##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

|           |  |                                                                                     
|---------- |  | ------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                     
|x          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

|                                           |  |  |  | 
|------------------------------------------ |  |  |  | 
|FOR THE FISCAL YEAR ENDED OCTOBER 31, 2002 |  | 
|                                           |  |  |  | 
|OR                                        

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 0-16448

HOLIDAY RV SUPERSTORES, INC.
(Exact Name of Registrant as Specified in Its Charter)

|                                                                                                      |  |                                                
|----------------------------------------------------------------------------------------------------- |  | -----------------------------------------------
|DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization)                               |  | 59-1834763
(I.R.S. Employer
Identification No.)
|                                                                                                      |  |                                                
|200 East Broward Boulevard
SUITE 920
Ft. Lauderdale, Florida
(Address of Principal Executive Offices) |  | 33301
(Zip Code)                               

REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE:
(954) 522-9903

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock; Par Value $0.10 Per Share
(TITLE OF CLASS)

Indicate by check mark whether the registrant: (1) has filed all 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 o No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in a definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. x

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes o No x

The aggregate market value of the common stock held by non-affiliates of the
registrant on April 30, 2002, based on the closing price of the common stock on
that date was approximately $4,915,691. For the purpose of this response,
officers, directors and holders of 5% or more of the registrants common stock
are considered affiliates of the registrant as of that date. As of
April 25,
2003, Holiday RV Superstores, Inc. had outstanding 7,029,480 shares of common
stock.

DOCUMENTS INCORPORATED BY REFERENCE:
None.





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TABLE OF CONTENTS



|                                                   |                                                                                               |  |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                            
|                                                   | ITEM 1. BUSINESS                                                                             
|                                                   | ITEM 2. PROPERTIES                                                                           
|                                                   | ITEM 3. LEGAL PROCEEDINGS                                                                    
|                                                   | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|PART II                                           
|                                                   | ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
|                                                   | ITEM 6. SELECTED FINANCIAL DATA                                                              
|                                                   | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                   | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|                                                   | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|                                                   | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III                                          
|                                                   | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|                                                   | ITEM 11. EXECUTIVE COMPENSATION                                                              
|                                                   | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|                                                   | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|                                                   | ITEM 14. CONTROLS AND PROCEDURES                                                             
|PART IV                                           
|                                                   | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                     
|SIGNATURES                                        
|Certifications                                    
|January 8, 2002, Letter Agreement w/ Stephen Adams
|Asset Purchase Agreement                          
|Asset for Purchase and Sale of Assets             
|Lease Agreement                                   
|Subsidiaries of the Registrant                    
|Certification of the CEO                          
|Certification of CFO                              



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##### Table of Contents



HOLIDAY RV SUPERSTORES, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2002

TABLE OF CONTENTS

|                     |  |                                                                                                |  |  |     |  |  | 
|-------------------- |  | ---------------------------------------------------------------------------------------------- |  |  | --- |  |  | 
|PART I              
|Item 1               |  | Business                                                                                       |  |  | 3   | 
|Item 2               |  | Properties                                                                                     |  |  | 10  | 
|Item 3               |  | Legal Proceedings                                                                              |  |  | 11  | 
|Item 4               |  | Submission of Matters to a Vote of Security Holders                                            |  |  | 12  | 
|PART II             
|Item 5               |  | Market for Registrants Common Equity and Related Stockholder Matters                          |  |  | 12  | 
|Item 6               |  | Selected Financial Data                                                                        |  |  | 13  | 
|Item 7               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations          |  |  | 14  | 
|Item 7A              |  | Quantitative and Qualitative Disclosures about Market Risk                                     |  |  | 25  | 
|Item 8               |  | Financial Statements and Supplementary Data                                                    |  |  | 25  | 
|Item 9               |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           |  |  | 25  | 
|PART III            
|Item 10              |  | Directors and Executive Officers of the Registrant                                             |  |  | 26  | 
|Item 11              |  | Executive Compensation                                                                         |  |  | 27  | 
|Item 12              |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  |  | 31  | 
|Item 13              |  | Certain Relationships and Related Transactions                                                 |  |  | 33  | 
|Item 14              |  | Controls and Procedures                                                                        |  |  | 34  | 
|PART IV             
|Item 15              |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                |  |  | 34  | 
|Signatures           |  |                                                                                                |  |  | 35  | 
|Certifications       |  |                                                                                                |  |  | 36  | 
|Financial Statements |  |                                                                                                |  |  | F-1 | 

2



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##### Table of Contents



HOLIDAY RV SUPERSTORES, INC.




PART I




ITEM 1. BUSINESS

UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES
TO HOLIDAY, WE, OUR, THE
COMPANY AND US IN THIS ANNUAL REPORT ON FORM
10-K INCLUDES HOLIDAY RV SUPERSTORES, INC., AND ITS SUBSIDIARIES.
THIS ANNUAL REPORT ON FORM 10-K CONTAINS OR MAY CONTAIN
FORWARD-LOOKING STATEMENTS, SUCH AS STATEMENTS REGARDING OUR STRATEGY
AND ANTICIPATED TRENDS IN THE INDUSTRY IN WHICH WE OPERATE. THESE
FORWARD-LOOKING STATEMENTS ARE BASED ON OUR CURRENT EXPECTATIONS AND
ARE SUBJECT TO A NUMBER OF RISKS, UNCERTAINTIES AND ASSUMPTIONS
RELATING TO OUR OPERATIONS AND RESULTS OF OPERATIONS, COMPETITIVE
FACTORS, SHIFTS IN MARKET DEMAND, AND OTHER RISKS AND UNCERTAINTIES,
INCLUDING, IN ADDITION TO THOSE DESCRIBED IN RISK FACTORS
ELSEWHERE IN THIS ANNUAL REPORT ON
FORM 10-K, THE FACT THAT OUR
AUDITORS HAVE EXPRESSED DOUBT CONCERNING OUR ABILITY TO CONTINUE AS A
GOING CONCERN; OUR ABILITY TO OBTAIN AN ADEQUATE FLOOR PLAN FACILITY
FOR FUTURE PURCHASES OF INVENTORY; OUR ABILITY TO SERVICE OUR DEBT,
INCLUDING DEBT DUE ON DEMAND AND DEBT CURRENTLY IN DEFAULT; OUR
ABILITY TO SUCCESSFULLY RESTRUCTURE OUR DEBT ON TERMS ACCEPTABLE TO
US AND TO SERVICE SUCH RESTRUCTURED DEBT; OUR ABILITY TO OBTAIN
ADDITIONAL FINANCING TO MEET OUR OPERATING REQUIREMENTS; THE FACT
THAT OUR MAJORITY STOCKHOLDER, WHO IS ALSO OUR PRIMARY LENDER, HAS
EFFECTIVE CONTROL OF OUR COMPANY; OUR ABILITY TO MAINTAIN GOOD
RELATIONSHIPS WITH OUR VENDORS, ESPECIALLY OUR KEY MANUFACTURER, AND
OUR CUSTOMERS; COMPETITION IN THE RV RETAIL MARKET, INCLUDING PRICING
PRESSURES; AND GENERAL ECONOMIC FACTORS WHICH AFFECT THE RV INDUSTRY.
SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR
SHOULD THE UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY
DIFFER SIGNIFICANTLY FROM RESULTS EXPRESSED OR IMPLIED IN ANY
FORWARD-LOOKING STATEMENTS MADE BY US IN THIS ANNUAL REPORT ON FORM
10-K. WE DO NOT UNDERTAKE ANY OBLIGATION TO REVISE THESE
FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR CIRCUMSTANCES.

GENERAL

Holiday RV Superstores, Inc. is a multi-store chain that sells, finances and
services recreation vehicles, or RVs, and recreation boats. As of
April 25,
2003, we operate three dealerships in the following locations:



| | Clermont, Florida
Lexington, Kentucky
Prosperity, West Virginia
| | ---------------------------------------------------------------

We were incorporated in Florida in 1978 and reincorporated in Delaware in
February 2000. Our initial public offering was in 1987.

Our principal executive offices are located at 200 East Broward Boulevard,
Suite 920, Ft. Lauderdale, Florida 33301 and our telephone number is (954)
522-9903.

RECENT DEVELOPMENTS

Expiration of Floor Plan.Our floor plan credit facility with Bank of America
expired on October 31, 2002. On November 11, 2002, Stephen
Adams, our now majority stockholder hereafter referred to as
Mr. Adams or our majority stockholder, issued a commitment to Bank of America to acquire our debt owed to
Bank of America. On December 13, 2002, Mr. Adams acquired our debt owed to
Bank of America and we entered into an agreement with Mr. Adams whereby there
would be no further advances under the credit facility. Accordingly,
we presently have
no borrowing capacity to acquire inventory or fund other working capital needs
and our floor plan and other amounts due Mr. Adams are either due on
demand or are in default.

Advances by Mr. Adams.In order for us
to continue operations, Mr. Adams
advanced to us an aggregate of $2.5 million from
September 2002 through the beginning of November 2002. On November 11, 2003,
Mr. Adams advanced an additional $4.3 million to allow us
to reduce our debt to
Bank of America. Of the $4.3 million of additional advances by
Mr. Adams, $1.0 million was a secured convertible loan
pursuant to the March 20, 2002 loan agreement with AGHI, a
company owned by Mr. Adams (see Liquidity and Capital Resources). The remaining $3.3
million advance was made by AGI Holding Corp., a company owned by Mr. Adams, for a term of two years and at an interest rate of 12.75%, payable
monthly. The $3.3 million loan is convertible into shares of our common stock at a price of $1.99 per share
and is collateralized by all of our assets. On December 13, 2002, a
company owned by Mr. Adams acquired our floor plan from our primary floor plan lender for $7.8 million,
making Mr. Adams also our primary lender. Subsequent to the acquisition of our floor plan by a company
owned by Mr. Adams, the $3.3 million advance was added to the outstanding floor plan balance
under the provisions of the floor plan agreement. On January 14, 2003, Mr. Adams advanced to
us an additional $1.3 million. After these advances, we owed Mr. Adams $12.3 million of
senior secured debt under

3



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the credit agreement, of which $3.3 million is
convertible into shares of our common stock, which is due on demand, and an
additional $5.1 million of convertible secured debt, which is in
default. As of April 25, 2003, we owe Mr. Adam $5.8 million
of senior secured debt, of which $3.3 million is convertible into
shares of our common stock, and $5.1 million of convertible secured debt.

Conversions of Preferred Stock.On January 14, 2003, all of our outstanding
shares of Series A and Series AA-2 Preferred Stock were converted into
5,645,162 shares of our common stock. The conversion of the shares of
Preferred Stock (see Notes 13 and 14 to the Consolidated Financial Statements) increased Mr. Adams ownership of common stock to approximately
69% of the outstanding shares of our common stock.

Delisting from Nasdaq SmallCap Market.In spite of our efforts to restructure
our balance sheet in order to increase our stockholders equity to meet the
minimum Nasdaq listing requirements, we were delisted from the Nasdaq SmallCap
Market effective February 21, 2003. In addition, because we are not current in
all of our periodic reporting requirements under the Securities Exchange Act of
1934, as amended, we are not currently eligible to trade on the OTC Bulletin
Board. Our shares of common stock are currently quoted on the pink sheets,
which subjects broker-dealers to additional sales practice requirements.

New Chairman and Acting CEO; Resignation
of Acting CEO.On February 4, 2003, we announced the appointment
of Lee B. Sanders as the new Chairman of our Board of Directors, Casey L.
Gunnell as Acting Chief Executive Officer and President and the resignation of Marcus A.
Lemonis, our former Chairman, Chief Executive Officer and
President. Mr. Gunnell has given notice of his resignation as
Acting Chief Executive Officer, President and Director effective
immediately after the filing of our Annual Report on Form 10-K. In addition, Lee
Iacocca resigned from our Board in February 2003.

Mr. Adams Notice to Convert  Increase Ownership to Over 90%.On February 28,
2003, we received notice from Mr. Adams requesting conversion of $150,000
principal amount and $150,000 of accrued but unpaid interest owed under a
convertible note. The conversion price sought by Mr. Adams is $0.02 per share,
which Mr. Adams asserts is the conversion price established in accordance with
the terms of the convertible note. We have not yet issued the shares of common
stock referenced in the conversion request and we are evaluating our rights,
responsibilities and options with respect to Mr. Adams demand.

If the shares of common stock are issued on the basis of the conversion
request, Mr. Adams ownership of our common stock will increase from
approximately 69% to more than 90%. Were we to issue the shares of common
stock subject to the conversion request, thus increasing Mr. Adams ownership
interest to over 90%, Mr. Adams would be able to effect a short form
merger in which the shares of common stock not owned by Mr. Adams could be
acquired in exchange for consideration solely determined by Mr. Adams (subject
only to dissenters appraisal rights under Delaware corporate law).

There can be no assurance as to the outcome of this matter.

Mr. Adams Amendment to His Schedule
13D  Removal of Certain Directors by Written Consent.On
May 23, 2003, Mr. Adams filed an amendment to his Schedule 13D
relating to his ownership in the Company (the Amendment).
The Amendment states that Mr. Adams has been informed that our Board
of Directors had determined to issue shares to Mr. Adams subject to
the conversion notice (see above) after the completion of the audit
for our fiscal year ended October 31, 2002. Our Board of Directors
has not made that determination, and as stated above, is evaluating
its rights, responsibilities and options with respect to issuing
shares subject to the conversion notice.

The Amendment further states that, on May 16, 2003,
Mr. Adams determined that if we had not filed our Form 10-K for the
year ended October 31, 2002 and our Form 10-Q for the quarter ended
January 31, 2003 by May 23, 2003, Mr. Adams would take action by
means of written consent pursuant to the Delaware General Corporation
Law and our certificate of incorporation to remove Lee Sanders and
Casey Gunnell as directors and replace them with other persons who
would, among other things, issue the shares to Mr. Adams subject to
the conversion notice. The Amendment continues stating that after the
issuance of the shares subject to the conversion notice, Mr. Adams
would consider effecting a short form merger. As stated
above, the issuance of the shares subject to the conversion notice
would increase Mr. Adams ownership to more than 90%, thus
allowing Mr. Adams to effect a short form merger in which shares
of common stock not owned by Mr. Adams could be acquired in
exchange for consideration solely determined by Mr. Adams (subject only to
dissenters appraisal rights under Delaware corporate law). The
Amendment further states that Mr. Adams understands that we have
made arrangements to file our Form 10-K by May 23, 2003 and therefore
Mr. Adams has not taken the proposed action to replace certain
members of our board.

Restructuring  Sale of Real Estate and Dealerships.
We have recently sold several of our dealerships, and related real
estate, to reduce our debt because we could not
acquire inventory for these dealerships to operate
profitably.

| |                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - In September 2002, we sold the real estate
at our Las Cruces, New Mexico dealership to an affiliate of
Mr. Adams and leased it back paying down our loan from Bank of
America by approximately $840,000.
|
| | - In December 2002, we sold our dealership in
Bakersfield, California for approximately $3.4 million and paid
down our loan from Bank of America by approximately
$3.3 million.                           
|
| | - In March 2003, we sold our dealership in
Spartanburg, South Carolina for approximately $3.2 million and
paid down our loan from Mr. Adams by approximately
$3.0 million.                                
|
| | - In April 2003, we sold our dealership in
Las Cruces, New Mexico for approximately $2.8 million and paid
down our loan from Mr. Adams by approximately
$2.6 million.                                     

Lawsuit Against
Former Chief Executive Officer.On April 24, 2003, we
filed suit against Marcus Lemonis, our former Chairman, Chief Executive Officer
and President who resigned on January 30, 2003, for breach of contract, breach
of fiduciary duty and unjust enrichment. We are seeking the return of a
$41,006 unauthorized bonus payment and over $70,000 of expenses reimbursed to
Mr. Lemonis that were non-business related, excessive and/or unsubstantiated
and contrary to the policies contained in our Employee Handbook.
There can be no assurance as to the outcome of this litigation.

Legal Proceedings. See Item 3  Legal Proceedings
below regarding legal proceedings initiated subsequent to
October 31, 2002.

RECREATIONAL VEHICLE INDUSTRY OVERVIEW

The United States recreation vehicle industry is a $16 billion a year industry.
The RV industry caters to the travel and leisure needs of an estimated 30
million RV enthusiasts by selling and servicing recreation vehicles. The
Recreation Vehicle Industry Association (RVIA) lists the number of new RVs
shipped to dealers as follows:

|                 |  |         |         |      |  |      |         |      |  |      |         |  |  |  |         |  |  |  |         | 
|---------------- |  | ------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  |  | ------- |  |  |  | ------- | 
|                 |  | 2002(1) |         | 2001 |  | 2000 |         | 1999 |  | 1998
|                 |  |         |         |      |  |      |         |      |  |     
|New RV shipments |  |         | 307,400 |      |  |      | 256,800 |      |  |      | 300,100 |  |  |  | 321,200 |  |  |  | 292,700 | 



---

|(1) |  | Shipment information for 2002 is based on RVIA forecast.
|--- |  | --------------------------------------------------------

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According to industry data, the average RV owner is 49, owns a home, is
married, has a household income of $56,000, has no children living at home, and
buys an RV for recreational travel.

One in 12 families in the United States owns an RV, with over nine million
vehicles on the road and an estimated 30 million RV travelers. Projections by
the RVIA indicate that RV ownership will increase 13% from 6.9 million
households in 2001 to an estimated 7.8 million households in 2010. This
projection is based primarily on the large number of baby boomers who will
reach their peak earnings and vacation years during this period. The U.S.
Census Bureau confirms the expected growth of this segment of the U.S.
population.

In an effort to capitalize on the potential baby boomer opportunity, the RV
industry embarked on a highly publicized national market expansion program
beginning in 1997. This program is aimed at showing the lifestyle appeal of
RV-ing to the baby boomers. We believe the Go RVing slogan favorably portrays
the industry as one that offers solitude, family time and the opportunity to
slow down and reconnect with the world.

OPERATIONS

Principal Products and Services

Our principal products and services for the last three fiscal years are listed
below, by major revenue source, as a percentage of total revenue.

|                                          |  |      |       |      |  |      |       |  |  |  |       | 
|----------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|PRINCIPAL PRODUCT OR SERVICE              |  | 2002 |       | 2001 |  | 2000
|                                          |  |      |       |      |  |     
|New and used vehicles and marine products |  |      | 88.6  |      |  |      | 90.1  |  |  |  | 90.7  | 
|Service, parts and accessories            |  |      | 8.4   |      |  |      | 7.5   |  |  |  | 6.1   | 
|Other, net                                |  |      | 3.0   |      |  |      | 2.4   |  |  |  | 3.2   | 
|Total revenue                             |  |      | 100.0 |      |  |      | 100.0 |  |  |  | 100.0 | 

Revenue from finance and insurance is included in the category entitled other,
net.

New and Used RVs and Boats

The RVs we sell are generally categorized as follows:

Towables

Towables are designed to be towed by a car, van or pickup truck. They provide
temporary housing for recreational, camping or travel use without requiring
permanent on-site hook up. There are four types of towable RVs:



| |  | Folding Camping Trailer   
|- |  | --------------------------
| 
| |  | Truck Camper              
| 
| |  | Travel Trailer            
| 
| |  | Fifth Wheel Travel Trailer

Motorized RVs

Also known as motor homes, motorized RVs are built on or as part of a
self-propelled motor vehicle chassis. They include the following types:



| |  | Type A  constructed entirely on a specially designed chassis that already
has the engine and drive components;                                                              
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Type B  van campers are panel-type trucks to which the manufacturer adds
sleeping, kitchen and toilet facilities, fresh water storage, 110 volt hook-up
and other items; and

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| |  | Type C  built on an automotive manufactured van frame with an attached cab
section, or on an automotive manufactured cab and chassis. The manufacturer
completes the body section, which contains the living area, and attaches it to
the cab section. For the van conversion, the manufacturer modifies a completed
van chassis aesthetically or decoratively for transportation and recreational
purposes.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Service, Parts and Accessories

Service is an integral part of our business. Recognizing that poor service
continues to top the list of consumer complaints, we are committed to providing
reliable, quality service at all of our retail locations. Service historically
provides higher margins than new and used vehicle and accessory sales.

Our service facilities are fully equipped to handle virtually any type of RV.
We are a factory designated chassis warranty service center for Gillig,
Chevrolet Division of General Motors, Freightliner Motors, Workhorse, and
Spartan Motors. These companies reimburse us for the warranty services we
provide. Our Prosperity, West Virginia dealership is also equipped to repair all brands of
boats and motors that we sell.

Our service facilities are equipped to make engine and drive train repairs, as
well as repairs to refrigerators, ovens and ranges, air conditioning systems,
plumbing and electrical systems of each RV we sell. In addition, we are an
authorized service center for most manufacturers of RV components.

We maintain service agreements with most RV and marine companies. These service
agreements allow us to purchase parts and obtain technical assistance needed to
repair and service the manufacturers vehicles, boats and equipment.

The parts department of each of our dealerships supports our sales and service
functions. In addition, each retail center stocks accessory items often
purchased by RV owners. Each dealership also maintains a computerized
point-of-purchase inventory control and customer tracking system. Our
Prosperity dealership also stocks parts and
accessories for the marine products it sells. All of our locations sell
propane gas and provide sewage dump stations for RV waste evacuation.

Finance and Insurance

We help our customers obtain financing by referring them to banks that finance
RV purchases. We also offer service contracts that provide additional warranty
coverage on RVs or some RV parts after the original warranty expires, and
various types of insurance policies, or credit life contracts, that pay a
customers RV loans if the customer dies or is physically disabled. Our
extended warranty contracts range from one to seven years depending on whether
the RV is new or used. These contracts are also subject to mileage limitations.
Our credit life contracts range from one to seven years, based on the
purchasers age.

Number of Dealerships

The following table provides information about the number of dealerships we
operated during each of the last five fiscal years:

6



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##### Table of Contents



|                          |  |                               |    |      |  |      |    |      |  |      |    |  |  |  |   |  |  |  |   | 
|------------------------- |  | ----------------------------- | -- | ---- |  | ---- | -- | ---- |  | ---- | -- |  |  |  | - |  |  |  | - | 
|                          |  | FISCAL YEAR ENDED OCTOBER 31,
|                          |  |                              
|                          |  | 2002                          |    | 2001 |  | 2000 |    | 1999 |  | 1998
|                          |  |                               |    |      |  |      |    |      |  |     
|Open at beginning of year |  |                               | 13 | (1)  |  |      | 14 |      |  |      | 7  |  |  |  | 7 |  |  |  | 8 | 
|Opened during year        |  |                               |   |      |  |      | 2  |      |  |      |   |  |  |  |  |  |  |  |  | 
|Acquired during year      |  |                               |   |      |  |      |   |      |  |      | 7  |  |  |  |  |  |  |  |  | 
|Closed during year        |  |                               | 7  |      |  |      | 3  |      |  |      |   |  |  |  |  |  |  |  | 1 | 
|Open at end of year       |  |                               | 6  | (2)  |  |      | 13 | (1)  |  |      | 14 |  |  |  | 7 |  |  |  | 7 | 



---

|(1) |  | Our Clermont, Florida location was rebuilt following a fire in April
2001 and reopened in September 2002.                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | We sold our Bakersfield
dealership in December 2002, our Spartanburg
dealership in March 2003 and our Las Cruces dealership in April 2003,
leaving us with 3 dealerships as of April 25, 2003.

Marketing

In December 1999, we launched a national branding strategy to consolidate and
rebrand the various operating names of our subsidiaries under the trade name
Recreation USA.

Advertising and Promotions

We advertise year round using newspapers, direct mail, billboards and
yellow pages. On-lot promotions and
off-lot consumer shows, organized by trade groups and private companies,
supplement the advertising program. We participate in numerous consumer RV
shows and rallies annually, attended by up to 40,000 consumers each.
We promote smaller product shows at RV parks in which we target existing RV owners
in our markets. We also promote off-site product shows in connection with
well-known mass merchandisers. We use the services of professional advertising
and public relations firms to assist in implementing our advertising, promotion
and public relations.

Customer Base

Our customer base demographics may vary from dealership to dealership, but
primarily are as represented in the following tables: (1)

|                                    |  |                                       |      |                       |  |                      |               |  |  |  |      |   | 
|----------------------------------- |  | ------------------------------------- | ---- | --------------------- |  | -------------------- | ------------- |  |  |  | ---- | - | 
|RV OWNERSHIP RATES BY AGE GROUPS(2) |  | RV OWNERSHIP RATES BY INCOME GROUP(2)
|                                    |  |                                      
|AGE OF HOUSEHOLDER                  |  | PERCENT OF OWNERSHIP                  |      | INCOME OF HOUSEHOLDER |  | PERCENT OF OWNERSHIP
|                                    |  |                                       |      |                       |  |                     
|18-34                               |  |                                       | 3.1  | %                     |  |                      | $0-24,999     |  |  |  | 4.9  | %
|35-44                               |  |                                       | 9.6  | %                     |  | $                    | 25,000-34,999 |  |  |  | 7.1  | %
|45-54                               |  |                                       | 8.0  | %                     |  | $                    | 35,000-49,999 |  |  |  | 8.5  | %
|55-64                               |  |                                       | 13.7 | %                     |  | $                    | 50,000-74,999 |  |  |  | 9.6  | %
|65-74                               |  |                                       | 7.5  | %                     |  |                      | $75,000+      |  |  |  | 17.0 | %
|75+                                 |  |                                       | 6.8  | %                     |  |                      |               |  |  |  |      |  



---

|(1) |  | Information from THE RV CONSUMER; A DEMOGRAPHIC PROFILE; A University
of Michigan Study, RVIA. The tables summarize findings from the fifth
national survey of RV ownership sponsored by RVIA (June 2001).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Of the population that falls into this group, this percentage owns
RVs.                                                                                                                                   

No single customer accounted for more than 10% of our revenues for fiscal 2002
or in prior years. Because we sell vehicles to retail customers, the loss
of any one customer would not materially adversely affect us.
However, we are dependent upon sales to a significant number of
customers and there can be no assurance a sufficient number of
customers will make purchases from us.

Manufacturers

We currently sell several brands of RVs and
recreational boats. During 2002, we purchased
approximately 18.2% of our RVs from Fleetwood Enterprises, Inc. and 31.5% from
Winnebago Industries. We purchased the remainder of our RVs and boats
from other manufacturers

7



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##### Table of Contents



including National RV Holdings, Inc., SMC Corporation, Forest
River, Inc., Gulfstream Coach, Inc., and Tracker Marine, Inc.
Subsequent to October 31, 2002, we sold our Bakersfield,
California and Las Cruces, New Mexico dealerships, which
relied on Winnebago products. Cancellation or modification of our
dealer agreement with Fleetwood would have an
adverse effect on our sales.

Floor Plan Financing

Most RV dealerships finance their new and used inventory under floor plan
financing agreements. A traditional floor plan agreement requires that the
dealerships new and used vehicle inventory be pledged as collateral.
Borrowings become due upon the sale of the related inventory or as the related
inventory ages beyond the allowable finance period. Adequate floor plan
financing allows the dealership to utilize its cash to finance non-inventory
working capital requirements.

We do not currently have a floor plan
financing agreement in place, except for a small floor plan facility
exclusively for our West Virginia dealership. As of October 31,
2002, substantially all of the new and used vehicles and boats held
in our inventory were pledged as collateral under floor plan contracts with
financial institutions. Under these contracts, the sale of a pledged vehicle to
a consumer required us to pay the lender the amount, or release price,
attributable to that vehicle under the floor plan contract. Manufacturers have
agreements with financial institutions for new vehicles that provide the
lenders limited repurchase indemnification against any default by us under the
floor plan contract. Our primary floor plan agreement expired in November 2001.
We negotiated a forbearance agreement to extend the floor plan financing to
March 15, 2002, at which time, our lender agreed to amend the expired
forbearance agreement essentially under the same terms through October 31,
2002. On October 31, 2002, that forbearance agreement expired.
On November 11, 2002, we executed a new forbearance agreement with our lender, whereby our
lender would refrain from exercising its rights under the expired forbearance
agreement until December 13, 2002. On December 13, 2002,
Mr. Adams, our majority stockholder,
through a wholly owned entity, AGHI Finance Co., LLC (AGHI), acquired the
loan from our primary floor plan lender. Concurrent with the acquisition of
the floor plan loan, the floor plan loan agreement was further amended whereby
the maturity date was extended to November 15, 2004, the interest rate was
changed to 12.75% and future advances were prohibited. On January 14, 2003, we
entered into a supplemental amendment to our floor plan agreement with AGHI.
Pursuant to the terms of the supplemental amendment, AGHI advanced us $1.3
million to be used by us to repay certain indebtedness and we acknowledged and
agreed that the entire loan was due on demand.

Employee Relations

As of October 31, 2002, 2001 and 2000, we had approximately 171, 319 and 351
full-time employees, respectively. We have no collective bargaining agreements
with labor unions and have never experienced work stoppages. We consider our
employee relations to be good. We maintain internal training programs at every
level and have an internal quality control program and customer satisfaction
feedback system for all of our dealerships. Factory training programs are
available to our employees and we generally take full advantage of these
programs. Most full time employees are provided with paid annual vacations,
medical and hospitalization insurance premium reimbursement, sick leave and
paid holidays. After one year of employment, employees are eligible to
participate in the profit sharing and 401(k) investment plans. See
Legal Proceedings below regarding the
Department of Labors inquiry regarding the 401(k) plan. Effective
November 1, 2002, we entered into a co-employment agreement with a Professional
Employer Organization. Under the terms of the agreement, our employees are
afforded benefits consistent with those existing prior to the agreement.

Seasonality

Although the RV business operates year-round in our markets, the industry in
general is seasonal. We have significantly higher sales in the second and third
quarters of our fiscal year than the first and
fourth quarters. During slack seasons at a particular dealership, we
seek to reduce
inventory of new and used RVs and introduce other cutbacks in operations, to
reduce the impact of the seasonality on our results of operations. However,
because a substantial portion of our expenses is fixed, our revenue
and operating income (in periods in which we have operating income) tends to be lower in the first and fourth quarters of our fiscal year and
higher in the second and third quarters.

Competition

According to RVIA, there are approximately 3,500 RV dealers and 190 RV
manufacturers in North America. Competition in the sales of new and used RVs is
intense. Some of these retailers have more than one location, although most of
our competitors operate from a single location.

Significant competitive factors in the RV sales and service industry include
vehicle availability, price, service, reliability, quality of service, and
convenience. Without a floor plan facility it will not be possible for us to
acquire the necessary inventory, adversely affecting our ability to
compete. We anticipate that we will continue to face
strong competition.

8



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##### Table of Contents



The RV business depends heavily on the availability and terms of financing for
the retail purchase of its products. Consequently, changes in interest rates and the tightening or loosening of
credit by government agencies and financial institutions dramatically affects
our business. As discussed in more detail in the Risk Factors section, the
Floor Plan Financing paragraph of this section, and in the Managements
Discussion and Analysis of Results of Operations, our major floor plan contract
is due on demand and further advances are prohibited. Without sufficient floor
plan financing we cannot stock the inventory needed to compete effectively.

Regulation

Compliance with federal, state and local laws and regulations, including
environmental protection laws, has not had, and is not expected to have, a
material effect on our financial position, results of operations or competitive
position.

Insurance Coverage

Historically, we have
experienced difficulty in obtaining insurance coverage
for our dealership operations due to our claims experience and our
overall financial condition. None the less, we have obtained the insurance annually on a
competitive bid basis, at what we believe are reasonable premium rates.
Although the applicable premium rates have increased, we do not believe that
these increases will have a material adverse effect on our business in the
foreseeable future.

RISK FACTORS RELATING TO THE RV
INDUSTRY

OUR SALES COULD DECLINE IF CONSUMERS BUY FEWER LEISURE ITEMS DUE TO GENERAL ECONOMIC CONDITIONS.

Our sales are affected by general economic conditions, including consumer
confidence, employment rates, prevailing interest rates, inflation,
fuel costs and other
economic conditions affecting consumer attitudes and disposable consumer income
generally. Weakness in the economy and volatility or declines in the stock
market could have an adverse effect on our business if consumers make fewer
discretionary purchases as a result. Increases in consumer interest rates could
cause a drop in sales because most of our customers finance their purchases.

OUR BUSINESS IS SEASONAL.

Our business, and the recreational vehicle
industry in general, is seasonal. Our strongest sales period begins in January
when many recreation vehicle shows are held. Strong sales demand continues
through the summer months. Approximately 30% of our average annual net sales
over the last three years occurred in the quarter ending April 30. With the
exception of our store in Florida, our sales are generally much lower in the
quarter ending January 31.

WE MUST RESPOND EFFECTIVELY TO THE COMPETITION WE FACE FROM OTHER RV DEALERS AS
WELL AS BUSINESSES THAT OFFER PRODUCTS TYPICALLY PURCHASED WITH DISCRETIONARY
INCOME.

We compete primarily on the basis of quality, available products, pricing and
value, and customer service. We will not generate sufficient revenues to
maintain our business unless we convince potential customers to use their
disposable income to purchase our products. To compete effectively, we must be
able to offer quality merchandise and service at prices generally equal to or
lower than those of our competitors, many of which have substantially greater
financial, marketing and other resources than we do. If our resources are not
used to target the appropriate audience for our products, we will not be
successful.

THE NATURE OF OUR BUSINESS EXPOSES US TO LIABILITY FOR PERSONAL INJURY AND
PROPERTY DAMAGE IF ANY OF THE PRODUCTS WE SELL OR SERVICE ARE DEFECTIVE.

The products that we sell, service and custom package have the potential to
inflict significant injury or property damage. Even if the manufacturer causes
the defect, we could be liable on the theory of third party product liability.
We carry insurance for this in addition to the general liability insurance generally maintained by the
manufacturers, but it is possible that a claim would not be covered or would
exceed our policy limits.

9



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##### Table of Contents



SIGNIFICANT CHANGES IN THE PRICING AND AVAILABILITY OF FUEL COULD CAUSE A
DECLINE IN SALES.

Our business is automotive in nature and depends upon ample supplies of fuel at
reasonable costs. Significant increases in the price of gasoline or decreases
in availability could result in fewer consumers purchasing RVs and/or boats.

OUR OPERATIONS ARE SUBJECT TO EXTENSIVE REGULATION, SUPERVISION AND LICENSING
UNDER VARIOUS FEDERAL, STATE, AND LOCAL STATUTES AND ORDINANCES.

The adoption of more stringent statutes and regulations or changes in the
interpretation of existing statutes and regulations could curtail some of our
operations. It could also deny us the opportunity to operate in certain
locations or restrict products or services offered by us. Various federal,
state and local regulatory agencies, including the Occupational Safety and
Health Administration, the United States Environmental Protection Agency and
similar federal and local agencies, have jurisdiction over the operation of our
dealerships, repair facilities and other operations with respect to matters
such as consumer protection, workers safety and laws regarding protection of
the environment, including air, water and soil. The failure to maintain all
requisite licenses and permits and comply with all applicable federal, state
and local regulations, requisite licenses and permits could limit our ability
to operate our business.

As with vehicle dealerships generally, and parts and service operations in
particular, our business involves the use, handling, storage and contracting
for recycling or disposal of hazardous or toxic substances or wastes, including
environmentally sensitive materials, such as motor oil, waste motor oil and
filters, transmission fluid, antifreeze, freon, waste paint and lacquer
thinner, batteries, solvents, lubricants, degreasing agents, gasoline, diesel
fuels and other chemicals. Accordingly, we are subject to regulation by
federal, state and local authorities establishing requirements for the use,
management, handling and disposal of these materials and health and
environmental quality standards. We are also subject to laws, ordinances and
regulations governing investigation and remediation of contamination at
facilities we operate to which we send hazardous or toxic substances or wastes
for treatment, recycling or disposal. Noncompliance with or changes to these
requirements could limit our ability to operate our business.

Soil contamination has been known to exist at certain properties owned or
leased by us. We have also been required and may in the future be required to
remedy soil contamination or remove aboveground storage tanks
containing hazardous substances or wastes.

Our customers and potential customers are subject to federal, state and local
statutes, ordinances and regulations regarding the ownership of recreation
vehicles and boats. The adoption of more stringent statutes, ordinances and
regulations affecting the consumer ownership of recreation vehicles or boats,
could limit our ability to sell our products.

RISK FACTORS RELATING TO US AND OUR FINANCIAL
CONDITION

OUR INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
EXPRESS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

Our financial statements for the year ended
October 31, 2002, 2001 and 2000 were audited by our independent
certified public accountants. Their report states that the financial
statements were prepared assuming we will continue as a going concern
although we incurred significant net losses in fiscal 2002, 2001 and
2000 and had net cash outflows from operations. These circumstances
raise substantial doubts about our ability to continue as a going
concern.

WE DO NOT HAVE A FLOOR PLAN FACILITY AND OUR
ABILITY TO CONTINUE AS A GOING CONCERN DEPENDS ON OBTAINING
SUFFICIENT FLOOR PLAN FINANCING.

We are essentially operating without a floor plan
facility. The acquisition of new and used inventory is being funded
by our internally generated working capital. Without an adequate
floor plan facility, we do not have sufficient resources to fund our
operating deficits and to meet our operating requirements. We have
been unsuccessful in our attempts to obtain an adequate floor plan
facility. All of the debt owed to our primary lender, affiliates of
Mr. Adams, is due upon demand or
in default and we have been unsuccessful in our requests to our
primary lender to restructure the debt and to permit additional
advances. Without an adequate floor plan facility, we believe that
our alternatives are limited to continuing to sell our inventory,
without the ability to replenish our inventory, close or sell our
remaining retail stores, reduce our corporate overhead, or seek
bankruptcy protection. We believe that corporate overhead can be
reduced only on a limited basis while we continue as a reporting company under the
Securities Exchange Act of 1934. Failure to obtain additional capital
and an adequate
floor plan credit facility would have a material adverse effect on us and
raises substantial doubt about our ability to continue as a going
concern.

CONTROL OF OUR COMPANY IS WITH OUR MAJORITY
STOCKHOLDER, WHO IS ALSO OUR PRIMARY LENDER.

Mr. Adams currently
owns approximately 69% or our outstanding common stock. With this
ownership position, Mr. Adams is able to control the vote on all
matters submitted to the vote of stockholders, including the right to
elect directors. Under Delaware law, Mr. Adams may not remove
five of our current directors under our staggered board. However,
should Mr. Adams be able to increase the size of the board or should one of our current directors side
with Mr. Adams, then Mr. Adams could appoint officers and direct our management and policies.
In addition, Mr. Adams has given notice requesting the
conversion of convertible debt held by Mr. Adams into shares of
our common stock which, if such shares of common stock were issued,
would increase Mr. Adams ownership from 69% to more than
90%. Were we to issue the shares of common stock subject to the
conversion request, thus increasing Mr. Adams ownership
interest to over 90%, Mr. Adams would be able to effect a
short form merger in which the shares of common stock not
owned by Mr. Adams could be acquired in exchange for
consideration solely determined by Mr. Adams (subject only to
dissenters appraisal rights under Delaware corporate law). We
have not yet issued the shares of common stock referenced in the
conversion notice and we are evaluating our rights, responsibilities
and options with respect to Mr. Adams conversion
request.

Mr. Adams, through entities wholly owned by
him, is our primary lender. As of April 25, 2003, we owed these
entities approximately $10.9 million, all of which is due on
demand or in default. While we have not received any notice to repay
the loans owed to these entities, we are not in the financial
position to repay if requested.

WE HAVE BEEN UNSUCCESSFUL IN OBTAINING ADDITIONAL
FINANCING THAT WE NEED.

We have been unsuccessful in our attempts to obtain
additional financing, including an adequate floor plan facility. We
have also been unsuccessful in our requests to our primary lender to
restructure the debt and to permit additional advances. Failure to
obtain adequate financing would have a material adverse effect on us
and raises substantial doubt about our ability to continue as a going
concern.

OUR SUBSTANTIAL INDEBTEDNESS, MOST OF WHICH IS
DUE ON DEMAND OR IN DEFAULT, RESTRICTS OUR OPERATIONS AND MAKES US
MORE VULNERABLE TO ADVERSE ECONOMIC CONDITIONS.

We have a significant amount of debt, most of which
is due on demand or in default. Our ability to generate adequate cash
flow and meet our operating objectives will depend upon our ability
to acquire inventory, and on market trends. Our large amount of
indebtedness, most of which is due on demand or in default, adversely
affects our business because:



| |  | Our ability to operate is dependent on our
creditors not seeking repayment and allowing us to use our cash flow
from operations to meet other obligations, including acquiring
inventory.                                                                          
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |  |                                                                                                                                                                                                                                                                    
| |  | Our ability to obtain additional financing
for working
capital or other reasons is dependent on our creditors not seeking
repayment and allowing us to obtain additional financing. We have
been unsuccessful in obtaining additional financing or working
capital.

OUR COMMON STOCK HAS BEEN DELISTED FROM THE
NASDAQ SMALLCAP MARKET.

Effective February 21, 2003, our shares of
common stock were delisted from the Nasdaq SmallCap Market. In
addition, because we are not current in all of our periodic reporting
requirements under the Securities Exchange Act of 1934, as amended,
we are not currently eligible to trade on the OTC Bulletin Board. Our
shares of common stock are currently quoted on the pink
sheets, which subjects broker-dealers with additional sales
practice requirements. This delisting could have a negative impact on
the trading activity and price of our common stock.

WE HAVE RELIED ON TWO KEY MANUFACTURERS FOR ALMOST
ALL OF OUR INVENTORY PURCHASES.

Our success has depended, to a significant extent,
on continued relationships with two major manufacturers, Winnebago
Industries and Fleetwood Enterprises, from whom we purchased
approximately 50% or our new products. We have recently sold our
dealerships which relied on Winnebago products. Cancellation or
modification of the dealer agreement with Fleetwood would have a
material adverse effect on our revenues.

THE WARRANTS WE SOLD IN A PRIVATE PLACEMENT, AND
OUR CONVERTIBLE DEBT, MAY REQUIRE THE ISSUANCE OF A NUMBER OF SHARES
OF COMMON STOCK THAT WILL SUBSTANTIALLY DILUTE OUR CURRENT
STOCKHOLDERS.

In January 2002 and March 2002, we sold units
consisting or shares of our Convertible Preferred Stock with warrants to purchase
shares of our common stock and convertible debt with warrants to
purchase shares of our common stock. In January 2003, the holders of
the Preferred Stock agreed to convert their Preferred Stock into
5,645,162 shares of our common stock; however, they have not yet
exercised their outstanding warrants. There are currently warrants
outstanding to
purchase 355,000 shares of our common stock at $5.00 per share. In
addition, we have $8.4 million of convertible debt outstanding,
plus associated fees and accrued but unpaid interest, which is
convertible into shares of our common stock at prices ranging from
the lower of $5.00 per share or the market price on the date of
issuance. The exercise of
the warrants or the conversion of the convertible debt would have a
dilutive effect to our current stockholders.

A PORTION OF OUR REVENUE IS FROM FINANCING,
INSURANCE AND EXTENDED SERVICE CONTRACTS, WHICH DEPEND ON THIRD-PARTY
LENDERS AND INSURANCE COMPANIES.

Part of our revenue comes from the fees we
receive from banks and other lending companies. We help our customers
obtain financing by referring them to certain banks that have offered
to provide financing for RV purchases. The bank or other lending
company pays us a fee for each loan they provide as a result of our
referral. If the lenders we arrange financing through lend to our
customers directly rather than through us, we would not receive a
referral fee. In addition, the lenders we currently refer customers
to may change the criteria or terms they use to make loan decisions,
which could reduce the number of customers that we can refer.
Our customers may also use the internet or other electronic methods to
find financing alternatives. If any of these events occur, we would
lose a significant portion of this revenue.

In addition, we generally offer our customers
(1) a service contract that provides additional warranty
coverage on their RV or some of its parts after the
manufacturers original warranty expires, and (2) various
types of insurance policies that will provide money to pay a
customers RV loan if the customer dies or is physically
disabled. We sell these products as a broker for unrelated companies
that specialize in these types of coverage. We receive a fee for each
product that we sell. Agency commission fees account for
approximately 22% or our total gross profit. If our customers obtain
these policies directly from the insurers, our net revenues could
decline.

Our credit profile may adversely effect our ability
to obtain financial products from these providers and therefore
negatively impact our results of operations.

TURNOVER OF MANAGERIAL PERSONNEL AT SEVERAL OF
OUR DEALERSHIPS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR SALES AND
PROFITABILITY.

We are highly dependent upon each dealerships
management for the on-going operations of that dealership. All of our
revenue is from retail sales and service. Turnover of managerial
personnel at any dealership usually has an adverse effect on the
sales and profitability at that location.

Availability of Reports and Other Information

The Securities and Exchange Commissions website is http://www.sec.gov. The
Commission makes available on its website, free of charge, reports, proxy and
information statements, and other information regarding issuers, such as us,
that file electronically with the Commission. Information provided on the
Commissions website is not part of this Annual Report on Form 10-K.




ITEM 2. PROPERTIES

The following table sets forth the location, premise size, and building square
footage for our properties as of October 31, 2002:

10



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##### Table of Contents



|                                |  |             |        |       |  |  |      | 
|------------------------------- |  | ----------- | ------ | ----- |  |  | ---- | 
|                                |  | SQUARE FEET |        | ACRES
|                                |  |             |        |      
|RETAIL
OPERATIONS
OWNED         |  |             |        |       |  |  |      | 
|Clermont,
Florida(1)            |  |             | 27,148 |       |  |  | 15.2 | 
|Inverness,
Florida (1)(2)       |  |             | 5,936  |       |  |  | 1.5  | 
|Ocala
North, Florida (1)(2)     |  |             | 6,856  |       |  |  | 17.9 | 
|Ocala
South, Florida (1)(2)     |  |             | 2,774  |       |  |  | 7.8  | 
|Spartanburg, South Carolina (5) |  |             | 34,000 |       |  |  | 20.0 | 
|                                |  |             |        |       |  |  |      | 
|LEASED                          |  |             |        |       |  |  |      | 
|Bakersfield, California (6)     |  |             | 17,400 |       |  |  | 6.9  | 
|Las Cruces, New Mexico (6)      |  |             | 14,000 |       |  |  | 7.0  | 
|Lexington, Kentucky             |  |             | 20,000 |       |  |  | 5.0  | 
|Wytheville,
Virginia (8)        |  |             | 11,250 |       |  |  | 3.0  | 
|Prosperity, West Virginia       |  |             | 62,450 |       |  |  | 5.5  | 
|Sanford, Florida                |  |             | 11,370 |       |  |  | 10.0 | 
|Las Vegas, Nevada (7)           |  |             | 15,049 |       |  |  | 5.0  | 
|                                |  |             |        |       |  |  |      | 
|EXECUTIVE
OFFICES
LEASED        |  |             |        |       |  |  |      | 
|Ft. Lauderdale, Florida         |  |             | 4,500  |       |  |  | n/a  | 
|Orlando, Florida (3)            |  |             | 3,750  |       |  |  | n/a  | 
|Chicago, Illinois (4)           |  |             | 1,059  |       |  |  | n/a  | 



---

|(1) |  | A foreclosure action has been
brought against this property. See Legal Proceedings
below.                                                                                                                                          
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Store has been closed and the related property is listed for sale
with a realtor.                                                                                                                                                    
|   
|(3) |  | Lease expired in December 2002 and was not renewed.                                                                                                                                                                                  
|   
|(4) |  | Lease expired in February 2003 and was not renewed.                                                                                                                                                                                  
|   
|(5) |  | The property is being leased to the purchaser of the Spartanburg
dealership who we understand is now an affiliate of Mr. Adams.
We are in negotiations to sell the property to an affiliate of
Mr. Adams.                            
|   
|(6) |  | Operations sold subsequent to October 31, 2002 and we received a
release from the related lease on the Bakersfield property
and we are in the process of seeking a release for the Las Cruces
property.                              
|   
|(7) |  | Property not used in operations. A settlement in the amount of
$300,000 has been reached, whereby satisfaction of the agreed upon
payment schedule will result in a release from the lease obligation.
See Legal Proceedings below.
|   
|(8) |  | Store was closed during fiscal 2002.                                                                                                                                                                                                 

Our leases generally have terms ranging from five to ten years and are
renewable at our option.

The land and buildings at our owned locations were subject to mortgages with
aggregate balances of approximately $6.7 million as of October 31, 2002.

We believe that our facilities are adequate for the foreseeable future for the
business conducted at the respective locations.




ITEM 3. LEGAL PROCEEDINGS

In November 2002, we, and our then Chief Executive Officer, were sued by
Doerge Capital Collaterized Bridge Fund, L.P. in the Circuit Court of Lake
county, Illinois. Doerge Capital had advanced $500,000 to us. The suit
alleges breach of contract and fraudulent inducement and seeks $500,000 plus
costs. We believe we have valid defenses to this suit and we intend to
vigorously defend this suit. Nevertheless, unfavorable resolution of this suit
would have a material adverse effect on our financial condition and
cash flow.

In January 2003, we were sued by Armando and Francisco Alonso in the Circuit
Court of Orange County, Florida. The Alonsos had sold their business to us,
taking back $1.5 million of convertible notes. The Alonsos, who converted
the notes into shares of our common stock, allege breach of contract and seek
rescission of the contract and unspecified money damages. We believe we have
valid defenses to this suit and we intend to vigorously defend this suit.
Nevertheless, unfavorable resolution of this suit would have a material adverse
effect on our financial condition and cash flow.

In March 2003, we were sued by Ernest and Lori Davis in the Circuit Court of
Orange County, Florida. The Davis had sold their business to us, taking back
a $1.7 million convertible note. The Davis, who converted the note into
shares of our common stock, allege breach of contract

11



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##### Table of Contents



and seek rescission of the contract and
unspecified money damages. We believe we have valid defenses to this suit and
we intend to vigorously defend this suit. Nevertheless, unfavorable resolution
of this suit would have a material adverse effect on our financial
condition and cash flow.

In February 2003, we settled a suit, filed in August 2002 in District Court of
Clark County, Nevada, by Century Partnership, LTD. involving an alleged breach
of a lease. The court approved settlement provides that we pay $300,000,
payable in monthly installments of $10,000 per month, commencing June 1, 2003
with interest accruing at 10% per annum. Should we default in our payments
under the settlement agreement, a judgment of $350,000, plus interest and less
any payments made by us, will be entered against us.

In March 2003, we received an inquiry from the
United States Department of Labor about contributions we are required
to make to the Recreation USA, Inc. 401(k) Plan which we maintain. We
have provided the Department of Labor with much of the information
that has been requested and we are in the process of compiling
information requested by the Department of Labor that has not yet
been submitted to such agency. We are also reviewing our internal
records to confirm that all contributions that we were required to
make to the plan have been made. At this time, we are unable to
determine whether this inquiry may lead to a potentially adverse action.

On April 24, 2003, we
filed suit against Marcus Lemonis, our former Chairman, Chief Executive Officer
and President who resigned on January 30, 2003, for breach of contract, breach
of fiduciary duty and unjust enrichment. We are seeking the return of a
$41,006 unauthorized bonus payment and over $70,000 of expenses reimbursed to
Mr. Lemonis that were non-business related, excessive and/or unsubstantiated
and contrary to the policies contained in our Employee Handbook.
There can be no assurance as to the outcome of this litigation.

On May 23, 2003, we were sued by Armando and
Francisco Alonso in the Circuit Court of Lake County, Florida. In
January 2000, we purchased from the Alonsos the real property
related to the business the Alonsos had previously sold to us.
In conjunction with our purchase of the real property, the
Alonsos took back a $5.0 million note secured by a mortgage on
the real property. The Alonsos allege a default under the note (with a current balance
of $4.7 million) for failure to pay the May 2003 payment as required
and by encumbering the real property with a second mortgage
in violation of the loan documents. We have made the May payment under
the note within the cure period as provided for in the note. At this
time we are unable to determine our defenses to the allegation
of encumbering the real property with a second mortgage.
An unfavorable resolution of this suit would have
a material adverse effect on our financial condition and cash flow.

We are also involved in various lawsuits and other contingencies arising out of
our operations in the normal course of business. In the opinion of management,
the ultimate resolution of these claims will not have a material adverse effect
upon our business, financial position, results of operations or
cash flows.




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

No matters were submitted to a vote of our stockholders during our fiscal
fourth quarter.




PART II




ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

SHARES OF COMMON STOCK RECENTLY ISSUED

In January 2003, we issued 5,642,142 shares of our common stock upon the
conversion of all of our outstanding shares of Series A and Series AA-2
Preferred Stock. In January 2003, we issued 406,250 shares of our common
stock in exchange for cancellation of $324,800 of indebtedness. As of
April 25, 2003, we have 7,029,480 shares of common stock outstanding.

MARKET INFORMATION; HOLDERS OF RECORD

Our common stock was traded on the Nasdaq SmallCap Market through February 20,
2003 under the symbol RVEE. Effective February 21, 2003, our common stock was
delisted from the Nadaq SmallCap Market for failure to meet certain
minimum listing requirements, including shareholders equity.
There is currently no established public trading market for our
common stock. Our
common stock is currently quoted on the pink sheets under the symbol RVEE.PK. As of
April 25, 2003, there were 330 holders of record of our common stock.

The table below gives the high and low closing sale prices for our common stock
for each of the quarters in the fiscal years ended October 31,
2003, 2002 and 2001.
Prices have been adjusted to reflect the 1 for 10 reverse stock split which was
effective August 7, 2002.

|              |  |      |      |      |  |      |      |     |  |      |       |     |  |   |      |  |  |   |       |  |  |   |       | 
|------------- |  | ---- | ---- | ---- |  | ---- | ---- | --- |  | ---- | ----- | --- |  | - | ---- |  |  | - | ----- |  |  | - | ----- | 
|              |  | 2003 |      | 2002 |  | 2001
|              |  |      |      |      |  |     
|QUARTER ENDED |  | HIGH |      | LOW  |  | HIGH |      | LOW |  | HIGH |       | LOW
|              |  |      |      |      |  |      |      |     |  |      |       |    
|January 31    |  | $    | 3.00 |      |  | $    | 0.35 |     |  | $    | 15.00 |     |  | $ | 8.50 |  |  | $ | 44.38 |  |  | $ | 35.63 | 
|April 30      |  |      | 0.38 |      |  |      | 0.02 |     |  |      | 9.50  |     |  |   | 3.00 |  |  |   | 41.88 |  |  |   | 28.80 | 
|July 31       |  |      | 0.18 |      |  |      | 0.02 |     |  |      | 6.50  |     |  |   | 2.30 |  |  |   | 40.00 |  |  |   | 31.00 | 
|October 31    |  |      | N/A  |      |  |      | N/A  |     |  |      | 3.70  |     |  |   | 0.62 |  |  |   | 37.00 |  |  |   | 12.50 | 

DIVIDEND POLICY

We have never declared or paid cash dividends on our common stock, and we do
not anticipate paying cash dividends in the foreseeable future. Under Section
170 of the Delaware General Corporate Law, we are prohibited from paying
dividends due to our lack of surplus or net profits. In addition, our loan
agreement with our lender prohibits us from paying dividends.

Equity Compensation Plans

Holiday maintains the 1999 Stock Option Plan.

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The following table gives information about equity awards under the 1999 Stock
Option Plan as of October 31, 2002:

|                                                           |  |                         |        |                      |  |                         |       |                      |  |  |         | 
|---------------------------------------------------------- |  | ----------------------- | ------ | -------------------- |  | ----------------------- | ----- | -------------------- |  |  | ------- | 
|                                                           |  | Number of Shares        |        |                      |  |                         |       | Number of Securities
|                                                           |  | to be issued upon the   |        | Weighted Average     |  | remaining available for
|                                                           |  | Exercise of Outstanding |        | Exercise Price of    |  | future issuance under  
|                                                           |  | Options, Warrants and   |        | Outstanding Options, |  | Equity Compensation    
|Plan Category                                              |  | Rights                  |        | Warrants and Rights  |  | Plans                  
|                                                           |  |                         |        |                      |  |                        
|Equity Compensation Plans approved by the shareholders     |  |                         | 82,175 |                      |  | $                       | 35.74 |                      |  |  | 217,825 | 
|Equity Compensation Plans not approved by the shareholders |  |                         |       |                      |  |                         |      |                      |  |  |        | 
|                                                           |  |                         |        |                      |  |                         |       |                      |  |  |         | 
|TOTALS                                                     |  |                         | 82,175 |                      |  | $                       | 35.74 |                      |  |  | 217,825 | 
|                                                           |  |                         |        |                      |  |                         |       |                      |  |  |         | 




ITEM 6. SELECTED FINANCIAL DATA

The table below sets forth selected historical financial data. This data
was derived from our audited Consolidated Financial Statements. The selected
historical financial data is qualified in its entirety by, and should be read
in conjunction with, Managements Discussion and Analysis of Financial
Condition and Results of Operations, Business and our Consolidated Financial
Statements, including the related notes to the financial statements.

|                                                            |  |                                           |         |            |  |         |         |      |  |      |         |   |  |   |        |  |  |   |        | 
|----------------------------------------------------------- |  | ----------------------------------------- | ------- | ---------- |  | ------- | ------- | ---- |  | ---- | ------- | - |  | - | ------ |  |  | - | ------ | 
|                                                            |  | FISCAL YEAR ENDED OCTOBER 31,            
|                                                            |  |                                          
|                                                            |  | 2002                                      |         | 2001(1)(3) |  | 2000(2) |         | 1999 |  | 1998
|                                                            |  |                                           |         |            |  |         |         |      |  |     
|                                                            |  | (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
|SELECTED STATEMENT OF OPERATIONS DATA:                      |  |                                           |         |            |  |         |         |      |  |      |         |   |  |   |        |  |  |   |        | 
|Net revenue                                                 |  | $                                         | 77,879  |            |  | $       | 134,089 |      |  | $    | 152,367 |   |  | $ | 81,396 |  |  | $ | 74,294 | 
|Net income (loss)                                           |  | $                                         | (19,062 | )          |  | $       | (18,022 | )    |  | $    | (3,205  | ) |  | $ | 2,154  |  |  | $ | 1,693  | 
|Net income (loss) per common share                          |  | $                                         | (21.52  | )          |  | $       | (22.11  | )    |  | $    | (4.22   | ) |  | $ | 3.00   |  |  | $ | 2.32   | 
|Proforma
amounts assuming SAB 101 is applied retroactively:
|Net income (loss)                                           |  |                                           | N/A     |            |  |         | N/A     |      |  | $    | (4,130  | ) |  | $ | 2,105  |  |  |   | (4)    | 
|Net
income (loss) per common share                          |  |                                           | N/A     |            |  |         | N/A     |      |  | $    | (5.43   | ) |  | $ | 2.88   |  |  |   | (4)    | 

|                                    |  |                   |        |         |  |         |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|----------------------------------- |  | ----------------- | ------ | ------- |  | ------- | ------ | ---- |  | ---- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                    |  | AS OF OCTOBER 31,
|                                    |  |                  
|                                    |  | 2002              |        | 2001(3) |  | 2000(2) |        | 1999 |  | 1998
|                                    |  |                   |        |         |  |         |        |      |  |     
|                                    |  | (IN THOUSANDS)   
|SELECTED BALANCE SHEET DATA:        |  |                   |        |         |  |         |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|Total assets                        |  | $                 | 30,025 |         |  | $       | 56,894 |      |  | $    | 90,186 |  |  | $ | 45,735 |  |  | $ | 37,740 | 
|Long term obligations               |  | $                 | 1,502  |         |  | $       | 8,977  |      |  | $    | 11,691 |  |  | $ | 156    |  |  | $ | 221    | 
|Cash
dividends paid on common stock |  | $                 |       |         |  | $       |       |      |  | $    |       |  |  | $ |       |  |  | $ |       | 



---

|(1) |  | Includes a $2.2 million charge representing effect of a change in
accounting principle. See Managements Discussion and Analysis of
Financial Condition and Results of Operations.                                   
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes 11.5 months of activity for County Line, which we acquired
on November 11, 1999, and eight months of activity for Little Valley,
which we acquired on March 1, 2000. See Note 2 to the financial
statements.
|   
|(3) |  | Includes 12 months of activity of Hall Enterprises, Inc., which we
acquired on October 31, 2000.                                                                                                                     
|   
|(4) |  | The information necessary to
determine the impact of the adoption of SAB 101 on a retroactive
basis is not
available in 1998.                                                                                        

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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward Looking Statements

UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES
TO HOLIDAY, WE, OUR, THE COMPANY AND US IN THIS ANNUAL
REPORT ON FORM 10-K INCLUDES HOLIDAY RV SUPERSTORES, INC., AND ITS
SUBSIDIARIES. THIS ANNUAL REPORT ON FORM 10-K CONTAINS OR MAY CONTAIN
FORWARD-LOOKING STATEMENTS, SUCH AS STATEMENTS REGARDING OUR STRATEGY
AND ANTICIPATED TRENDS IN THE INDUSTRY IN WHICH WE OPERATE. THESE
FORWARD-LOOKING STATEMENTS ARE BASED ON OUR CURRENT EXPECTATIONS AND
ARE SUBJECT TO A NUMBER OF RISKS, UNCERTAINTIES AND ASSUMPTIONS
RELATING TO OUR OPERATIONS AND RESULTS OF OPERATIONS, COMPETITIVE
FACTORS, SHIFTS IN MARKET DEMAND, AND OTHER RISKS AND UNCERTAINTIES,
INCLUDING, IN ADDITION TO THOSE DESCRIBED IN RISK FACTORS ELSEWHERE
IN THIS ANNUAL REPORT ON
FORM 10-K, THE FACT THAT OUR AUDITORS HAVE
EXPRESSED DOUBT CONCERNING OUR ABILITY TO CONTINUE AS A GOING
CONCERN; OUR ABILITY TO OBTAIN AN ADEQUATE FLOOR PLAN FACILITY FOR
FUTURE PURCHASES OF INVENTORY; OUR ABILITY TO SERVICE OUR DEBT,
INCLUDING DEBT DUE ON DEMAND AND DEBT CURRENTLY IN DEFAULT; OUR
ABILITY TO SUCCESSFULLY RESTRUCTURE OUR DEBT ON TERMS ACCEPTABLE TO US
AND TO SERVICE SUCH RESTRUCTURED DEBT; OUR ABILITY TO OBTAIN
ADDITIONAL FINANCING TO MEET OUR OPERATING REQUIREMENTS; THE FACT
THAT OUR MAJORITY STOCKHOLDER, WHO IS ALSO OUR PRIMARY LENDER, HAS
EFFECTIVE CONTROL OF OUR COMPANY; OUR ABILITY TO MAINTAIN GOOD
RELATIONSHIPS WITH OUR VENDORS, ESPECIALLY OUR KEY MANUFACTURER, AND
OUR CUSTOMERS; COMPETITION IN THE RV RETAIL MARKET, INCLUDING PRICING
PRESSURES; AND GENERAL ECONOMIC FACTORS WHICH AFFECT THE RV INDUSTRY.
SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR
SHOULD THE UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY
DIFFER SIGNIFICANTLY FROM RESULTS EXPRESSED OR IMPLIED IN ANY
FORWARD-LOOKING STATEMENTS MADE BY US IN THIS ANNUAL REPORT ON FORM
10-K. WE DO NOT UNDERTAKE ANY OBLIGATION TO REVISE THESE
FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR CIRCUMSTANCES.

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General

Holiday RV Superstores, Inc. is a multi-store chain that retails, finances, and
services recreation vehicles, or RVs, and other recreation vehicles. As of
October 31, 2002, we operated six retail centers, one in central Florida, one
in Spartanburg, South Carolina, one in Bakersfield, California, one in Las
Cruces, New Mexico, one in Prosperity, West Virginia, and one in Lexington,
Kentucky. During the year ended October 31, 2002, we closed and consolidated
four stores located in Florida, one store located in Wytheville, Virginia and
one store located in Ripley, West Virginia. In addition, we also sold our
Roseville, California operations during the year ended October 31, 2002. In
September 2002, we sold the real estate at our Las Cruces, New Mexico
dealership to an affiliate of Mr. Adams and leased it back in
order to pay down our loan from Bank of America.
In December 2002, we sold our dealership in Bakersfield, California to pay
down our loan from Bank of America. In March 2003, we sold our dealership in
Spartanburg, South Carolina due to our inability to finance
inventory, to resolve certain covenant violations within our mortgage and to
curtail the losses from that dealership. In April 2003, we sold our dealership
in Las Cruces, New Mexico due to our inability to finance inventory. Currently
we operate three retail locations. We operate on a fiscal year
beginning on the first day of November and ending on the last day of October.

See discussion in Note 2 of the consolidated
financial statements, Basis of Presentation, and in the Liquidity and
Capital Resources section concerning substantial doubts about our ability to
continue as a going concern.

Our primary focus in fiscal 2000 was on acquiring RV and
marine dealerships in key geographic markets with
strong demographics. The plan was to take these acquisitions and improve their performance and
profitability by implementing our operating strategies. Our rapid growth during
this period coupled with a downturn in the general state of the economy,
resulted in significant reductions in our working capital and an immediate
deterioration in our results of operations caused by insufficient levels of
working capital. In fiscal 2001, our primary strategy focused on integrating
the acquired dealerships into our corporate structure, reducing our inventory
turnover rates to comply with dollar limits imposed by our primary floor plan
lender, reducing expenditures and closing unprofitable locations. Our
performance in late fiscal 2001 and through fiscal 2002, reflected a
reevaluation of our business from all aspects. During fiscal 2002, our focus
was on the right sizing of our company, while continuing to deleverage our
balance sheet.

Effective November 1, 2000, we changed our revenue recognition policy related
to commissions we earn for placing retail financing contracts with indirect
lending institutions in connection with customer vehicle and marine purchases
and customer purchases of credit life insurance products to defer these
commissions until the chargeback period has lapsed. Also effective November 1,
2000, we changed our revenue recognition policy related to commissions earned
on the sale of administrator obligor extended warranty and service contracts to
defer recognition of the commissions until the 100% chargeback period has
lapsed and to recognize revenue ratably over the remaining life of the contract
as commissions are earned and not subject to chargeback. This change was made
in accordance with the implementation of the U.S. Securities and Exchange
Commission Staff Accounting Bulletin No. 101, Revenue Recognition in Financial
Statements (SAB 101). The effect of this change is reported as the cumulative
effect of a change in accounting principle in the year ended October 31, 2001.
The net effect reflects the deferral as of November 1, 2000 of approximately
$2.2 million of revenue net of chargebacks previously recognized.

RESULTS OF OPERATIONS

In the following table, we have summarized for the periods presented, certain selected financial
statement data (in millions):

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|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|------------------------------------------------------------------------------------------------ |  | ----------------------------- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                                                                                 |  | FISCAL YEAR ENDED OCTOBER 31,
|                                                                                                 |  |                              
|                                                                                                 |  | 2002                          |       | 2001 |  | 2000
|                                                                                                 |  |                               |       |      |  |     
|Total revenue                                                                                    |  | $                             | 77.9  |      |  | $    | 134.1 |   |  | $ | 152.4 |  
|Cost of sales                                                                                    |  |                               | 67.2  |      |  |      | 115.7 |   |  |   | 127.4 |  
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Gross profit                                                                                     |  |                               | 10.7  |      |  |      | 18.4  |   |  |   | 25.0  |  
|Selling, general and administrative expense                                                      |  |                               | 18.6  |      |  |      | 26.8  |   |  |   | 25.0  |  
|Marketing expense                                                                                |  |                               | 1.5   |      |  |      |      |   |  |   |      |  
|Goodwill impairment                                                                              |  |                               | 4.8   |      |  |      | 1.6   |   |  |   |      |  
|Loss on the sale of fixed assets                                                                 |  |                               | 0.6   |      |  |      | 0.1   |   |  |   |      |  
|GoodSam Endorsement impairment                                                                   |  |                               | 1.3   |      |  |      |      |   |  |   |      |  
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Loss from operations                                                                             |  |                               | (16.1 | )    |  |      | (10.0 | ) |  |   |      |  
|Interest expense, net                                                                            |  |                               | 4.6   |      |  |      | 4.6   |   |  |   | 5.0   |  
|Loss on debt conversion                                                                          |  |                               | 0.2   |      |  |      | 1.5   |   |  |   |      |  
|Gain on insurance recovery                                                                       |  |                               |      |      |  |      | (0.4  | ) |  |   |      |  
|Income tax benefit                                                                               |  |                               | (1.8  | )    |  |      | (0.1  | ) |  |   | (1.8  | )
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Net loss before cumulative effect of a change in
accounting principle                            |  |                               | (19.1 | )    |  |      | (15.9 | ) |  |   | (3.2  | )
|Cumulative effect on prior years as of November 1, 2000
related to the implementation of SAB 101 |  |                               |      |      |  |      | (2.2  | ) |  |   |      |  
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Net loss                                                                                         |  | $                             | (19.1 | )    |  | $    | (18.1 | ) |  | $ | (3.2  | )
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Number of stores at end of period                                                                |  |                               | 6     |      |  |      | 12    |   |  |   | 14    |  
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  

RESULTS OF OPERATIONS FOR FISCAL 2002 COMPARED TO FISCAL 2001

Sales and service revenue decreased $56.2 million or 41.9% to $77.9 million for
fiscal 2002 from $134.1 for fiscal 2001. Of the decrease for fiscal 2002
compared to fiscal 2001, $6.4 million was attributable to a 9.7% decrease in same
store sales. This decrease was primarily the result of limited inventory levels
and mix resulting from the Companys reduced floor plan capacity coupled with the
factors discussed below. Net store closures during fiscal 2001 and fiscal 2002
represented a decrease in revenues of $37.8 million for fiscal 2002. In
addition, $12.0 million of the decrease is attributable to the closure of our
Clermont location for most of 2002. This location, which was damaged by fire in
April 2001, was under reconstruction and re-opened in September 2002. Used unit
sales as a percentage of total unit sales increased to 27.1% for fiscal 2002,
compared to 24.1% for fiscal 2001. New unit sales decreased for fiscal 2002 to
$47.2 million, or 60.6% of total unit sales, from $75.9 million, or 56.5% of
total unit sales for fiscal 2001. New vehicle sales have been adversely
affected by the reduction in available inventory due to our limited floor plan
financing in fiscal 2002.

The decline in comparable store sales was primarily the result of the following
factors:

Internal management initiatives.Beginning in the second quarter of fiscal
2001, we began a concentrated program to reduce aged and overstocked inventory
by reducing selling prices, lowering inventory at all locations to increase
inventory turnover and restocking inventory based on local market demand at
each dealership. We also focused on changing our product mix to include less
expensive new models, and more used RVs to the extent our floor plan
financing would permit, which have a higher gross profit. We
believe that lower priced used vehicles are more desirable in a weak economy
characterized by declining consumer confidence. In addition, in the last 45
days of fiscal year 2001 and the beginning of fiscal year 2002, we focused on
store performance by closing four dealerships we believed were not performing
at levels sufficient to justify their continued operation or were in markets
where we had multiple locations.

Financial constraints.Our ability to maintain what we believe is a desirable
mix between new and used products has been hampered by reductions in our
available floor plan credit line and the time required to sell aged inventory,
which is not eligible for floor plan funding, and overstocked inventory. In
addition, we have not had sufficient capital to satisfy all of our
working capital requirements. This dramatically

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limits our ability to meet our business
objectives and fully exploit our markets in any economic environment.

Parts and services revenue decreased $3.6 million, or 35.6%, to approximately
$6.5 million for fiscal 2002, compared to $10.1 million for fiscal 2001. While
same store parts and service sales increased $2.5 million, parts and services
revenue decreased $3.6 million, due to net store closures made during fiscal
2001 and fiscal 2002 coupled with our Clermont store not being operational for
most of 2002 while under reconstruction from fire damage sustained in April
2001.

Net revenue from finance and insurance products and other sources decreased
$0.8 million, or 25.0%, to $2.4 million for fiscal 2002 from $3.2 million for
fiscal 2001. The decrease is directly related to our decrease in new and used
RV and marine product sales and charge backs relating to closed stores.
Effective November 1, 2000, we changed our revenue recognition policy by
adopting SAB 101, which defers recognizing revenue on commissions received from
placing indirect retail installment contracts with indirect lenders, fees
generated from the sale of credit life insurance and extended warranty
contracts. As of October 31, 2002 and 2001, the amounts deferred relating to
these commissions and fees were $2.0 million and $2.7 million, respectively.
Accordingly, for the fiscal year ended October 31, 2002, we recognized earned
revenue from this change in the amount of $0.7 million.

Total gross profit decreased $7.7 million, or 41.8%, to $10.7 million for
fiscal 2002 from $18.4 million for fiscal 2001. Same store gross profit
increased $1.8 million, or 22.8%, to $9.7 million for fiscal 2002 compared to
$7.9 million for fiscal 2001. This increase was more than offset by the lost
volume attributable to store closures made in fiscal 2001 and fiscal 2002
coupled with the temporary closure of our Clermont location. Also negatively
impacting gross profit during fiscal 2002, we recorded charges totaling $2.3
million to write down certain older new and used vehicles, a significant
portion of which originated at closed facilities, to their fair market value.
Additionally, a charge of $0.8 million was taken for excess parts inventory.
This excess was created when part inventories, from closed stores, were
consolidated to existing open stores which resulted in fewer sales points.
Gross margin as a percent of sales would have increased to 17.7%, were it not
for the previously discussed charges of $3.1 million, from 13.7% due to product
mix.

Parts and services gross profit decreased $0.4 million, or 9.8%, to $3.7
million for fiscal 2002 from $4.1 million in fiscal 2001. Same store gross
profit increased $1.2 million, or 52.2% to $3.5 million for fiscal 2002 from
$2.3 million in fiscal 2001. The increase in same store gross profit was offset
by a charge of $0.8 million to write down certain parts. The
charge was attributed to the Company determining that its parts inventory became overstocked
due to fewer selling points that resulted from the closing and
consolidation of stores. This created a longer shelf life for the inventory
causing some parts to become obsolete. The parts inventory therefore was
adjusted to market value creating a charge of $0.8 million. Additionally, 2002
parts and service gross profit was negatively impacted by net store closures
made during fiscal 2001 and 2002 and our temporary out of service Clermont
location.

Net revenue from finance and insurance and other products contributed 22.1% of
total gross profit in fiscal 2002 compared to 17.5% in fiscal 2001.

Selling, general and administrative expenses decreased $8.2 million, or 30.6%,
to $18.6 million for fiscal 2002 from $26.8 million for fiscal 2001. On a same
store basis, selling, general and administrative expenses were $13.9 million
for fiscal 2002, compared to $14.6 million for fiscal 2001. Included in
selling, general and administrative expenses for fiscal 2002 are charges for
legal of $0.3 million associated with the preparation of certain of our SEC
filings and a charge of $0.2 million for carrying costs related to closed
stores.

Selling, general and administrative expenses relating to closed stores was $4.7
million for fiscal 2002 compared to $12.2 million for fiscal 2001. Personnel
expenses decreased 39.5% or approximately $6.4 million to $9.8 million for
fiscal 2002 and represented 50.3% of expenses for fiscal 2002, compared to
60.4% for fiscal 2001 as a result of personnel reductions. Total selling,
general and administrative expenses as a percent of revenue increased to 23.9%
from 20.2% due to decreased revenue during
fiscal 2002 at our stores, which have fixed cost structures intended
for higher levels of revenue.

During July 2002, as a result of the passage of
time and our inability to secure an adequate floor plan credit
facility, we performed a detailed analysis of the realizability of our
unamortized goodwill. In July 2002, we decided to close and consolidate one of our dealerships. The
unamortized goodwill relating to that dealership was $0.9 million and deemed to
be not realizable. Accordingly, we recorded a non-cash charge to write off the
unamortized balance. We have reassessed the realizability of the goodwill
associated with a dealership acquired in March 2000. As of July 2002, this
dealership had completed three selling seasons and had not been able
to demonstrate that it could generate sufficient cash flows to recover the
unamortized goodwill of $1.6 million related to the store. Based
on its historical performance, we did not believe that this goodwill would be recoverable. Accordingly, we
recorded a non-cash charge to write off the unamortized balance. Additionally,
we have reassessed the realizability of the goodwill associated with
a dealership acquired in November 2000. As of July 2002, this dealership had

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completed
two selling seasons and had not been able to demonstrate
that it could generate sufficient cash flows to recover the unamortized
goodwill of $0.6 related to the store. Based on its historical
performance, we did not believe that this goodwill would be recoverable. Accordingly, we recorded a
non-cash charge to write off the unamortized balance. Finally, in July 2002, we
reassessed the recoverability of the unamortized goodwill associated with a
facility that was previously destroyed by fire. It was our expectation to have
the facility repaired and placed back in service within several months. Due to
delays in construction, the reopening was significantly postponed. Due to the
significant delay of reopening the dealership and the resulting loss of
competitive advantage in the marketplace, we determined that the unamortized
balance of the goodwill of $1.6 million would not be realizable. Accordingly,
we recorded a non-cash charge to write off the unamortized goodwill balances
from the respective stores, as listed above, in the amount of $4.7 million.

The marketing expense of $1.5 million represents the difference between the
fair value of the units of preferred stock and warrants sold to a potential
business partner, Affinity Group, a company controlled by
Mr. Adams (see Note 9 to the consolidated financial
statements), over the cash proceeds received (see Notes 13 and 14 to the
consolidated financial statements) net of the impact of periodically
remeasuring the fair value of the warrant liability component of the units
sold. The charge is required because on the date of the issuances of these
shares in January 2002 and March 2002 and the origination of the
convertible loan in March 2002, we were in discussion with, and have
since developed a business relationship with, a company controlled by
Mr. Adams, our majority stockholder and then majority holder of the Series A preferred stock and Series AA preferred stock.

In March 2002, we entered into an endorsement agreement with Affinity Group,
Inc., a company controlled by Mr. Adams, our majority stockholder (see Note 9 to the consolidated financial statements). The agreement
grants us a non-exclusive right to use Affinitys Good Sam name and logo,
including trade names of all of Affinitys service marks in connection with the
sales and service of our products for a period of three years. With
the proceeds from the Series AA Preferred Stock, we paid
Affinity a one-time fee of $1.5 million for the license in March 2002. From
the inception date of the agreement, we amortized the
agreement cost on a straight-line basis over the agreements three-year term.
Amortization expense, which is included in selling, general and administrative,
for the year ended October 31, 2002 was $241,668. During fiscal 2002, we
re-assessed the realizability of the costs associated with the Good Sam
endorsement agreement. At the time the agreement was consummated, we were
operating 10 dealerships and we anticipated we would recover
the agreement costs through benefits derived at
all 10 dealerships. During 2002, we closed four dealerships and sold
another and at October 31,
2002, due to our inability to obtain sufficient inventory, we anticipated the
possibility of closing or selling additional dealerships. As a result of the closures,
anticipated closures and our financial condition and its related impact on our
potential ability to realize the value of this asset in the future, we recorded
an impairment charge of $1.3 million to write off the remaining unamortized
balance.

Loss from operations for fiscal 2002 was $19.0 million compared to operating
losses of $10.0 million for fiscal 2001. This was primarily the result of the
activities described above.

Interest expense remained constant at
$4.6 million for fiscal 2002 and 2001. Interest expense included
a charge of $1.6 million relating to the deemed beneficial value of
conversion features included in our convertible note payable (see
Note 12 to the consolidated financial statements). Excluding this
charge, interest would have decreased $1.6 million primarily due to reductions in
floor plan financing resulting from our reduced floor plan facility
and store closures, despite an
increase in our floor plan interest rates.

Note conversion expense of $0.2 million for fiscal 2002 is the result of
converting $0.3 million of a certain bridge financing and a demand loan into
common stock, including accrued interest, from an affiliate of a former
director and a former officer/director of ours at a per share conversion price
of $6.00. The market price of our common stock at the conversion date was
$9.50. We issued 47,938 shares under the terms of the conversion. Only 30,277
shares would have been issued at the market price. The market value of the
additional 17,662 shares issued is recorded as a non-cash note conversion
expense. Note conversion expense of $1.5 million for fiscal 2001, was the
result of a required non-cash expense in connection with the April 2001
conversions of seller notes into shares of the our common stock. Seller notes
with a principal balance of approximately $3.2 million were converted into
91,200 shares of common stock valued at approximately $2.7 million ($0.5
million less than the carrying value of the debt). Since the terms of the
conversion were the result of a modification of the original conversion terms
that would have called for share issuance at a fixed price of $75.00 per share,
or 43,092 shares, we were required under SFAS No. 84, Induced Conversions of
Convertible Debt, to record this non-cash expense equal to the fair
value of the incremental shares (48,108) issued.

We recorded an income tax benefit of $1.8 million in fiscal 2002 compared to a
benefit of $0.1 million recorded for fiscal 2001. As a result of the change
in tax law, we were able to carry back net operating losses, which were fully
reserved with a valuation allowance. Accordingly, we recorded an income tax
benefit of $1.7 million to reflect the change in our tax valuation allowance.
The remaining income tax benefit in fiscal 2002 relates to the utilization of
certain state taxable losses.

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In fiscal 2001, we recorded a $2.2 million charge for the cumulative effect of
a change in accounting principle resulting from the change in our revenue
recognition policy from adopting SAB 101, which defers recognizing revenue on
commissions received from placing indirect retail installment contracts with
indirect lenders and fees generated from the sale of credit life insurance and
also defers recognizing revenue from administrator obligor extended warranty
and service contracts until the 100% chargeback period has lapsed.

RESULTS OF OPERATIONS FOR FISCAL 2001 COMPARED TO FISCAL 2000

Sales and service revenue decreased 12.0% to $134.1 million in fiscal 2001 from
$152.4 million in fiscal 2000. Of this decrease, $33.7 million was attributable
to a 23.2% decrease in same store sales, partially offset by the effect of
acquired stores. Used vehicle sales as a percentage of total vehicle sales
increased to 33.1% in fiscal year 2001 compared to 32.9% in fiscal year 2000.
Used vehicle sales result in approximately 2.1% higher gross profits than new
units on average. New RV and marine product sales decreased in fiscal 2001 to
$75.9 million, or 56.5% of total RV and marine product sales, from $97.6
million, or 64.0% of total RV and marine product sales in fiscal 2000. Although
new vehicle sales may have been adversely affected by the reduction in
available inventory, management believes that its prior inventory levels were
principally overstocked.

The decline in comparable store sales was primarily the result of internal
management initiatives and financial constraints consistent with those
previously discussed in the Results of Operations for the Fiscal 2002 Compared
to Fiscal 2001. Additionally, we believe that declining consumer confidence
and the slower economic environment played a significant role in the overall
decrease in recreation vehicle and marine product revenue for fiscal 2001.

Parts and services revenue increased $0.8 million, or 9.0%, to approximately
$10 million in fiscal 2001 from $9.2 million in fiscal 2000. While same store
sales decreased $0.9 million, or 6.8%, acquired or newly opened stores offset
this decrease. Although there was a downturn in our overall business and we
were constrained by our limited working capital, we emphasized our parts and
service business, which contributed, positively to our performance.

Net revenue from finance and insurance products and other sources decreased
$1.5 million, or 30.1%, to $3.5 million from $5.0 million in the prior fiscal
year. Of this decrease, $2.3 million was attributable to a 53.8% decrease in
same store sales partially offset by net revenue generated from acquired or
newly opened stores. The overall decrease in fiscal 2001 is directly related to
our decrease in new and used RV and marine product sales. Effective November 1,
2000, we changed our revenue recognition policy by adopting SAB 101, which
defers recognizing revenue on commissions received from placing indirect retail
installment contracts with indirect lenders and fees generated from the sale of
credit life insurance. The cumulative adjustment required to record the
accounting change is separately recorded as a charge before net income in the
consolidated statement of operations. The net effect of this change in the
revenue recorded in fiscal 2001 from finance and insurance products was
additional revenue of $0.1 million.

Total gross profit decreased $6.6 million to $18.4 million, or 26.4% in fiscal
2001 from $25.0 million in 2000, primarily due to a 24.9% decrease in same
store gross profit, partially offset by gross profit from the newly acquired
dealerships in fiscal 2000. The decrease in actual dollars and as a percent of
revenue was primarily related to a reduction in overstocked and aged inventory
which we accomplished by reducing retail prices to increase sales of aged units
and through additional inventory reserves based on inventory aging,
reassessment of wholesale market value and salability, historical sales
activity and the condition of the merchandise as of October 31, 2001. These
efforts resulted in a fourth quarter charge of $2.3 million. In addition to
marking down inventory, which we believe created value for our customers; we
provided incentives to our sales force to achieve our inventory objectives.
Although these initiatives impacted gross profit, we successfully reduced new
and used RV and marine product inventories by $24.6 million, or 42.7%.

Parts and services gross profit decreased $0.1 million, or 2.4%, to $4.1
million from $4.2 million in fiscal 2000. Same store gross profit decreased
$0.5 million, or 7.9%, partially offset by the effect of the acquired stores.
In addition, all parts and accessory inventory was reviewed and valued based on
sales history, aging, condition of merchandise and applicability to the markets
we service. As a result, our reserve for obsolescence increased by $0.5 million
in fiscal 2001.

Net revenue from finance and insurance and other
products contributed 17.5% of
total gross profit in fiscal 2001 compared to 19.9% in fiscal 2000.

Selling, general and administrative expenses increased 7.2%, or approximately
$1.8 million, in fiscal 2001 to $26.8 million from $25.0 million in fiscal 2000.
On a same store basis, selling, general and administrative expenses decreased
$0.3 million, or 1.7%, to $17.0 million in fiscal 2001 compared to $17.3 million
in fiscal 2000. Acquisitions and new store openings represent an additional
expense of $4.3 million in fiscal 2001. All other expenses were $5.5 million,
including an expense of $1.6 million for common stock issued to a financial consultant as

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compensation for services.
Personnel related expenses remained essentially unchanged, and represented
54.3% of expenses in fiscal 2001, compared to 59.3% in fiscal 2000. Total
selling, general and administrative expenses as a percent of revenue increased
to 20.0% from 16.4% due to decreased revenue and increased charges incurred in
fiscal 2001.

In the fourth quarter of fiscal 2001, we recorded a charge of $1.6 million
representing impaired goodwill for two closed stores. We concluded that
operating one larger dealership in a geographic market, rather than three
smaller dealerships in the same market, would improve performance in that
market, and positively impact the performance of our dealerships in surrounding
markets.

Loss from operations in fiscal 2001 was $10.0 million compared to near
break-even operations for fiscal 2000. This was primarily the result of the
activities described above.

Interest expense decreased 8.0% to $4.6 million in fiscal 2001 from $5.0
million in fiscal 2000. The decrease was primarily due to reductions in floor
plan financing as a result of decreased inventory levels.

In fiscal year 2001, we recorded a gain of $0.4 million from an insurance
recovery on the Clermont, Florida property damaged in a fire.

Debt conversion expense of $1.5 million was charged in fiscal 2001 in
connection with the conversion of seller notes into shares of our common stock.
Seller notes with a principal balance of approximately $3.2 million were
converted into 91,200 shares of common stock valued at approximately $2.7
million, or $0.5 million less than the carrying value of the debt. Since the
terms of the conversion were the result of a modification of the original
conversion terms that would have called for share issuance at a fixed price of
$75.00 per share, or 43,092 shares, we were required under SFAS No. 84,
Induced Conversions of Convertible Debt, to record this non-cash expense
equal to the fair value of the incremental shares (48,107) issued.

An income tax benefit of $0.1 million was recorded in fiscal 2001. Most all of
the tax benefits created from 2001 loss carry backs to income years were offset
by a valuation allowance established to reduce previously recognized deferred
tax assets due to uncertainty about their realization. In fiscal 2000, we recorded an income tax benefit of $1.8
million. We received a tax refund of approximately $1.4 million in fiscal 2001
for a carry back of net operating loss.

LIQUIDITY AND CAPITAL RESOURCES

During 2002, we were unable to internally generate sufficient cash
flows to fund our operations or meet our mandatory debt service
payments, including those required by our primary floor plan facility.
We relied primarily on
the issuance of mandatorily redeemable preferred stock
($3.3 million net of costs), proceeds from loans ($4.3 million) and proceeds from the sales of real
property ($1.8 million net of costs) to generate the necessary cash to meet our operating and debt service requirements. We have been
unsuccessful since those transactions in raising additional capital
except from Mr. Adams, our now majority stockholder, who is also our primary lender.

Cash flows from operations. Cash flows from operations used cash of $8.9 million in fiscal 2002 compared to
a use of $2.5 million in fiscal 2001. During the fiscal year ended October 31,
2002, our cash flows decreased primarily due to a $19.1 million net loss. Cash
of $19.0 million was used during the fiscal year to repay our floor plan
lenders. Additionally cash of $1.5 million from the sale of the
Series AA Preferred Stock was used to purchase the Good Sam
endorsement agreement. Total inventory was reduced $13.1 million and we also
received $2.3 million in cash for an income tax refund that resulted from our
net operating loss carry back, which partially offset the reduction in cash flow
from the net operating loss.

Cash flows from investing. Investing
activities provided net cash of $1.3
million as compared to a use of $0.5 million in the previous fiscal year. The
increase in cash provided by investing activities in fiscal 2002 is primarily
due to our emphasis on selling certain assets and utilizing the proceeds to pay
down our floor plan credit facility. During fiscal 2002, we sold for $1.0
million real property located in Tampa, Florida, which previously housed a
store that we closed in fiscal 2001. In addition to the real
property sales, we liquidated $0.5 million of certificates of deposit, which
were classified as restricted cash, and used the proceeds to pay down our floor
plan credit facility. In fiscal year 2001, we invested $1 million in
restricted cash to support our floor plan agreement with our primary lender and
$0.1 million to support other obligations. The 2001 investments were partially
offset by proceeds received of $0.6 relating to a casualty gain.

Cash flows from financing. Financing
activities provided net cash of $7.5
million as compared to $0.9 million in fiscal 2001. In fiscal 2002, the net
cash provided by financing activities is primarily attributable to our raising
$3.3 million, net of costs, through the issuance of
Series A and Series AA Preferred
Stock and an additional $4.6 million through short term
financing. We also executed a sale and lease back
transaction on the real property at our Las Cruces store. The sale and lease
back transaction generated cash of $0.8 million which was used
to pay down our floor plan credit facility. The proceeds generated from these transactions were partially

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offset by payments
made on various notes and mortgages. We raised $2.0 million in fiscal 2001
through additional short-term bridge loans, some of which were repaid in 2001.

Net use of cash from all activities was $0.1 million, which reduced cash and
cash equivalents to zero.

Working capital. Working capital decreased
to $(10.4) million from $(1.4)
million in the prior year, primarily due to the loss from operations, an
increase in short term notes payable and a reduction in inventory at reduced
margins.

Capital expenditures. Generally, all major capital projects are discretionary
in nature and no material commitments currently exist.

Contractual Obligations. Our obligations and commitments to make future payments under contracts consist
principally of our floor plan financing, long-term debt payable, mandatorily
redeemable preferred stock and capital and operating lease commitments. The
following table sets forth our contractual commitments as of October 31, 2002:

|                                       |       |       |            |            |  |           |            |            |  |               |           |           |  |   |         |           |  |   |           |           | 
|-------------------------------------- | ----- | ----- | ---------- | ---------- |  | --------- | ---------- | ---------- |  | ------------- | --------- | --------- |  | - | ------- | --------- |  | - | --------- | --------- | 
|                                       |       |       |            |            |  |           | Less Than  |            |  |               |           |           |  |   |         |           |  |   |          
|Contractual Obligation                 |       | Total |            | One Year   |  | 1-3 Years |            | 4-5 Years  |  | After 5 years
|                                       |       |       |            |            |  |           |            |            |  |              
|Floor Plan Financing                   |       | $     | 18,764,428 |            |  | $         | 18,764,428 |            |  | $             |          |           |  | $ |        |           |  | $ |          |          
|Long Term Debt                         |       |       | 12,313,565 |            |  |           | 12,107,088 |            |  |               | 179,333   |           |  |   | 27,144  |           |  |   |          |          
|Mandatorily Redeemable
Preferred Stock |       |       | 4,628,741  |            |  |           |           |            |  |               |          |           |  |   |        |           |  |   | 4,628,741 |          
|Capital Leases                         |       |       | 401,599    |            |  |           | 80,586     |            |  |               | 173,053   |           |  |   | 147,960 |           |  |   |          |          
|Operating Leases                       |       |       | 5,657,734  |            |  |           | 961,847    |            |  |               | 1,789,080 |           |  |   | 903,718 |           |  |   | 2,008,089 |          
|                                       |       |       |            |            |  |           |            |            |  |               |           |           |  |   |         |           |  |   |           |          
|                                       | Total |       | $          | 41,766,067 |  |           | $          | 31,913,949 |  |               | $         | 2,136,466 |  |   | $       | 1,078,822 |  |   | $         | 6,636,830 | 
|                                       |       |       |            |            |  |           |            |            |  |               |           |           |  |   |         |           |  |   |           |          

In January 2003, the holders of the mandatorily redeemable preferred stock
agreed to convert their preferred stock into 5,645,162 shares of our common
stock. Upon the conversion of the preferred stock, deemed dividends of $0.9
million (see notes 13, 14 and 22 to the consolidated financial statements) were
credited back to additional paid in capital. Any and all unpaid dividends on
the date of conversion were reclassified to other current liabilities.

During fiscal 2002 we financed substantially all new and used inventories
through floor plan financing arrangements with one primary and several smaller
lenders. These financing agreements generally require that substantially all
new and used vehicles and marine products held in inventory be pledged as
collateral. Advances become due upon sale of the related vehicle or marine
product or as the related item ages beyond the allowable finance period.

Our floor plan agreement with our primary lender expired on October 31, 2001.
Subsequently, we continued to negotiate a new agreement, executing a
forbearance and amendment to the expired agreement through January 23, 2002
while negotiations continued. The primary floor plan lender continued the
forbearance through March 15, 2002 at which time we executed an amendment to
the expired agreement which extended the credit facility through October 31,
2002 essentially under the same terms, lowering the maximum borrowing to $20.0
million and adjusting the financial covenants based on our fiscal 2002 business
plan. The maximum borrowing was reduced again to $19.0 million in May 2002 as a
result of our sale of our Tampa property, which served as collateral for the
floor plan with our primary lender. The maximum borrowing was further reduced
to $18.2 million in September 2002 as a result of our sale of our Las Cruces
property, which also served as collateral for the floor plan. On November 14,
2002, we executed an amendment to our floor plan which expired October 31,
2002. Pursuant to the amendment, until December 13, 2002, our primary lender
agreed to refrain from exercising any rights and remedies available under the
expired amendment. Also pursuant to the amendment, we paid down the amount
owed our primary lender by $4.8 million, to $11.8 million as of November 13,
2002. The amount available for borrowing under the amendment was also reduced
from $18.2 million to $13.4 million. In connection with executing the
amendment, Mr. Adams, our now majority stockholder, issued a commitment to our primary lender to
acquire our debt owed to them on or before December 12, 2002. In addition to
providing a commitment, Mr. Adams provided $4.3 million of additional
advances to us, which we used to make a portion of the $4.8 million pay down.
Of the $4.3 million of additional advances by Mr. Adams, $1.0 million was a secured convertible loan
pursuant to the March 20, 2002 loan agreement with AGHI, a
company owned by Mr. Adams (see below). The remaining $3.3 million advance was made by AGI Holding
Corp., a company owned by Mr. Adams, for a term of two years and at an interest rate of 12.75%,
payable monthly. The $3.3 million loan is convertible into shares of our common stock at a price of $1.99
per share and is secured by all of our assets. On December 13,
2002, a company owned by Mr. Adams acquired our floor plan from
our primary floor plan lender for $7.8 million, making Mr. Adams also our primary lender. Subsequent to the acquisition of our floor plan by
a company owned by Mr. Adams, the $3.3 million advance was added to the outstanding floor plan balance
under the provisions of the floor plan agreement.
Upon Mr. Adams purchase of our loan from our
primary lender, we were obligated to enter into an additional amendment to our
primary floor plan agreement whereby the maturity date was extended to November
15, 2004, there would be no further advances under the floor plan and the
interest rate was changed to 12.75% per annum, payable monthly. On January 14,
2003, we executed a supplemental amendment to our floor plan. Pursuant to
the supplemental amendment, Mr. Adams advanced an additional $1.3 million for the
purpose of allowing us to pay certain indebtedness. Additionally, pursuant to
the supplemental amendment, we are obligated to reduce the principal amount of
the debt owed under our floor plan agreement to $3.5 million from the proceeds
of sales of certain inventory and certain other assets owned by us and we acknowledged and agreed that the entire loan was due on demand. After the $1.3
million advance and

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the additional $3.3 million advance previously discussed,
we owed approximately $12.3 million under our floor plan agreement, which is
due and payable on demand. Subsequent to January 14, 2003, we sold our
Spartanburg operations, certain inventory specified under the supplemental
amendment and our Las Cruces, New Mexico operations. The proceeds from
these sales have been used to reduce our outstanding floor plan balance. As of
April 25, 2003, the balance outstanding on our floor plan is $5.8 million.

We have a separate floor plan facility at the Prosperity, West Virginia
dealership with a $5.0 million commitment level and $1.8 million outstanding on
the facility as of October 31, 2002. The lender previously requested additional
security for the facility and had temporarily suspended the facility. As of
October 31, 2002, we were not required to provide any additional security and
the facility was no longer suspended. However, there can be no assurance that
the lender will not request the additional security and suspend and/or call the
loan.

We have negotiated an arrangement with one of our floor plan providers that
requested to be paid down in February 2001 because of our less than acceptable
performance under its floor plan agreement and because the provider
subsequently exited the business of providing floor plan financing to RV
dealers. On August 26, 2002, we entered into a two year term note for $0.3
million which is net of an initial payment of $0.1 million, which was due
September 2002. As of April 25, 2003, we had paid substantially all of the
initial $0.1 million payment which was due in September 2002. The note is
payable in equal monthly installments beginning in September 2002, bears
interest at a rate of prime plus 5% and is due in September 2004. As of
October 31, 2002, the remaining outstanding balance on the term note was $0.3
million. As of October 31, 2002 there was a remaining balance of $0.1 million
still outstanding on the floor plan that was not converted to the previously
mentioned term note. We concluded the pay down of the remaining
floor plan in May 2003.

On March 20, 2002, AGHI, an affiliate of
Mr. Adams, our
now majority stockholder, loaned us $1.6 million in the form of a one-year
term loan. The loan is convertible into shares of our common stock,
upon receipt of a stockholder approval which was received on
June 21, 2002, at a price equal to the lower of $5.00 per share
or the closing price for our shares of common stock on the trading
day prior to the issuance date of the shares of common stock subject
to conversion. The loan has an interest rate of 20%, payable monthly, half of which
may be paid in stock at the discretion of our board of directors. If certain
specified events of default occur, as defined in the loan agreement, the lender
may declare the principle and interest payable immediately and the interest
rate increases to 25%. We are currently in default and the loan has
matured. While we have not received any communication from the
lender regarding its intention to require prepayment of the note, we are
currently not in the financial position to prepay the note if requested. As of October 31, 2002, the interest rate on the note was
25%, as we had not paid the interest due for the months of June 2002 and
October 2002. We paid a $50,000 origination fee, which is included in the
note. The loan also calls for us to pay a fee equal to 10% of the loan balance
91 days and 181 days from origination. This fee can be paid in the form of
stock with approval from our board of directors. Such fees have not been paid;
however, we have accrued a liability for them. The loan is secured by a lien
against our assets. Additionally, our stockholders approved the issuance of a
warrant to purchase 180,000 shares of our common stock at an exercise price of
$5.00 per share. During the period from September 2002 through November 2002,
AGHI amended this term loan and advanced us an additional $3.5 million. The
term loan matured on March 18, 2003 and the entire balance of $5.1 million plus
accrued interest is due upon demand.

Going Concern. As of April 25, 2003, we
have $17.6 million of collateralized debt,
which is due upon demand or in default. Should our lenders, which includes $10.9 million due Mr. Adams, also our majority stockholder, demand immediate payment of these
amounts, we would be unable to meet our obligations there under. We have also
incurred net losses of $19.1 million, $18.0 million and $3.2 million for the
years ended October 31, 2002, 2001 and 2000, respectively, and incurred net
cash outflows from operations of approximately $8.9 million, $2.5 million and
$0.6 million, respectively. These circumstances raise substantial doubt about
our ability to continue as a going concern. We have been unsuccessful
in our attempts to obtain an adequate floor plan facility. All of the
debt of our primary lender is due upon demand or in default and we
have been unsuccessful in our requests to our primary lender to
restructure the debt and to permit additional advances. Without
additional financing, we believe that our alternatives are limited to
continuing to sell our inventory, without the ability to replenish
our inventory, close or sell our remaining retail stores, reduce our
corporate overhead or file for bankruptcy. We believe that corporate
overhead can be reduced only on a limited basis while we continue as a
reporting company under the Securities Exchange Act of 1934.
Failure to raise additional capital and obtain an adequate floor plan credit facility would have a material adverse
effect on us and raises substantial doubt about our ability to
continue as a going concern.

Inflation. If inflation occurs in the general economy, the cost of our
inventory could increase and interest rates paid by us or our customers could
increase. We believe that increases in the cost of new RVs and marine products
purchased from our manufacturers can generally be passed on to consumers,
although there may be a lag in our ability to pass such increases on to our
customers. Historically, increases in operating costs are passed on to the
consumer when the market allows. We believe that our business has not been
significantly affected by past inflation, despite increased chassis and
manufacturer conversion costs. However, significant increases in interest rates
may make RVs less affordable to many potential purchasers. This could
materially and adversely affect purchases of RVs generally and our results of
operations.

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CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and revenue
and expenses during the period reported. The accounting policies
set forth below require management to make estimates and assumptions. These estimates and
assumptions are reviewed periodically and the effects of revisions are
reflected in the period that they are determined to be necessary. If actual
results differ significantly from managements estimates, the financial
statements could be materially impacted.

Revenue Recognition

We recognize revenue when the four basic
criteria are met: (1) persuasive evidence
of an arrangement must exist; (2) delivery must have occurred or services
rendered; (3) the fee must be fixed and determinable; and (4) collectibility
must be reasonably assured. Determinations of criteria are based on
managements judgments regarding the fixed nature of the fee charged for
services rendered and products delivered and the collectibility of those fees.
Should changes in conditions cause management to determine these criteria are
not met for certain future transactions, revenue recognized for any reporting
period could be adversely affected.

RV and marine product sales are not recognized until the
unit is delivered to
the customer, title has passed, and payment has been received
from the customer or financing has been arranged. Parts and service sales are
paid at the time the service is rendered through cash or credit card payment.
The commissions received from the placement of finance and insurance products
are deferred for revenue recognition until the period in which the commission
may be charged back to us has lapsed. The commissions received on extended
warranty and service contracts are deferred for revenue recognition until the
100% chargeback period has lapsed with revenue recognized ratably over the
remaining life of the contract as commissions are earned and not subject to
chargeback.

Impairment of Goodwill

During July 2002, as a result of the passage of time and our inability to obtain
an adequate floor plan credit facility, we performed a detailed analysis relating to the realizability of our unamortized goodwill. In July 2002, we decided to close and consolidate one of our dealerships. As of
that date, the unamortized goodwill relating to that dealership was $0.9
million and deemed to be not realizable. Accordingly, we recorded a non-cash
charge to write off the unamortized balance. We have reassessed the
realizability of the goodwill associated with a dealership acquired in March
2000. In July 2002, this dealership had completed three selling seasons and had not been able to demonstrate that it could
generate sufficient cash flows to recover the unamortized goodwill of
$1.6 million related to the store. Based on its historical
performance, we determined that this goodwill was not recoverable. Accordingly, we recorded a non-cash
charge to write off the unamortized balance. Additionally, we reassessed the
realizability of the goodwill associated with a dealership acquired in November
2000. In July 2002, this dealership had completed two selling seasons and had not been able to demonstrate that it could
generate sufficient cash flows to recover the unamortized goodwill of $0.6
related to the store. Based on its historical performance, we did not
believe its goodwill was recoverable. Accordingly,
we recorded a non-cash charge to write off the unamortized balance. Finally, we
reassessed the recoverability of the unamortized goodwill associated with a
facility that was previously destroyed by fire. It was our expectation to have
the facility repaired and placed back in service within several months. Due to
delays in construction the reopening was significantly postponed. Due to the
significant delay of reopening the dealership and the resulting loss of
competitive advantage in the marketplace, we determined that the unamortized
balance of the goodwill of $1.6 million at that time was no longer realizable.
Accordingly, we recorded a non-cash charge to write off the unamortized
goodwill balances from the respective stores, as listed above, in the amount of
$4.7 million.

Inventory Valuation

We record the purchase of used RV and marine products based on the cost to
acquire the units. Trade-ins are recorded at their fair market value at the
time the trade-in is received on a unit sold. Estimating the fair market value
of used RV and marine products is a dynamic process that depends on several
factors, including general economic conditions and supply and demand for new
and used RV and marine products, and may require downward adjustments to be
recognized in future periods. Periodically, used inventory units are reviewed
and compared to the N.A.D.A. Recreation Vehicle Appraisal Guide or other
wholesale auction values to determine whether market declines have occurred
since the unit was placed into inventory. For any unit whose book value is
greater than the indicative market value, the carrying cost is adjusted as
required to properly value it at the lower of cost or market value. As
previously mentioned, overstocked conditions attributable to a number of
factors and general economic conditions could also cause inventory write-downs.
Failure to properly manage both new and used RV and marine products could
result in inventory write-down adjustments that could, in turn, have a material
adverse impact on our financial condition and results of operations.

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Equity-Based Compensation

We account for equity instruments issued to non-employees in accordance with
the provisions of SFAS No. 123 and Emerging Issues Task Force (EITF) Issue
No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services and
EITF 01-01, Accounting for Convertible Instruments Granted or Issued to a
Nonemployee for Goods or Services or a Combination of Goods or Services and
Cash. All transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the
fair value of the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable. The measurement date
of the fair value of the equity instrument issued is the earlier of the date on
which the counterpartys performance is complete or the date on which it is
probable that performance will occur.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, Business Combinations (SFAS 141).
SFAS No. 141 requires business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting, and broadens the
criteria for recording intangible assets separate from goodwill. Recorded
goodwill and intangibles will be evaluated against that new criteria and may
result in certain intangibles being subsumed into goodwill, or alternatively,
amounts initially recorded as goodwill may be separately identified and
recognized apart from goodwill.

Statement of Financial Accounting Standards No. 142, Goodwill and other
Intangible Assets (SFAS 142) requires the use of a non-amortization approach
to account for purchased goodwill and certain intangibles. Under a
non-amortization approach, goodwill and certain intangibles will not be
amortized into results of operations, but instead would be reviewed for
impairment and written down and charged to results of operations only in the
periods in which the recorded value of goodwill and certain intangibles is more
than its fair value. SFAS 142 is required to be applied starting with fiscal
years beginning after December 15, 2001, with early application permitted in
certain circumstances. We do not expect SFAS 142 to have a material effect on
our financial statements as all goodwill has been written off as of
October 31, 2002.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement
Obligations (SFAS 143). SFAS 143 establishes accounting standards for
recognition and measurement of a liability for asset retirement obligation and
the associated asset retirement cost. SFAS 143 is effective for financial
statements relating to fiscal years beginning after June 15, 2002. We do not
expect SFAS 143 to have a material effect on our financial statements.

In September 2001, the Financial Accounting Standards Board issued Statement Of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS 144). SFAS 144 addresses the financial
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS 144 is effective for financial statements issued for fiscal years
beginning after December 15, 2001. We do not believe that the implementation
of SFAS 144 will have a material impact on our financial position or results of
operations.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statement No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
Under Statement 4, all gains and losses from extinguishment of debt were
required to be aggregated and, if material, classified as an extraordinary
item, net of related income tax effect. This Statement eliminates Statement 4
and as a result, gains and losses from extinguishment of debt should be
classified as extraordinary items only if they meet the criteria in APB 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. Additionally, this Statement amends SFAS No. 13,
Accounting for Leases, such that lease modifications that have economic
effects similar to sale-leaseback transactions be accounted for in a similar
manner as a sale-leaseback. This Statement will become effective for us on
November 1, 2003.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This Statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and supersedes Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
and Activity (including Certain Costs Incurred in a Restructuring). A
liability for a cost associated with an exit or disposal activity shall be
recognized and measured initially at its fair value in the period in which the
liability is incurred, except for certain qualifying employee termination
benefits. This Statement will be effective for exit or disposal activities
initiated by us after October 31, 2003.

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In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
CompensationTransition and Disclosure. SFAS No. 148 amends SFAS No. 123
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. SFAS No. 148 is effective for financial reports containing financial
statements for interim period beginning after December 15, 2002. We do not
believe that the implementation of SFAS No. 148 will have a material impact on
our financial condition or results of operations.




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange. To date, our revenue from operations has exclusively been
denominated in United States dollars. The RV and marine products that we have
sold to date have been priced in United States dollars and all of our sales in
the fiscal years 2002, 2001 and 2000, have been denominated in United States
dollars. In the event we conduct transactions in currencies other than the
United States dollar, we intend to carefully evaluate our currency management
policies. If we deem it appropriate, we may consider hedging a portion of any
currency exposure in the future.

The table below provides information about our market sensitive financial
instruments and constitutes a forward-looking statement. Our major market
risk exposure is changing interest rates in the United States. All items
described are non-trading. The table below assumes the October 31, 2002
interest rates remain constant (dollars in thousands).

|                                       |                          |  |      |       |      |  |      |     |      |  |      |     |            |  |                  |     |   |  |  |       |   |  |  |     |   |  |            |        |    
|-------------------------------------- | ------------------------ |  | ---- | ----- | ---- |  | ---- | --- | ---- |  | ---- | --- | ---------- |  | ---------------- | --- | - |  |  | ----- | - |  |  | --- | - |  | ---------- | ------ | ---
|                                       |                          |  |      |       |      |  |      |     |      |  |      |     |            |  |                  |     |   |  |  |       |   |  |  |     |   |  | Fair Value
|                                       |                          |  | 2003 |       | 2004 |  | 2005 |     | 2006 |  | 2007 |     | Thereafter |  | October 31, 2002
|                                       |                          |  |      |       |      |  |      |     |      |  |      |     |            |  |                 
|Long term debt:                        |                          |  |      |       |      |  |      |     |      |  |      |     |            |  |                  |     |   |  |  |       |   |  |  |     |   |  |            |       
|                                       | Fixed rate debt          |  |      | 9,991 |      |  |      | 11  |      |  |      | 12  |            |  |                  | 13  |   |  |  | 14    |   |  |  | 0   |   |  |            | 10,042 |    
|                                       | Average interest rate    |  |      | 11.2  | %    |  |      | 6.9 | %    |  |      | 6.9 | %          |  |                  | 6.9 | % |  |  | 6.9   | % |  |  | 0.0 | % |  |            |        |    
|                                       | Variable rate debt       |  |      | 2,116 |      |  |      | 156 |      |  |      |    |            |  |                  |    |   |  |  |      |   |  |  |    |   |  |            | 2,271  |    
|                                       | Average interest rate    |  |      | 9.3   | %    |  |      | 6.9 | %    |  |      |    |            |  |                  |    |   |  |  |      |   |  |  |    |   |  |            |        |    
|Mandatorily redeemable
Preferred Stock |                          |  |      |       |      |  |      |     |      |  |      |     |            |  |                  |     |   |  |  |       |   |  |  |     |   |  |            |       
|                                       | Series A Preferred Stock |  |      |      |      |  |      |    |      |  |      |    |            |  |                  |    |   |  |  | 3,500 |   |  |  |    |   |  |            | 3,500  | (1)
|                                       | Average rate             |  |      | N/A   |      |  |      | N/A |      |  |      | N/A |            |  |                  | N/A |   |  |  | 10    | % |  |  | N/A |   |  |            |        |    






|    |                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The mandatorily redeemable Preferred Stock was converted to
    5,645,162 shares of our common stock on January 14, 2003
    (see Note 22 to the consolidated financial statements).




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the Index included at Item 15. Exhibits, Financial Statement Schedules and
Reports on Form 8-K. The response to Part II, Item 8, is submitted as a
separate section of this form 10-K.




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information about our current directors and executive officers is provided
below. Our Board of Directors is divided into three classes.
Class II currently has two directors and their term will expire
in 2005. Class III currently has three directors and their term
expires in 2004. There are no Class I directors. None of the directors or officers has any family relationship to any
other director or executive officer of Holiday.

Directors

|                                     |  |     |    |                       |  |                                                                 |  |          |      | 
|------------------------------------ |  | --- | -- | --------------------- |  | --------------------------------------------------------------- |  | -------- | ---- | 
|                                     |  |     |    |                       |  |                                                                 |  | DIRECTOR
|NAME                                 |  | AGE |    | POSITION WITH HOLIDAY |  | SINCE                                                          
|                                     |  |     |    |                       |  |                                                                
|Directors to hold office until 2005:
|Lee B. Sanders                       |  |     | 43 |                       |  | Class II Director, Chairman of the Board                        |  |          | 2000 | 
|Casey L. Gunnell                     |  |     | 56 |                       |  | Class II Director, Acting Chief Executive Officer and President |  |          | 2001 | 
|                                    
|Directors to hold office until 2004:
|David A. Kamm                        |  |     | 66 |                       |  | Class III Director                                              |  |          | 1999 | 
|William H. Toy                       |  |     | 63 |                       |  | Class III Director                                              |  |          | 2002 | 
|Larry J. Hughes                      |  |     | 56 |                       |  | Class III Director                                              |  |          | 2002 | 

Lee B. Sanders has been a director of Holiday since May 2000 and has served as
Chairman of the Board since February 2003. Until its merger with Travelbyus,
Inc. in 2000, Mr. Sanders served as chairman of the board of Aviation Group,
Inc., an aircraft manufacturing, overhaul, services and distribution company
which he founded in 1986. From 2000 until 2001, Mr. Sanders also served as a
director of Travelbyus, Inc. Mr. Sanders currently owns and is the chairman of
the board of a private real estate development company.

David A. Kamm has been a director of Holiday since
May 1999. Since 1995, Mr.
Kamm has been a registered investment advisor with Raymond James Financial
Services.

Casey L. Gunnell has served as a director, the President and Secretary of
Holiday from October 2001 through July 2002, and as the Chief Financial Officer
from May 2001 through May 2002. Mr. Gunnell was appointed in February 2003 and
currently serves as Acting Chief Executive Officer and President. Prior to
that, from March 2000 to February 2001, Mr. Gunnell served as Chief Financial
Officer of PNV, Inc., which filed for bankruptcy protection in
December 2000. From July 1999 until joining PNV, Mr. Gunnell served as
president of JWH Management, Inc. Prior to that, and since April 1998, he was
an independent financial and management advisor to various companies. Prior to
that he served as Senior Vice President and Chief Financial Officer of
AutoNation USA Incorporated. Before joining AutoNation, Mr. Gunnell held
various management positions, including, Executive Vice President and Chief
Financial Officer, with JM Family Enterprise, Inc., a regional distributor of
Toyotas.

William H. Toy has served as a director since October 2002. Since 1999, Mr.
Toy has been an independent marketing Consultant for Workhorse Custom Chassis
and RV Alliance. Mr. Toy was employed by Fleetwood from 1972 to 1999 and
during his tenure he directed sales and marketing.

Larry J. Hughes has served as a director since October 2002. Since 1998, Mr.
Hughes has been an independent RV consultant for marketing, sales,
manufacturing operations and product development. Since 1998,
Mr. Hughes has been a consultant to a company controlled by
Mr. Adams, our majority stockholder and primary lender. Mr. Hughes was employed by
Fleetwood in various senior management positions from 1969 through
1998, including Vice President of Operations of the Towable Group.

Executive Officers Who Are Not Directors

|                    |  |     |    |          |  |                                                      
|------------------- |  | --- | -- | -------- |  | -----------------------------------------------------
|Name                |  | Age |    | Position
|                    |  |     |    |         
|Anthony D. Borzillo |  |     | 35 |          |  | Vice President, Chief Financial Officer and Secretary

Anthony D. Borzillo has served as Chief Financial Officer since May 2002 and
Corporate Secretary since July 2002. Prior to joining Holiday RV, from
November 1998 though May 2002, Mr. Borzillo, a Certified Public Accountant,
served as the Corporate Controller and Director of Financial Planning for TIMCO
Aviation Services, Inc. (formerly Aviation Sales Co.) Prior to his position
at TIMCO, Mr. Borzillo was an auditor with Arthur Andersen LLP in Miami,
Florida from September 1989 through October 1998.

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BOARD MEETINGS AND COMMITTEES

Our Board of Directors held 14 meetings during the fiscal year ended
October 31, 2002. All of the directors attended at least 75% of the board
meetings and committee meetings of which they were members.

Our Board of Directors is divided into three classes. Directors are
elected to staggered three-year terms and serve until their successors are
elected and qualified. There are no Class I Directors. Class II Directors serve until our 2005 Annual Meeting and Class III
Directors serve until our 2004 Annual Meeting.

Non-employee directors currently receive $1,500 per month for serving as
directors and an additional $500 per month per committee for which
they are a member. Each non-employee director is also
reimbursed for travel-related expenses incurred in attending meetings.
Executive officers are not paid for their services as directors or as members
of committees.

We currently have two standing committees, which are the Audit Committee
and the Compensation Advisory Committee. The Audit Committee currently consists
of Mr. Sanders and Mr. Kamm, neither of whom is an officer or employee of
Holiday, and Casey Gunnell who is an officer and employee of the Company. The
Compensation Advisory Committee currently consists of Mr. Sanders and Mr. Kamm.
Mr. Lemonis, the former Chairman, Chief Executive Officer and President served
as an ex-officio member of the Compensation Advisory Committee until his
resignation in January 2003.




ITEM 11. EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION ADVISORY COMMITTEE

The Compensation Advisory Committee is responsible for setting and
administering the policies that govern executive compensation. The Committee
currently consists of Mr. Kamm and Mr. Sanders. Prior to his resignation from
the Board in January 2003, Mr. Lemonis also served as an ex-officio member of
the Committee. The Compensation Advisory Committee met once during fiscal 2002.

The Compensation Advisory Committee recommends to the Board guidelines for
administering Holidays 1999 Stock Compensation Program and compensation for
Holidays executive officers. Its primary function is to ensure that Holidays
compensation program is consistent with its values and aligned with its goals.

COMPENSATION PHILOSOPHY

The Compensation Advisory Committee determines executive compensation and
administers Holidays stock option plans with the following goals in mind:



| |  |  | Provide a competitive level of total compensation necessary to
attract, motivate and retain talented executives;                                          
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Align the interests of Holidays executives with Holidays interests
by granting stock options, stock appreciation rights and restricted
stock awards; and
|
| |  |  | Emphasize variable, performance-based compensation that rewards
executives for achieving short-term and long-term goals.                                  

COMPONENTS OF COMPENSATION

Generally, compensation is structured through a combination of the following:



| |  |  | Base Salary  Base salaries are established based upon the
individuals performance and contribution to Holiday. The base salaries
of executives in comparable positions in similar companies are taken
into account.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  |  | Annual Incentives  Annual incentive awards are provided to reward
contributions to Holiday. Bonuses are determined based on Holidays
profits and other factors at the discretion of the Chief Executive
Officer, based on guidelines established by the Board of Directors.                                                                                                                                                                                                                                      
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Long Term Incentive Compensation  Periodically, stock or stock
options are granted to Holidays executives. The grants are intended to
align the interests of Holidays executives with those of the
stockholders. Grants typically permit each executive to acquire
Holidays common stock at fixed price per share  generally the market
price on the grant date  over a specified period of time. The grants
provide value to the executive only if the price of the shares
appreciates over the option term.

The size of the grant is based on the executives:



| |  |  | Position with Holiday;                                   
| | - |  | ---------------------------------------------------------
|
| |  |  | Potential for future responsibility over the option term;
|
| |  |  | Performance in recent periods; and                       
|
| |  |  | Current holdings of Holiday stock and options.           

The Committee believes that Holidays financial performance is a better
indicator of executive achievement than its stock price. The Committee examines
a number of financial indicators in assessing Holidays performance, including:



| |  |  | Net sales;         
| | - |  | -------------------
|
| |  |  | Operating income;  
|
| |  |  | Net income; and    
|
| |  |  | Earnings per share.

Compensation decisions are not based upon any precise formula, nor is any one
factor given greater weight than the other factors.

CHIEF EXECUTIVE OFFICER COMPENSATION

The Chief Executive Officer participates in the same programs and receives
compensation based on the same factors as the other executive officers.
However, Mr. Lemonis overall compensation reflects a greater degree of policy
and decision-making authority and a higher level of responsibility with respect
to Holidays strategic direction and financial and operational results. Mr.
Lemonis compensation components for the fiscal year ended October 31, 2002
included the following:



| |  |  | Base Salary: Mr. Lemonis base salary was determined based on a study
of chief executive officers compensation in the recreation
vehicle industry
that have financial and corporate characteristics similar to Holidays.
Mr. Lemonis annual base salary was increased from $220,000 to $300,000
in fiscal 2002.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Annual Incentive: Annual incentive is based on relative attainment of
Holidays annual performance goals. Based on these criteria, Mr. Lemonis
was awarded an authorized bonus of $150,000 in fiscal 2002.                                                                                                        

The Committee believes that the compensation levels of Holidays executives,
who provide leadership and strategic direction, should consist of



| | (1) |  | Base salaries that are commensurate with executives of other
comparable public companies, and;                                             
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Periodic cash bonuses based on achieving specific objectives. These
objectives are usually tied to a percentage of Holidays profitability.

The Committee also believes that it should provide executive officers with
significant stock-based incentive compensation, which increases in value in
direct correlation with improvement in Holidays common stock price. Incentive
or non-qualified stock options may be granted upon appointment as an inducement
for employment. Additional incentive or non-qualified stock
options may be granted if specific goals are achieved.

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##### Table of Contents



Holidays executive officers are also eligible to participate in Holidays
benefit plans that are available to all employees.

Submitted by the Compensation Advisory Committee



| | David Kamm
Lee B. Sanders
| | -------------------------

FEDERAL INCOME TAX CONSEQUENCES

Section 162(m) of the Internal Revenue Code limits Holiday to a deduction for
federal income tax purposes of not more than $1.0 million of compensation paid
to certain executive officers in a taxable year. Compensation above that amount
may be deducted only if it is performance-based compensation within the
meaning of the Code. The Board of Directors has not established a formal policy
for determining which forms of incentive compensation will be designed to
qualify as performance-based compensation.

EXECUTIVE COMPENSATION SUMMARY

The following table sets forth all compensation for the Chief Executive Officer
and the other executive officers in fiscal 2002 and during the last three
fiscal years.

|                                                              |  |                     |      |              |  |       |         |              |  |              |         |              |  |              |        |            |  |            |   |  |  |   |       |    
|------------------------------------------------------------- |  | ------------------- | ---- | ------------ |  | ----- | ------- | ------------ |  | ------------ | ------- | ------------ |  | ------------ | ------ | ---------- |  | ---------- | - |  |  | - | ----- | ---
|                                                              |  |                     |      |              |  |       |         |              |  |              |         |              |  |              |        |            |  | Long Term  |   |  |  |  
|                                                              |  | Annual Compensation |      | Compensation |  |       |         |             
|                                                              |  |                     |      |              |  |       |         |             
|                                                              |  |                     |      |              |  |       |         |              |  |              |         |              |  |              |        |            |  | Securities |   |  |  |  
|Name and                                                      |  |                     |      |              |  |       |         |              |  |              |         |              |  | Other Annual |        | Underlying |  | All Other 
|Principal Position                                            |  | Year                |      | Salary       |  | Bonus |         | Compensation |  | Options/SARs |         | Compensation
|                                                              |  |                     |      |              |  |       |         |              |  |              |         |             
|Marcus A. Lemonis (1)                                         |  |                     | 2002 |              |  | $     | 246,637 |              |  | $            | 156,282 |              |  |              |       |            |  |            |  |  |  |   |      |    
|Chairman of the Board, President and
Chief Executive Officer, |  |                     | 2001 |              |  |       | 94,711  |              |  |              | 61,167  |              |  |              |       |            |  |            |  |  |  | $ | 3,752 | (2)
|Chief Operating Officer and Secretary                         |  |                     | 2000 |              |  |       |        |              |  |              |        |              |  |              |       |            |  |            |  |  |  |   |      |    
|Casey L. Gunnell (3)                                          |  |                     | 2002 |              |  |       | 115,384 |              |  |              | 81,445  |              |  |              | 11,154 | (4)        |  |            |  |  |  |   |      |    
|President, Chief Financial Officer,                           |  |                     | 2001 |              |  |       | 59,615  |              |  |              | 52,084  |              |  |              | 3,852  | (4)        |  |            |  |  |  |   |      |    
|Chief Operating Officer and Secretary                         |  |                     | 2000 |              |  |       |        |              |  |              |        |              |  |              |       |            |  |            |  |  |  |   |      |    
|Anthony D. Borzillo (5)                                       |  |                     | 2002 |              |  |       | 60,429  |              |  |              | 50,000  |              |  |              | 3,078  | (4)        |  |            |  |  |  |   |      |    
|Chief Financial Officer and Secretary                         |  |                     | 2001 |              |  |       |        |              |  |              |        |              |  |              |       |            |  |            |  |  |  |   |      |    
|                                                              |  |                     | 2000 |              |  |       |        |              |  |              |        |              |  |              |       |            |  |            |  |  |  |   |      |    



---

|(1) |  | Mr. Lemonis served as President from March 2001 to October 2001. Mr.
Lemonis served as Chief Executive Officer from June 2001 through January
2003 and as Chairman of the Board from October 2001 through January
2003. Mr. Lemonis also served as Secretary from March 2001 to October
2001 and as Chief Operating Officer from March 2001 to June 2001. In
January 2003, Mr. Lemonis resigned from the Company and its Board of
Directors. The Company has filed suit against Mr. Lemonis
relating to unauthorized bonus payments and inappropriate expense
reimbursements. See Note 22 to the consolidated financial
statements.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Represents relocation expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(3) |  | Mr. Gunnell served as Chief Financial Officer from May 2001 through
May 2002 and as President and Secretary from October 2001 through July
2002. Mr. Gunnell has also served as Chief Operating Officer from June
2001 through July 2002. Mr. Gunnell was appointed Acting Chief
Executive Officer and President in February 2003.                                                                                                                                                                                                                                                                                                  
|   
|(4) |  | Represents reimbursement for health insurance premiums.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(5) |  | Mr. Borzillo has served as Chief Financial Officer since May 2002 and
as Secretary since July 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

EMPLOYMENT, TERMINATION AND SEVERANCE AGREEMENTS

Holiday does not currently have any employment contracts or termination or
change-in-control arrangements with any of its executive officers.

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OPTION GRANTS IN FISCAL 2002

There were no grants of stock options or stock appreciation rights during
fiscal 2002.

OPTION EXERCISES IN FISCAL 2002 AND FISCAL YEAR-END OPTION VALUES

No options were exercised during fiscal 2002 and no unexercised options were in
the money in fiscal 2002. None of the named executive officers had unexercised
options at the end of fiscal 2002.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the Compensation Committee is or at any time was an officer or
employee of Holiday nor did any member have an interest in a transaction which
would require disclosure hereunder.

STOCK PERFORMANCE GRAPH

Holidays performance peer group consists of eight publicly owned retail
companies with a market capitalization similar to Holidays. Holiday selected
the market capitalization criteria for determining a peer group for stockholder
return analysis because there is no published industry or line-of-business
index comparable to Holidays. The peer group consists of FFP Partners LLP,
Foodarama Stores, Inc., Pubco Corp., Sieber Financial Corp., Uni Marts Inc. and
Village Supermarket, Inc. Holiday believes that the graph comparison is not on
a comparable basis and is not meaningful.

Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
October 2002

(PERFORMANCE GRAPH)

|                             |  |      |        |      |  |      |        |      |  |      |        |      |  |   |        |  |  |   |        |  |  |   |        | 
|---------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|                             |  | 1997 |        | 1998 |  | 1999 |        | 2000 |  | 2001 |        | 2002
|                             |  |      |        |      |  |      |        |      |  |      |        |     
|Holiday RV Superstores, Inc. |  | $    | 100.00 |      |  | $    | 146.96 |      |  | $    | 281.68 |      |  | $ | 281.68 |  |  | $ | 81.65  |  |  | $ | 7.58   | 
|S & P Small Cap 600          |  | $    | 100.00 |      |  | $    | 88.94  |      |  | $    | 99.65  |      |  | $ | 124.83 |  |  | $ | 116.79 |  |  | $ | 112.38 | 
|Peer Group Only              |  | $    | 100.00 |      |  | $    | 183.37 |      |  | $    | 283.75 |      |  | $ | 151.09 |  |  | $ | 151.07 |  |  | $ | 122.39 | 
|Peer Group + RVEE            |  | $    | 100.00 |      |  | $    | 180.64 |      |  | $    | 283.57 |      |  | $ | 160.29 |  |  | $ | 145.40 |  |  | $ | 113.18 | 

30



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##### Table of Contents



COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN BETWEEN OR AMONG
HOLIDAY RV SUPERSTORES, INC., S&P SMALLCAP 600 INDEX AND PEER GROUP*

HOLIDAY RV SUPERSTORES INC. COMPARISON GRAPH

|                       |  |          |        |          |  |          |        |          |  |          |        |  |  |   |        |  |  |   |        | 
|---------------------- |  | -------- | ------ | -------- |  | -------- | ------ | -------- |  | -------- | ------ |  |  | - | ------ |  |  | - | ------ | 
|TOTAL RETURN ANALYSIS  |  | 10/31/98 |        | 10/31/99 |  | 10/31/00 |        | 10/31/01 |  | 10/31/02
|                       |  |          |        |          |  |          |        |          |  |         
|Holiday RV
Superstores |  | $        | 146.96 |          |  | $        | 281.68 |          |  | $        | 281.68 |  |  | $ | 81.65  |  |  | $ | 7.58   | 
|S&P Small Cap 600      |  | $        | 88.94  |          |  | $        | 99.65  |          |  | $        | 124.83 |  |  | $ | 116.79 |  |  | $ | 112.38 | 
|Peer Group             |  | $        | 183.37 |          |  | $        | 283.75 |          |  | $        | 151.69 |  |  | $ | 151.07 |  |  | $ | 122.39 | 



---

|* |  | Assuming that the value of the investment in Holiday common stock
and each index was $100 on October 31, 1997 and that all dividends
were reinvested, this graph compares Holidays cumulative total
return  based on common stock price and dividends  plotted on an
annual basis, with Holidays peer groups cumulative total returns
and the SmallCap 600 Index  a performance indicator of the overall
stock market.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Notwithstanding anything to the contrary set forth in any of Holidays previous
filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Form 10-K, in whole or in part, the foregoing Report of the
Compensation Committee on Executive Compensation and the Stockholder Return
Performance Graph shall not be incorporated by reference into any such filings.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND OFFICERS

The following table sets forth the beneficial
ownership of our common stock, as of April 25, 2003 by:



| |  |  | Beneficial owners of more than
5% of our common stock,
| | - |  | ------------------------------------------------------
|
| |  |  | Holidays named executive officers,                   
|
| |  |  | Holidays directors,                                  
|
| |  |  | All directors and named executive officers as a group.

The table is based on (i) information supplied
to the Company by directors, officers and principal stockholders,
(ii) filings under the Securities Exchange Act of 1934, and
(iii) information supplied to us by our transfer agent, American
Stock Transfer & Trust Company.

As of April 25, 2003, we had 7,029,480
outstanding shares of common stock.

31



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##### Table of Contents



The amounts shown include shares of common stock that are issuable upon
exercise of options or warrants that are exercisable within
60 days of April 25, 2003.

|                                      |                               |                         |            |               |  |  |      |     | 
|------------------------------------- | ----------------------------- | ----------------------- | ---------- | ------------- |  |  | ---- | --- | 
|                                      |                               |                        
|                                      |                               | SHARES OF COMMON STOCK 
|                                      |                               | BENEFICIALLY OWNED     
|                                      |                               | AS OF APRIL 25, 2003(1)
|                                      |                               |                        
|NAME AND                              |                               | NUMBER OF               |            | PERCENTAGE OF
|ADDRESS OF BENEFICIAL OWNER           |                               | SHARES (2)              |            | OUTSTANDING  
|                                      |                               |                         |            |              
|Stephen Adams                         |                               |                         | 29,835,871 | (3)(6)        |  |  | 93.2 | (3)
|                                      | 2575 Vista del Mar Drive      |                         |            |               |  |  |      |     | 
|                                      | Ventura, California 93001     |                         |            |               |  |  |      |     | 
|Steven Antebi                         |                               |                         | 867,477    | (4)           |  |  | 12.3 | (4)
|                                      | 10550 Fontanelle Way          |                         |            |               |  |  |      |     | 
|                                      | Los Angeles, California 90077 |                         |            |               |  |  |      |     | 
|George Santopietro                    |                               |                         | 831,452    | (4)           |  |  | 11.8 | (4)
|                                      | 10550 Fontanelle Way          |                         |            |               |  |  |      |     | 
|                                      | Los Angeles, California 90077 |                         |            |               |  |  |      |     | 
|RBF International, Inc.               |                               |                         | 406,250    | (5)(6)        |  |  | 5.8  |    
|                                      | 141 E. Service Rd.            |                         |            |               |  |  |      |     | 
|                                      | Staten Island, New York 10314 |                         |            |               |  |  |      |     | 
|Directors and Named Officers**        |                               |                         |            |               |  |  |      |    
|Marcus Lemonis                        |                               |                         | 150        |               |  |  | *    |    
|Lee A. Iacocca                        |                               |                         | 7,666      | (7)           |  |  | *    |    
|Casey L. Gunnell                      |                               |                         | 330        |               |  |  | *    |    
|Anthony D. Borzillo                   |                               |                         |           |               |  |  | *    |    
|William H. Toy                        |                               |                         |           |               |  |  | *    |    
|Larry J. Hughes                       |                               |                         |           |               |  |  | *    |    
|David A. Kamm                         |                               |                         | 1,000      | (7)           |  |  | *    |    
|Lee B. Sanders                        |                               |                         | 1,000      | (7)           |  |  | *    |    
|All officers and directors as a group |                               |                         | 10,216     |               |  |  | *    |    



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Less than 1%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|**  | The address for all directors and named officers
    is in care of Holiday RV Superstores, Inc., 200 East Broward
    Blvd., Fort Lauderdale, Florida 33301.                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(1) | Beneficial ownership means the sole
    or shared power to vote, or to direct the voting of, shares of
    our common stock, or investment power with respect to shares of
    our common stock.                                                                                                                                                                                                                                                                                                                                                    
|   
|(2) | This column includes beneficial ownership of
    shares of our common stock issued and outstanding as of
    April 25, 2003, and beneficial ownership of shares of our
    common stock that persons have rights to acquire within
    60 days of April 25, 2003, including rights to acquire
    by ownership of options, warrants or securities with conversion
    privileges.                                                                                                                                                                     
|   
|(3) | Based on information contained in Schedule 13D/A
    filed with the Securities and Exchange Commission on
    March 5, 2003 by Stephen Adams that stated that
    Mr. Adams owned 4,863,710 shares of our common stock and
    had the right to acquire 24,972,161 shares of our common stock.
    For purposes of calculating Mr. Adams ownership
    percentage, the securities owned by Mr. Adams subject to
    warrants and conversion privileges are deemed to be outstanding.
See footnote 6.                                                 
|   
|(4) | Based on information from American Stock Transfer
    & Trust Company. Includes 806,452 shares of our common stock
    and warrants to purchase 25,000 shares of our common stock held
    by Arc Capital, LLC, a Nevada limited liability company, of
    which Steven Antebi and George Santopietro are members. For
    purposes of calculating the ownership percentage of Messrs.
    Antebi and Santopietro, the 25,000 shares of common stock
    subject to the warrant owned by Arc Capital are deemed to be
    outstanding. See footnote 6.
|   
|(5) | Based on information from American Stock Transfer
    & Trust Company. See footnote 6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(6) | Based on information contained in Schedule 13D/A
    filed with the Securities and Exchange Commission on May 9,
    2003 by Stephen Adams, on May 8, 2003, a company controlled
    by Mr. Adams purchased the 406,250 shares of our common
    stock owned by RBF International, Inc.                                                                                                                                                                                                                                                               
|   
|(7) | All of these shares are issuable upon exercise of
    options that are presently exercisable.                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Imperial Group Holdings

In January 2002, we agreed to convert $324,307 of the $452,307 debt owed to
Imperial Group Holdings, LLC, a limited liability company whose
members include one of our former directors and one former director
and chief executive officer, into 479,382 shares of our common stock. The
remaining balance was assigned by Imperial to Mr. Lemonis, our
then Chief
Executive Officer, in settlement of obligations Imperial had to Mr. Lemonis.
In connection with the assignment, Mr. Lemonis agreed to eliminate the interest
charge and to structure a repayment schedule to fit within our cash flow
parameters, with payment due on or before December 31, 2003. On April 17,
2002, the outstanding balance was paid in full to Mr. Lemonis.

Mr. Adams

In January 2002, Stephen Adams (Mr. Adams), currently our majority stockholder,
purchased 15,000 shares of Series A Convertible Preferred Stock (Series A,
consisting of 3,774 shares of Sub-Series A-1 Convertible Preferred Stock
(Series A-1) and 11,226 shares of Sub-Series A-2 Convertible Preferred Stock
(Series A-2)), plus warrants to purchase 75,000 shares of our common stock, for
$1.5 million. The Series A-1 had voting rights on an as converted basis (8.55
shares of common stock per share of Series A-1, or 32,268 shares of common
stock). This voting right represented approximately 3.4% of our outstanding
shares. The shares of Series A-2 were not convertible and did not have voting
rights until approval by our stockholders, which occurred in June 2002.

In conjunction with the
sale of the Series A Preferred Stock to Mr. Adams, our then
Chief Executive Officer, without the knowledge or authorization of
our Board of Directors, entered into an agreement
with Mr. Adams that would require us to issue to Mr. Adams 25,000 shares of our
common stock if we did not consummate the sale and leaseback
transaction of the Las
Cruces property with Mr. Adams pursuant to certain terms. In September
2002, in order to pay down
our debt to Bank of America, we sold the real property at our
Las Cruces, New Mexico dealership to a company owned by Mr. Adams for $860,000, which was $270,800
over its carrying value and approximately $440,000 less than its appraised value.
Concurrent with the sale of the property, we entered into a 15-year lease for
the property with the company owned by Mr. Adams for an annual lease payment of
$123,000 increasing to $158,400 per year for the last five years of
the lease, plus taxes and insurance. In October 2002, our Board of
Directors authorized the issuance of the 25,000 shares of our
common stock to Mr. Adams since the sale/leaseback transaction had not been
consummated pursuant to the terms of the prior agreement entered into by
our then Chief Executive Officer.

On March 20, 2002, Mr. Adams purchased 15,000 shares of Series AA-2 Convertible
Preferred Stock (Series AA-2) for $1.5 million. The shares of Series AA-2,
like the Series A-2, were not convertible and did not have voting rights until
approval by our stockholders, which occurred in June 2002. All of the
proceeds from the sale of the shares of the Series AA-2,
$1,500,000, were used to acquire a non-exclusive right to use the
Good Sam  name and logo from a company controlled by
Mr. Adams.

Also on March 20, 2002, we entered into a loan agreement (Loan Agreement) with
a company wholly-owned by Mr. Adams, pursuant to which we were loaned $1.6
million. The initial terms of the Loan Agreement provided for an annual
interest rate of 20%, a one-year term and the right to convert into our common
shares, upon receipt of stockholder approval, at a price equal to the
lower of $5.00 per share or the closing price for our shares of
common stock on the trading day prior to the issuance date of the
shares of common stock subject to conversion. There was also a
$50,00 fee, plus an additional fee of $160,000 if 10% of the loan had not been
repaid within 90 days of the loan, plus an additional fee of $160,000 if an
additional 10% of the loan had not been repaid within 180 days of the loan. We
also issued warrants to purchase 180,000 shares of common stock at $5.00 per
share.

Also in March, 2002, we entered into agreements with Mr. Adams granting Mr.
Adams the right of first refusal to purchase our property located in Las
Cruces, New Mexico and in Spartanburg, South Carolina.

In June 2002, our stockholders approved the right of the holders of the Series
A and Series AA-2 Preferred Stock to convert their shares of Preferred Stock
into shares of our common stock; the right of Mr. Adams to convert the $1.6
million note into shares of our common stock; and the right of the holders of
the warrants issued with respect to the Preferred Stock and the $1.6 million
note to exercise their warrants to purchase 355,000 shares of our common stock.
After such approval, Mr. Adams had voting rights, on an as
converted basis, of
428,250 shares, representing approximately 30.1% of our outstanding shares, and
had the right to acquire approximately 1,250,000 shares of our common stock,
which would represent more than 50% of our outstanding shares.

In October 2002, we entered into an amendment to our Loan Agreement with Mr.
Adams for additional loans of $1.4 million. The terms of the Loan Agreement
remained the same: an annual interest rate of 20%, a one-year term and the
right to convert into our common shares, at a price equal to the
lower of $5.00 per share or the closing price for our shares of
common stock on the trading day prior to the issuance date of the
shares of common stock subject to conversion. Later in October 2002,
the Company entered into a term sheet (Term Sheet) with
Mr. Adams whereby Mr. Adams agreed to make an additional
investment of up to $3.5 million, of which $1.7 million
had already been advanced, in the form of secured debt convertible
into shares of common stock of the Company at $.62 per share, the
closing price on the last trading day prior to the execution of the
Term Sheet. The convertible debt issued pursuant to the Term Sheet
would mature on May 1, 2003 and have an annual interest rate of
20%. The additional investment pursuant to the Term Sheet was subject
to certain conditions, which when satisfied, Mr. Adams would
also convert all of his shares of Series A Preferred Stock and
Series AA Preferred Stock and the existing $1.6 million
convertible note into shares of common stock of the Company at $.62
per share. In November 2002, we
entered into another amendment to our Loan Agreement with

33



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Mr. Adams loaning an additional $2.1 million, and modifying the terms of the Loan
Agreement as follows: an annual interest rate of 12.75%,
 the loan was due on demand, and the loan was convertible into shares
of our common stock on the terms and subject to the conditions set
forth in the Term Sheet. In addition, in
November 2002, Mr. Adams provided us another loan of $3.3 million convertible
into shares of our common stock, with an annual interest rate of 12.75%, a
conversion rate of $1.99 per share and a maturity date of November 15, 2004.
Furthermore, in November 2002, Mr. Adams issued a commitment to Bank of
America, our senior lender at that time, to acquire our debt owed to Bank of
America. It was also agreed that upon Mr. Adams purchase of the Bank of
America debt, our loan agreement with Bank of America would be modified whereby
the maturity date would be November 15, 2004, the interest rate would be 12.75
% per annum and that there would be no further advances. Mr. Adams purchased
the Bank of America loan on December 13, 2002, becoming our
primary lender.

In January 2003, we entered into another amendment to our Loan Agreement with
Mr. Adams for an additional loan of $1.3 million. Under the terms of the
January 2003 amendment to the Loan Agreement, we acknowledged and
agreed the approximate $12.3 million we
owed at the time was due and payable upon demand by Mr. Adams
and that the conditions under the Term Sheet had not been satisfied. Also pursuant
to the January 2003 amendment to the Loan Agreement, Mr. Adams converted all of
his Series A and Series AA-2 Preferred Stock into 4,838,710 shares of our
common stock at a conversion price of $.62 per share. After the issuance of
the shares of common stock, Mr. Adams owned approximately 69% of our
outstanding common stock.

At the end of February 2003, Mr. Adams sent a conversion notice to us
requesting that we convert $150,000 in principal and $150,000 in accrued and
unpaid interest owing under an outstanding convertible promissory note. The
notice requested a conversion price of $.02 per share, which Mr. Adams asserts
is the conversion price under the terms of the note. Were the shares of common
stock issued pursuant to the conversion request, Mr. Adams ownership would
increase from approximately 69% to more than 90%, allowing Mr. Adams to effect
a short form merger whereby the shares of common stock not owned by Mr. Adams
could be acquired by Mr. Adams in exchange for consideration solely determined
by Mr. Adams (subject only to dissenters appraisal rights under Delaware law).
We have not issued the shares of common stock referenced in the conversion
notice as we continue evaluating our rights, responsibilities and options.

Larry J. Hughes, a
member of our Board of Directors since October 2002, is a consultant
to a company controlled by Mr. Adams.

Mr. Adams/Holiday Kamper

In November 2002, we entered into a term sheet with
Holiday Kamper of Columbia, Inc. to acquire Holiday Kamper, subject
to certain conditions, including approval by our lender and our board
of directors. We never were able to obtain financing for the
transaction or get lender approval and, therefore, we did not
consummate the acquisition of Holiday Kamper. Mr. Adams was our
secured lender, subordinate to Bank of America, and became our primary lender
on December 13, 2002.

In March 2003, we entered into an agreement with
Holiday Kamper to sell the assets, including the new and used RV
inventory, of our dealership in Spartanburg, South Carolina to
Holiday Kamper. We leased the property related to the dealership to
the purchaser, Holiday Kamper, at a lease rate below current market
rates and equal to our current mortgage payment on the property. The
RV inventory that was sold to Holiday Kamper was financed by a
company owned by Mr. Adams. We used the net proceeds from the
sale, approximately $3.0 million, to pay down our debt owned to
Mr. Adams.

We understand that in April or May 2003, a company
owned by Mr. Adams entered into an agreement to acquire Holiday Kamper.

Mr. Lemonis/Mr. Adams

In May 2002, Mr. Lemonis, our then Chief
Executive Officer, borrowed $100,000 from the chief executive officer
of a company controlled by Mr. Adams. Mr. Lemonis has since
repaid the loan.

We also understand that Mr. Lemonis is
currently actively engaged with Mr. Adams in business related
to the retail RV industry, including the acquisition of Holiday
Kamper and the monitoring of our operations.




ITEM 14. CONTROLS AND PROCEDURES

In order to ensure the information we must disclose
in our filings
with the Securities and Exchange Commission is recorded, processed, summarized
and reported on a timely basis, we have formalized our disclosure controls
and procedures. Our principal executive officer and principal financial
officer have reviewed and evaluated the effectiveness of our disclosure
controls and procedures, as defined in Exchange Act Rules 13a-14(c) and
15d-14(c), as of a date within 90 days prior to the filing date of this report
(the Evaluation Date). Based on such evaluation, such officers have
concluded that, as of the Evaluation Date, our disclosure controls and
procedures were effective in alerting them on a timely basis to material information
required to be included
in our periodic SEC filings. Since the Evaluation Date, there have not
been any significant changes in the internal controls, or in other
factors that could significantly affect these controls subsequent to the
Evaluation Date.




PART IV




ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) Financial Statements  The financial statements are filed as a separate
section of this Form 10-K, starting on page F-1.

(a)(2) Financial Statement Schedules

Schedule II
 Valuation and Qualifying Accounts follow the financial
statements.

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(a)(3) Exhibits  The Exhibits filed as part of this Form 10-K are listed on
the Index to Exhibits following the financial statements.

(b)  Reports on Form 8-K

The following Current Reports on Form 8-K were filed during the fiscal quarter
ended October 31, 2002:



| | (1) |  | Current Report on Form 8-K filed on August 7, 2002 
| | --- |  | ---------------------------------------------------
|
| | (2) |  | Current Report on Form 8-K filed September 30, 2002
|
| | (3) |  | Current Report on Form 8-K filed October 9, 2002   
|
| | (4) |  | Current Report on Form 8-K filed October 30, 2002  




SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: June 2, 2003

| |  |     |  |                                                                                      
| |  | --- |  | -------------------------------------------------------------------------------------
|
| |  |     |  | HOLIDAY RV SUPERSTORES, INC.                                                         
|
| |  | By: |  | /s/ ANTHONY D. BORZILLOAnthony D. Borzillo
Vice President and Chief
Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

|                                     |  |                                                        |  |             
|------------------------------------ |  | ------------------------------------------------------ |  | ------------
|SIGNATURE                            |  | TITLE                                                  |  | DATE        
|                                     |  |                                                        |  |             
|/s/ CASEY L. GUNNELLCasey L. Gunnell |  | Acting Chief Executive Officer, President
and Director |  | June 2, 2003
|                                    
|                                     |  |                                                        |  |             
|                                    
|/s/ LEE B. SANDERSLee B. Sanders     |  | Director                                               |  | June 2, 2003
|                                    
|                                     |  |                                                        |  |             
|                                    
|/s/ DAVID A. KAMMDavid A. Kamm       |  | Director                                               |  | June 2, 2003
|                                    
|                                     |  |                                                        |  |             
|                                    
|/s/ WILLIAM H. TOYWilliam H. Toy     |  | Director                                               |  | June 2, 2003
|                                    
|                                     |  |                                                        |  |             
|                                    
|/s/ LARRY J. HUGHESLarry J. Hughes   |  | Director                                               |  | June 2, 2003

35



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Certifications

I, Casey L. Gunnell, Acting Chief Executive Officer, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Holiday RV
Superstores, Inc.;                                                                                                                                                                                                                                        
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the Registrant as of, and for, the
periods presented in this annual report;                   
|  
|4. |  | The Registrants other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
Registrant and have:                                                                                                   
|  

| | a. |  | designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the Registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c. |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The Registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the Registrants auditors and
the audit committee of Registrants board of directors (or persons
performing the equivalent functions):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrants
ability to record, process, summarize and report financial data and
have identified for the Registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrants
internal controls; and                                                                                                                                        
|

|6. |  | The Registrants other certifying officer and I have indicated
in this annual report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|      |  |              |  |                  |  |                                                                    
|----- |  | ------------ |  | ---------------- |  | -------------------------------------------------------------------
|Date: |  | June 2, 2003 |  | By:
Name:
Title: |  | /s/ Casey L. GunnellCasey L. Gunnell
Acting Chief Executive Officer

36



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##### Table of Contents



I, Anthony D. Borzillo,Chief Financial Officer, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Holiday RV Superstores,
Inc.;                                                                                                                                                                                                                                        
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the Registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The Registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and
have:                                                                                                   



| | a. |  | designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the Registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c. |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The Registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the Registrants auditors and the audit
committee of Registrants board of directors (or persons performing the
equivalent functions):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrants
ability to record, process, summarize and report financial data and
have identified for the Registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrants
internal controls; and                                                                                                                                        



|6. |  | The Registrants other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|      |  |              |  |                  |  |                                                                   
|----- |  | ------------ |  | ---------------- |  | ------------------------------------------------------------------
|Date: |  | June 2, 2003 |  | By:
Name:
Title: |  | /s/ Anthony D. BorzilloAnthony D. Borzillo
Chief Financial Officer

37



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##### Table of Contents



HOLIDAY RV SUPERSTORES, INCORPORATED

TABLE OF CONTENTS

SECTIONReport of Independent Certified Public Accountants
        
        
        F-1Consolidated Financial Statements:Balance Sheets
        
        
        F-2Statements of Operations
        
        
        F-3Statements of Shareholders Equity (Deficit)
        
        
        F-4Statements of Cash Flows
        
        
        F-5-6Notes to Consolidated Financial Statements
        
        
        F-7-30






---



##### Table of Contents



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Shareholders and Board of Directors of
Holiday RV Superstores, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, shareholders equity and cash flows
present fairly, in all material respects, the financial position of Holiday RV
Superstores, Inc. and its subsidiaries at October 31, 2002 and 2001, and the
results of their operations and their cash flows for each of the three years in
the period ended October 31, 2002 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Companys management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

As discussed in Note 2 to the financial statements, in 2001, the Company
changed its method of accounting for certain revenues to conform to the U.S.
Securities and Exchange Commission Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Notes 2 and
10 to the financial statements, the Company does not have a definitive
agreement in place with its primary floor plan lender to cover their floor plan
financing requirements. Additionally, the Company has incurred significant
losses and had net cash outflows from operations for the fiscal
years ended October 31, 2002 and 2001, and had negative working capital, and an
accumulated shareholders' deficit at October 31, 2002. These
circumstances raise substantial doubt about the Companys ability to continue
as a going concern. Managements plans in regard to these matters are also
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

PRICEWATERHOUSECOOPERS LLP

Fort Lauderdale, Florida

May 28, 2003

F-1



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##### Table of Contents



HOLIDAY RV SUPERSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

YEARS ENDED OCTOBER 31,2002
        
        2001AssetsCurrent assets:Cash and cash equivalents
        
        $
        
        
        
        $
        93,484Restricted cash and investments
        
        
        546,399
        
        
        
        1,131,662Trade accounts receivable
        
        
        313,627
        
        
        
        1,631,871Other receivables
        
        
        34,201
        
        
        
        989,492Inventories, net
        
        
        18,459,439
        
        
        
        34,363,637Prepaid expenses
        
        
        363,141
        
        
        
        161,709Refundable income taxes
        
        
        
        
        
        
        529,888Property held for sale
        
        
        3,542,186
        
        
        
        633,468Other
        
        
        403,949
        
        
        
        124,958Total current assets
        
        
        23,662,942
        
        
        
        39,660,169Property and equipment, net
        
        
        6,179,588
        
        
        
        11,339,229Other assetsGoodwill, net
        
        
        
        
        
        
        5,665,656Other
        
        
        182,085
        
        
        
        229,399Total assets
        
        $
        30,024,615
        
        
        $
        56,894,453Liabilities, Mandatorily Redeemable Convertible Preferred Stock
and Shareholders Equity (Deficit)Current liabilities:Floor plan notes payable
        
        $
        15,036,125
        
        
        $
        31,034,172Accounts payable
        
        
        1,861,778
        
        
        
        2,131,754Customer deposits
        
        
        135,924
        
        
        
        142,962Accrued expenses and other current liabilities
        
        
        3,097,076
        
        
        
        3,529,825Current portion of deferred finance and insurance income
        
        
        1,332,970
        
        
        
        1,847,591Current portion of capital lease obligation
        
        
        80,586
        
        
        
        126,015Current portion of LIFO tax liability
        
        
        
        
        
        
        333,935Current portion of mortgages payable
        
        
        6,744,609
        
        
        
        198,412Current portion of notes payable
        
        
        1,582,479
        
        
        
        1,662,923Notes payable to affiliate
        
        
        3,780,000
        
        
        
        Current portion of deferred gain on leaseback transaction
        
        
        403,714
        
        
        
        48,624Total current liabilities
        
        
        34,055,261
        
        
        
        41,056,213Long-term deferred finance and insurance income
        
        
        707,461
        
        
        
        855,355Long-term capital lease obligation, less current portion
        
        
        321,014
        
        
        
        123,177LIFO tax liability, less current portion
        
        
        
        
        
        
        333,935Long-term mortgages payable, less current portion
        
        
        
        
        
        
        6,787,776Long-term notes payable, less current portion
        
        
        206,477
        
        
        
        500,000Deferred gain on leaseback transaction, less current portion
        
        
        241,570
        
        
        
        376,858Series A and AA common stock warrant
        
        
        25,000
        
        
        
        Total liabilities
        
        
        35,556,783
        
        
        
        50,033,314Commitments and contingenciesMandatorily Redeemable Convertible Series A Preferred stock
$.01 par value; shares authorized 2,000,000;
issued and outstanding 20,000 at October 31, 2002
        
        
        2,640,683
        
        
        
        Mandatorily Redeemable Convertible Series AA-2 Preferred stock
$.01 par value; shares authorized 1,500,000;
issued and outstanding 15,000 at October 31, 2002
        
        
        1,988,058
        
        
        
        Shareholders Equity (deficit):Common stock, $.10 par, shares authorized 38,000,000;
issued 983,138 and 935,200
        
        
        98,314
        
        
        
        93,520Additional paid-in capital
        
        
        15,665,240
        
        
        
        13,630,108Accumulated deficit
        
        
        (25,382,808
        )
        
        
        (6,320,834
        )Treasury stock, 30,070 shares at cost
        
        
        (541,655
        )
        
        
        (541,655
        )Total shareholders equity (deficit)
        
        
        (10,160,909
        )
        
        
        6,861,139Total liabilities, redeemable convertible preferred stock
and shareholders equity (deficit)
        
        $
        30,024,615
        
        
        $
        56,894,453


See accompanying notes to consolidated financial statements

F-2



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##### Table of Contents



HOLIDAY RV SUPERSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED OCTOBER 31,2002
        
        2001
        
        2000Sales and service revenueVehicle and marine
        
        $
        68,976,425
        
        
        $
        120,794,939
        
        
        $
        138,155,081Service, parts and accessories
        
        
        6,549,748
        
        
        
        10,075,207
        
        
        
        9,240,171Other, net
        
        
        2,353,151
        
        
        
        3,218,422
        
        
        
        4,972,094Total sales and service revenue
        
        
        77,879,324
        
        
        
        134,088,568
        
        
        
        152,367,346Cost of sales and serviceVehicles and marine
        
        
        64,362,745
        
        
        
        109,711,839
        
        
        
        122,284,905Service, parts and accessories
        
        
        2,879,776
        
        
        
        5,989,109
        
        
        
        5,089,500Total cost of sales and service
        
        
        67,242,521
        
        
        
        115,700,948
        
        
        
        127,374,405Gross profit
        
        
        10,636,803
        
        
        
        18,387,620
        
        
        
        24,992,941Selling, general and administrative expenses
        
        
        18,631,228
        
        
        
        26,836,270
        
        
        
        25,031,909Goodwill impairment
        
        
        4,759,102
        
        
        
        1,572,590
        
        
        
        Marketing expense
        
        
        1,520,000
        
        
        
        
        
        
        
        Good Sam Endorsement impairment
        
        
        1,258,332
        
        
        
        
        
        
        
        (Gain) loss on sale of fixed assets
        
        
        571,891
        
        
        
        106,095
        
        
        
        (35,845
        )Loss from operations
        
        
        (16,103,750
        )
        
        
        (10,127,335
        )
        
        
        (3,123
        )Other income (expense):Interest income
        
        
        9,567
        
        
        
        47,707
        
        
        
        117,788Interest expense
        
        
        (2,442,925
        )
        
        
        (4,641,117
        )
        
        
        (5,094,560
        )Interest expense on note payable to affiliate
        
        
        (2,137,616
        )
        
        
        
        
        
        
        Total other expense
        
        
        (4,570,974
        )
        
        
        (4,593,410
        )
        
        
        (4,976,772
        )Loss on debt conversion
        
        
        (167,784
        )
        
        
        (1,523,545
        )
        
        
        Gain on involuntary sale of assets
        
        
        
        
        
        
        358,562
        
        
        
        Loss before income tax benefit and
cumulative effect of a change in accounting principle
        
        
        (20,842,508
        )
        
        
        (15,885,728
        )
        
        
        (4,979,895
        )Income tax benefit
        
        
        (1,780,534
        )
        
        
        (53,343
        )
        
        
        (1,775,120
        )Loss before cumulative effect of a change
in accounting principle
        
        
        (19,061,974
        )
        
        
        (15,832,385
        )
        
        
        (3,204,775
        )Cumulative effect as of November 1, 2000 related to
the implementation of SAB 101 (See Note 2)
        
        
        
        
        
        
        (2,189,271
        )
        
        
        Net loss
        
        
        (19,061,974
        )
        
        
        (18,021,656
        )
        
        
        (3,204,775
        )Deemed dividend on redeemable convertible preferred stock
        
        
        (1,195,487
        )
        
        
        
        
        
        
        Net
loss available to common stockholders
        
        $
        (20,257,461
        )
        
        $
        (18,021,656
        )
        
        $
        (3,204,775
        )BASIC AND DILUTED LOSS PER COMMON SHARE:Loss before cumulative effect of a change in
accounting principle
        
        $
        (21.52
        )
        
        $
        (19.42
        )
        
        $
        (4.22
        )Cumulative effect as of November 1, 2000 related to
the implementation of SAB 101
        
        
        
        
        
        
        (2.69
        )
        
        
        Net loss
        
        $
        (21.52
        )
        
        $
        (22.11
        )
        
        $
        (4.22
        )Pro-forma amounts assuming SAB 101 is applied
retroactively:Net loss
        
        
        
        
        
        
        
        
        
        $
        (4,130,000
        )Basic and diluted loss per
common share
        
        
        
        
        
        
        
        
        
        $
        (5.43
        )


See accompanying notes to consolidated financial statements

F-3



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##### Table of Contents



HOLIDAY RV SUPERSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT)
YEARS ENDED OCTOBER 31, 2001, 2000 AND 1999

Common Stock
        
        Additional
        
        Retained
        
        Treasury StockPaid-in
        
        EarningsShares
        
        Amount
        
        Capital
        
        (deficit)
        
        Shares
        
        Amount
        
        TotalBalance at October 31, 1999
        
        
        750,500
        
        
        $
        75,050
        
        
        $
        5,184,371
        
        
        $
        14,905,597
        
        
        
        30,700
        
        
        $
        (541,655
        )
        
        $
        19,623,363Net loss for the year
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (3,204,775
        )
        
        
        
        
        
        
        
        
        
        
        (3,204,775
        )Exercise of common stock options
        
        
        13,500
        
        
        
        1,350
        
        
        
        234,316
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        235,666Stock option compensation expense
        
        
        
        
        
        
        
        
        
        
        72,290
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        72,290Options and warrants issued to lenders
and consultants
        
        
        
        
        
        
        
        
        
        
        308,220
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        308,220Tax benefit of incentive stock options
        
        
        
        
        
        
        
        
        
        
        65,000
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        65,000Shares issued for acquisition
        
        
        30,000
        
        
        
        3,000
        
        
        
        1,275,000
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        1,278,000Balance at October 31, 2000
        
        
        794,000
        
        
        
        79,400
        
        
        
        7,139,197
        
        
        
        11,700,822
        
        
        
        30,700
        
        
        
        (541,655
        )
        
        
        18,377,764Net loss for the year
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (18,021,656
        )
        
        
        
        
        
        
        
        
        
        
        (18,021,656
        )Stock option compensation expense
        
        
        
        
        
        
        
        
        
        
        49,500
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        49,500Debt conversion
        
        
        91,200
        
        
        
        9,120
        
        
        
        4,645,285
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        4,654,405Stock issued to consultant
        
        
        50,000
        
        
        
        5,000
        
        
        
        1,575,000
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        1,580,000Options and warrants issued to lenders
and consultants
        
        
        
        
        
        
        
        
        
        
        221,126
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        221,126Balance at October 31, 2001
        
        
        935,200
        
        
        $
        93,520
        
        
        $
        13,630,108
        
        
        $
        (6,320,834
        )
        
        
        30,700
        
        
        $
        (541,655
        )
        
        $
        6,861,139Net loss for the year
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (19,061,974
        )
        
        
        
        
        
        
        
        
        
        
        (19,061,974
        )Interest
expense for beneficial conversion feature of convertible note payable
        
        
        
        
        
        
        
        
        
        
        1,600,000
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        1,600,000Preferred
stock marketing expense
        
        
        
        
        
        
        
        
        
        
        2,000,000
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        2,000,000Preferred stock deemed dividends
        
        
        
        
        
        
        
        
        
        
        (875,000
        )
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (1,375,000
        )Preferred stock legal costs
        
        
        
        
        
        
        
        
        
        
        (160,000
        )
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (160,000
        )Preferred stock dividends accrued or paid
        
        
        
        
        
        
        
        
        
        
        (320,487
        )
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (320,487
        )Warrants
issued
        
        
        
        
        
        
        
        
        
        
        (660,000
        )
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (160,000
        )Note payable converted to common stock
        
        
        47,938
        
        
        
        4,794
        
        
        
        450,619
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        455,413Balance at October 31, 2002
        
        
        983,138
        
        
        $
        98,314
        
        
        $
        15,665,240
        
        
        $
        (25,382,808
        )
        
        
        30,700
        
        
        $
        (541,655
        )
        
        $
        (10,160,909
        )


See accompanying notes to consolidated financial statements

F-4



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##### Table of Contents



HOLIDAY RV SUPERSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED OCTOBER 31,2002
        
        2001
        
        2000Cash Flows from Operating Activities:Cash received from customers
        
        $
        81,636,094
        
        
        $
        136,570,671
        
        
        $
        153,156,135Cash paid to suppliers and employees
        
        
        (88,368,858
        )
        
        
        (135,726,680
        )
        
        
        (149,099,253
        )Interest received
        
        
        9,567
        
        
        
        47,707
        
        
        
        338,155Interest paid
        
        
        (2,980,541
        )
        
        
        (4,850,627
        )
        
        
        (4,935,418
        )Income taxes (paid) refunded
        
        
        2,310,422
        
        
        
        1,454,809
        
        
        
        (28,084
        )Good Sam Endorsement Fee
        
        
        (1,500,000
        )
        
        
        
        
        
        
        Net cash used in operating activities
        
        
        (8,893,316
        )
        
        
        (2,504,120
        )
        
        
        (568,465
        )Cash Flows from Investing Activities:Purchase of property and equipment
        
        
        (257,445
        )
        
        
        (580,801
        )
        
        
        (3,418,066
        )Proceeds from the sale of property and equipment
        
        
        1,010,720
        
        
        
        596,814
        
        
        
        688,106Restricted cash
        
        
        585,263
        
        
        
        (1,131,662
        )
        
        
        Proceeds from casualty gain
        
        
        
        
        
        
        620,888
        
        
        
        Payments for businesses acquired, net of cash
        
        
        
        
        
        
        
        
        
        
        (6,180,770
        )Net cash provided by (used in) investing activities
        
        
        1,338,538
        
        
        
        (494,761
        )
        
        
        (8,910,730
        )Cash Flows from Financing Activities:Proceeds from note payable to affiliate
        
        
        3,780,000
        
        
        
        
        
        
        
        Proceeds from notes payable
        
        
        486,006
        
        
        
        2,000,000
        
        
        
        3,921,358Repayment of capital lease obligations
        
        
        (142,923
        )
        
        
        (82,987
        )
        
        
        (78,944
        )Repayments of notes and mortgages payable
        
        
        (1,341,789
        )
        
        
        (1,040,000
        )
        
        
        (5,802,020
        )Proceeds from the exercised stock options
        
        
        
        
        
        
        
        
        
        
        231,998Proceeds from notes on real property
        
        
        
        
        
        
        
        
        
        
        2,200,000Proceeds from the sale-leaseback of property
        
        
        840,000
        
        
        
        
        
        
        
        2,102,891Proceeds from the issuance of Series A redeemable preferred stock
        
        
        2,000,000
        
        
        
        
        
        
        
        Payment of Series A issuance cost
        
        
        (150,000
        )
        
        
        
        
        
        
        Proceeds from the issuance of Series AA-2 redeemable preferred stock
        
        
        1,500,000
        
        
        
        
        
        
        
        Payment of Series AA-2 issuance cost
        
        
        (10,000
        )
        
        
        
        
        
        
        Proceeds from Series B advance
        
        
        500,000
        
        
        
        
        
        
        
        Net cash provided by financing activities
        
        
        7,461,294
        
        
        
        877,013
        
        
        
        2,575,283Net decrease in Cash and Cash Equivalents
        
        
        (93,484
        )
        
        
        (2,121,868
        )
        
        
        (6,903,912
        )Cash and Cash Equivalents, beginning of year
        
        
        93,484
        
        
        
        2,215,352
        
        
        
        9,119,264Cash and Cash Equivalents, end of year
        
        $
        
        
        
        $
        93,484
        
        
        $
        2,215,352


See accompanying notes to consolidated financial statements.

F-5



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##### Table of Contents



HOLIDAY RV SUPERSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS  CONTINUED

YEARS ENDED OCTOBER 31,2002
        
        2001
        
        2000RECONCILIATION OF NET LOSS TO NET CASH USED IN
OPERATING ACTIVITIESNet loss
        
        $
        (19,061,974
        )
        
        $
        (18,021,656
        )
        
        $
        (3,204,775
        )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation and amortization
        
        
        1,157,289
        
        
        
        1,083,282
        
        
        
        803,546Amortization of deferred gain
        
        
        (51,001
        )
        
        
        (48,626
        )
        
        
        Writedown of inventories to market
        
        
        2,856,289
        
        
        
        2,578,694
        
        
        
        Stock option compensation and warrant issuance
        
        
        31,620
        
        
        
        270,626
        
        
        
        380,510Deferred income taxes
        
        
        
        
        
        
        
        
        
        
        (337,896
        )Income tax benefit
        
        
        
        
        
        
        
        
        
        
        (1,437,224
        )Provision for doubtful accounts
        
        
        798,600
        
        
        
        150,000
        
        
        
        Net (gain) loss on disposal of property and equipment
        
        
        305,744
        
        
        
        106,095
        
        
        
        (35,845
        )Gain on involuntary conversion of assets
        
        
        
        
        
        
        (358,562
        )
        
        
        Loss on debt conversion
        
        
        
        
        
        
        1,523,545
        
        
        
        Impairment of goodwill
        
        
        5,426,972
        
        
        
        1,572,590
        
        
        
        Stock issued to consultant
        
        
        
        
        
        
        1,580,000
        
        
        
        Impairment of long-lived assets
        
        
        490,000
        
        
        
        
        
        
        
        Reserve on property held for sale
        
        
        110,000
        
        
        
        
        
        
        
        Note conversion expense
        
        
        167,784
        
        
        
        
        
        
        
        Remeasurement of warrant liability
        
        
        (660,000
        )
        
        
        
        
        
        
        Marketing expense
        
        
        2,180,000
        
        
        
        
        
        
        
        Interest
expense for beneficial conversion feature of convertible note payable
        
        
        1,600,000
        
        
        
        
        
        
        
        Good Sam impairment
        
        
        1,258,332
        
        
        
        
        
        
        
        Cumulative effect as of November 1, 2001 related to the
implementation of SAB 101
        
        
        
        
        
        
        2,189,271
        
        
        
        Changes in assets and liabilities(Increases) decreases in:Accounts receivable
        
        
        1,474,935
        
        
        
        1,671,763
        
        
        
        (162,940
        )Refundable income taxes
        
        
        529,888
        
        
        
        869,905
        
        
        
        (28,084
        )Inventories
        
        
        13,062,718
        
        
        
        23,039,440
        
        
        
        (1,520,326
        )Prepaid expenses
        
        
        (201,432
        )
        
        
        281,987
        
        
        
        (168,814
        )Deferred income taxes
        
        
        
        
        
        
        866,948
        
        
        
        Payment of Good Sam Endorsement Fee
        
        
        (1,500,000
        )
        
        
        
        
        
        
        Other assets
        
        
        (631,119
        )
        
        
        437,052
        
        
        
        1,334,654Increases (decreases) in:Floor plan contracts
        
        
        (15,998,047
        )
        
        
        (22,850,069
        )
        
        
        3,650,002Accounts payable
        
        
        (269,976
        )
        
        
        941,614
        
        
        
        (1,254,625
        )Customer deposits
        
        
        (7,038
        )
        
        
        (262,716
        )
        
        
        294,159Accrued expenses
        
        
        (1,228,284
        )
        
        
        208,632
        
        
        
        1,119,193LIFO liability
        
        
        (667,870
        )
        
        
        (333,935
        )
        
        
        Preferred stock dividends paid
        
        
        (66,746
        )
        
        
        
        
        
        
        Net cash used in operating activities
        
        $
        (8,893,316
        )
        
        $
        (2,504,120
        )
        
        $
        (568,465
        )


See accompanying notes to consolidated financial statements.

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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED OCTOBER 31, 2002, 2001 AND 2000

1. ORGANIZATION AND NATURE OF BUSINESS

Holiday RV Superstores, Inc. and its wholly-owned subsidiaries (Holiday, the
Company, we, us or our) is a multi-state retail chain of dealerships
engaged in the retail sales, financing, and service of recreation vehicles, or
RVs, and other recreation vehicles under the name Recreation USA in the
Southeastern United States, West Virginia, Kentucky and New Mexico. Each
dealership offers a full line of new and used RVs and each dealership maintains
parts, service and body repair facilities. Recreational boats are carried at
selected dealerships.

The Companys dealerships have historically experienced, and we expect its
dealerships to continue to experience, seasonal fluctuations in revenues with a
larger percentage of revenues typically being realized in the second quarter of
our fiscal year.

Effective November 11, 1999, the Company acquired all of the outstanding
capital stock of County Line Select Cars, Inc. for a cash price of $5,000,000
and $1,500,000 in notes convertible into the Companys common
stock (See Note 4).

On March 1, 2000, the Company acquired all of the outstanding stock of Little
Valley Auto & RV Sales, Inc. for a cash price of $1,656,036 and $1,731,920 in a
note convertible into the Companys common stock (See Note 4).

On October 31, 2000, the Company purchased all of the outstanding stock of Hall
Enterprises, Inc. The total purchase price paid was $1,278,000 and consisted of
30,000 shares of the Companys common stock (See Note 4).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles Of Consolidation: The consolidated financial statements include the
accounts of Holiday RV Superstores, Inc. and its wholly-owned subsidiaries,
which include Holiday RV Rental/Leasing, Inc., Holiday RV Superstores of South
Carolina, Inc., Holiday RV Superstores West, Inc., Holiday RV Superstores of
New Mexico, Inc., Holiday RV Superstores of Nevada, Inc., Holiday RV Assurance Corporation, County Line Select Cars,
Inc., Little Valley Auto & RV Sales, Inc., Collision USA, Inc. and Hall Enterprises, Incorporated.
All inter-company accounts and transactions have been eliminated in
consolidation.

Basis Of Presentation: The accompanying Consolidated Financial Statements have
been prepared on a going concern basis, which contemplate continuity of
operations, realization of assets, and liquidation of liabilities in the
ordinary course of business and do not reflect adjustments that might result if
the Company is unable to continue as a going concern.

Going
Concern:     As more fully discussed in Note 10 the Companys primary floor plan agreement
expired on December 13, 2002 at which point in time the agreement was amended
and acquired by a company wholly-owned by the Companys now
majority stockholder, Mr. Adams, hereafter referred to as
Mr. Adams or the Companys now majority
stockholder. Pursuant to the amendment, the
Companys floor plan prohibits any future advances. The Company is essentially
operating without a primary floor plan lender. The acquisition of new and used
inventory is being funded by the Companys internally generated working
capital. Without an adequate floor plan facility, the Company does
not have sufficient resources to fund operating deficits or meet its
operating requirements. The Company has been unsuccessful in its
attempts to obtain an adequate floor plan facility. All of the debt
of the Companys primary lender is due upon demand or in default
and the Company has been unsuccessful in its requests to its primary
lender to restructure the debt and to permit additional advances.
Without additional financing, management believes that the
Companys alternatives are limited to continuing to sell its
inventory, without the ability to replenish its inventory, close or
sell the remaining retail stores, reduce the Companys corporate
overhead, or seek bankruptcy. Management believes that corporate
overhead can be reduced only on a limited basis while the Company continues as a
reporting company under the Securities Exchange Act of 1934.
Failure to raise additional capital and secure a primary floor plan
lender would have a material adverse
effect on the Company and raises substantial doubt about the
Companys ability to continue as a going concern.

Additionally, the Company incurred
losses of $19,061,974, $18,021,656 and
$3,204,775 for the years ended October 31, 2002, 2001 and 2000, respectively,
incurred net cash outflows from operations of $8,893,316, $2,504,120 and
$568,465 for the years ended October 31, 2002, 2001 and 2000,
respectively, had negative working capital of $10,392,319 and
$1,396,044 as of October 31, 2002 and 2001, respectively, and
had an accumulated shareholders deficit of $10,160,909 as of
October 31, 2002.
During late 2001 certain inventory initiatives coupled with restrictions placed
on the Companys ability to order new product by its primary floor plan lender
resulted in a 46.3% reduction in the year-over-year inventory levels. In
addition, the short-term performance and the long-term potential for each
retail location were reviewed together with each dealerships management team.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

As a result, three dealerships that were under-performing or competing in the
same markets were closed and/or consolidated into other Company dealerships
during the fiscal year ended October 31, 2001 and an additional six more
dealerships were closed and consolidated during the fiscal year ended October
31, 2002. In September 2002, the Company sold the real estate at its Las
Cruces, New Mexico dealership and leased it back in order to pay down its loan
to Bank of America. In December 2002, the Company sold its dealership in
Bakersfield, California to pay down its loan to Bank of America. Additionally,
during March 2003 and April 2003, the Company sold its stores in Spartanburg,
South Carolina and Las Cruces, New Mexico and utilized the proceeds to pay down
its primary floor plan. While management believes that with the restructuring
of its dealerships and the focus on managing its inventory to optimum levels
and turns and the continuation of rigid expense control will improve the
operating performance from the remaining stores, without an adequate floor plan
facility the Company will be unable to fund operating deficits or
meet its operating requirements. The Company has been unsuccessful in its attempts to obtain an
adequate floor plan facility. All of the debt of the Companys primary lender
is due upon demand or in default and the Company has been unsuccessful in its
requests to its primary lender to restructure the debt and to permit additional
advances. Without additional financing, management believes that the
Companys alternatives are limited to continuing to sell its
inventory, without the ability to replenish its inventory, close or
sell the remaining retail stores, reduce the Companys corporate
overhead, or seek bankruptcy protection. Management believes that
corporate overhead can be reduced only on a limited basis while the Company
continues as a reporting company under the Securities Exchange
Act of 1934. Failure to raise additional capital and obtain an
adequate floor plan credit facility would have a
material adverse effect on the Company and raises substantial doubt
about the Companys ability to continue as a going concern.

Reverse Stock Split: On August 7, 2002 the Company effected a 1-for-10 reverse split of all
outstanding shares and treasury shares of the Companys common stock. All share
and per share data contained herein reflects completion of the above-described
1-for-10 share reverse stock split.

Cash And Cash Equivalents: Holiday considers all highly liquid debt instruments
with a maturity of three months or less at the time of purchase to be cash
equivalents. Cash and cash equivalents consist of checking accounts, money
market funds and overnight repurchase agreements.

Restricted Cash and Investments: Restricted cash and investments represents
amounts deposited with financial institutions as required to be maintained
under contractual obligation.

Inventories: Inventories are valued at the lower of cost or market. New and
used vehicles are accounted for using specific identification. Cost of parts
and accessory inventories is determined by the first-in, first-out (FIFO)
method.

Property And Equipment: Property and equipment are stated at cost. Depreciation
is computed over the estimated useful lives of the assets by the straight-line
method for financial reporting purposes. Amortization of leasehold improvements
is computed using the straight-line method over the estimated useful lives of
the assets or the term of the lease, whichever is shorter. The estimated useful
lives of the property and equipment range from 3 to 31 years. Maintenance and
repairs are charged to expense as incurred. The carrying amount and accumulated
depreciation of assets, which are sold or retired, are removed from the
accounts in the year of disposal and any resulting gain or loss is included in
the results of operations.

Intangible Assets: Intangible assets include costs in excess of identifiable
assets acquired (goodwill). Prior to impairment, goodwill was being amortized using the straight-line
method over 20 years. The Company has written-off all goodwill
as of October 31, 2002.

Accounting for the Impairment of Long-Lived Assets: The Company periodically
evaluates the potential impairment of its long-lived assets, including property
and equipment and intangible assets, whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Events or circumstances considered include, but are not limited
to, recent operating losses, projected cash flows and managements plans for
future operations. Upon the occurrence of a certain event or change in
circumstances, the Company evaluates the potential impairment of any asset
based on estimated future undiscounted cash flows. If impairment exists, the
Company will measure the amount of such impairment based on the present value
of the estimated cash flows over the remaining life of the asset using a
discount rate commensurate with the risks involved. Cash flow estimates are
made at the retail location level and include the interest charges associated
with the locations floor plan financing.

Income Taxes: Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus
deferred taxes resulting from temporary differences. The temporary differences
result from differences in the carrying value of assets and liabilities for tax
and financial reporting purposes. The deferred tax assets and liabilities
represent the future tax consequences of those differences, which will either
be taxable or deductible when the assets and liabilities are recovered or
settled. Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized.

F-8



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

Revenue Recognition and Cumulative Effect of Change in Accounting Principle:
Retail sales and related costs of vehicles, parts and service are recognized in
operations upon delivery of products or services to customers or, in the case
of RVs, when the title passes to the customer.

Prior to November 1, 2000, commissions earned by the Company for placing retail
financing contracts with indirect lending institutions in connection with
customer vehicle and marine purchases and customer purchases of credit life
insurance products were recognized when the related vehicle or marine sale was
recognized. Pursuant to dealer agreements negotiated with the indirect retail
lending institutions and credit life insurance companies, the Company is
charged back for all or a portion of these commissions should the customer
terminate or default on the related contract during a stipulated period
beginning at the contract date. After the passage of the stipulated period, all
commissions received are not subject to charge back. The Company established a
reserve for possible chargebacks based on historical experience for the
repayment of commissions to the indirect lenders and credit life insurance.

Prior to November 1, 2001, commissions earned on extended warranty and service
contracts sold on behalf of third-party administrators are generally recognized
at the later of customer acceptance of the contract terms as evidenced by
contract execution, or when the related vehicle or marine sale is recognized.
The Company is charged back for a portion of these commissions should the
customer terminate or default on the contract prior to its scheduled maturity.
The chargeback reserve, which is not material to the financial statements taken
as a whole as of October 31, 2002 and 2001 is based on the Companys experience
for repayments or defaults on these contracts.

Effective November 1, 2000, the Company changed its revenue recognition policy
related to commissions earned by the Company for placing retail financing
contracts with indirect lending institutions in connection with customer
vehicle and marine purchases and customer purchases of credit life insurance
products to defer these commissions until the chargeback period has lapsed.
Also effective November 1, 2000, the Company changed its Revenue Recognition
policy related to commissions earned on the Sales of Administration obligor
extended warranty and service contracts to defer these commissions until this
100% chargeback period has lapsed and to recognize revenue ratably over the
remaining life of the contracts as commissions are earned and not subject to
chargeback. This change was made in accordance with the implementation of the
U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 101,
Revenue Recognition in Financial Statements (SAB 101). The effect of this
change is reported as the cumulative effect of a change in accounting principle
in the year ended October 31, 2001. The net effect reflects the deferral as of
November 1, 2000 of $2,189,271 of revenue net of chargebacks previously
recognized. The Company recognized approximately $1,187,000 of the revenue
included in the cumulative effect adjustment during the year ended October 31,
2001. The effects of this change in accounting principle on net loss and net
loss per share for the year ended October 31, 2001 were decreases of
approximately $168,000 and $0.18 per share respectively.

Stock-Based Compensation: Holiday accounts for stock option grants and other
forms of employee stock-based compensation in accordance with the requirements
of Accounting Principles Board Opinion No. 25, Accounting For Stock Issued To
Employees (APB 25), and related interpretations. APB 25 requires compensation
cost for stock-based compensation plans to be recognized based on the
difference, if any, between the fair market value of the stock on the date of
grant and the option exercise price. Holiday provides the disclosure
requirements of Statement of Financial Accounting Standards No. 123, Accounting
for Stock Based Compensation (SFAS 123) and related interpretations.
Stock-based awards to non-employees are accounted for under the provisions of
SFAS 123.

Loss Per Common Share: Basic earnings (loss) per common share is calculated by
dividing net income (loss) by the weighted average number of shares
outstanding. Diluted earnings (loss) per common share is based upon the
weighted average number of shares outstanding, plus the effects of potentially
dilutive common shares consisting of stock options and warrants. For the years
ended October 31, 2002 and 2001, options to purchase 56,000 and 75,217 shares
of common stock, respectively, and warrants to purchase 395,000 and 40,700
shares of common stock, respectively, were excluded from the calculation of
loss per share since their inclusion would be antidilutive (See
Note 15 Stock Options and Warrants).

F-9



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

A reconciliation of the weighted average number of shares outstanding used in
the computation of basic and diluted earnings (loss) per share is as follows:

OCTOBER 31,2002
        
        2001
        
        2000BasicWeighted average number of common shares
outstanding
        
        
        941,117
        
        
        
        815,265
        
        
        
        759,240DilutedWeighted average number of common shares
outstanding
        
        
        941,117
        
        
        
        815,265
        
        
        
        759,240Dilutive stock options and convertible notes
        
        
        
        
        
        
        
        
        
        
        941,117
        
        
        
        815,265
        
        
        
        759,240


Advertising: Advertising costs, included in selling, general and administrative
expenses, are expensed as incurred. Advertising costs were approximately
$916,000 $2,680,000 and $2,679,000 for the years ended October 31, 2002, 2001
and 2000, respectively.

Fair Value Of Financial Instruments: The carrying amounts of financial
instruments including cash and cash equivalents, accounts receivable and
payable, accrued and other current liabilities and current maturities of
long-term debt approximate fair value due to their short maturity. Based on
borrowing rates currently available to the Company for loans with similar
terms, the carrying value of notes payable, mandatorily redeemable preferred
stock and capital lease obligations approximate fair value.

Use Of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Comprehensive Income (loss): For all periods presented, comprehensive income
(loss) is equal to historical income (loss).

Reclassifications: Certain prior year account balances have been reclassified
to confirm with the fiscal 2002 presentation.

Recent Accounting Pronouncements: In June 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 141,
Business Combinations (SFAS 141) and Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS No.
141 requires business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting, and broadens the
criteria for recording intangible assets separate from goodwill. Recorded
goodwill and intangibles will be evaluated against that new criteria and may
result in certain intangibles being subsumed into goodwill, or alternatively,
amounts initially recorded as goodwill may be separately identified and
recognized apart from goodwill. SFAS No. 142 requires the use of a
non-amortization approach to account for purchased goodwill and certain
intangibles. Under a non-amortization approach, goodwill and certain
intangibles will not be amortized into results of operations, but instead would
be reviewed for impairment and written down and charged to results of
operations only in the periods in which the recorded value of goodwill and
certain intangibles is more than its fair value. SFAS 142 is required to be
applied starting with fiscal years beginning after December 15, 2001, with
early application permitted in certain circumstances. Management does not
expect SFAS 142 to have a material effect on the Companys financial
statements. During the year ended October 31, 2002, the Company determined the
realizability of its goodwill was impaired and recorded a charge of $4,759,102
(see Note 8).

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement
Obligations (SFAS 143). SFAS 143 establishes accounting standards for
recognition and measurement of a liability for asset retirement obligation and
the associated asset retirement cost. SFAS 143 is effective for financial
statements relating to fiscal years beginning after June 15, 2002. Management
does not expect SFAS 143 to have a material effect on the Companys financial
statements.

F-10



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

In September 2001, the Financial Accounting Standards Board issued Statement Of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS 144) SFAS 144 addresses the financial
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS 144 is effective for financial statements issued for fiscal years
beginning after December 15, 2001. Management is still analyzing the potential
impacts of this pronouncement.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
CompensationTransition and Disclosure. SFAS No. 148 amends SFAS No. 123
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. SFAS No. 148 is effective for fiscal years beginning after December
15, 2002. The interim disclosure provisions are effective for financial
reports containing financial statements for interim periods beginning after
December 15, 2002. We do not believe that the implementation of SFAS No. 148
will have a material impact on our financial condition or results of
operations.

3. SUPPLEMENTAL CASH FLOW INFORMATION

The following table summarizes the Companys non-cash investing and financing
transactions:

FISCAL YEAR ENDED OCTOBER 31,2002
        
        2001
        
        2000Equipment acquired through Capital Lease
        
        $
        297,000
        
        
        $
        
        
        
        $
        Declared but unpaid dividends
        
        
        1,128,741
        
        
        
        
        
        
        
        Common stock issued for business acquisitions
        
        
        
        
        
        
        
        
        
        
        1,278,000Mortgage notes payable assumed in connection with
acquisition of building and land
        
        
        
        
        
        
        
        
        
        
        5,010,864Convertible notes payable issued in connection with
business acquisitions
        
        
        
        
        
        
        
        
        
        
        3,231,920Conversion of seller notes
        
        
        287,629
        
        
        
        3,231,920
        
        
        
        Common stock issuable to financial consultant
        
        
        
        
        
        
        1,580,000
        
        
        
        Vehicles delivered as repayment of bridge loan
        
        
        25,000
        
        
        
        132,987
        
        
        
        


4. ACQUISITIONS

On November 11, 1999 the Company acquired 100% of the issued and outstanding
stock of County Line Select Cars, Inc., a recreational vehicle dealership with
five Florida locations. The total purchase price paid to the County Line
shareholders was $6,500,000, consisting of $5,000,000 cash and $1,500,000 in
notes convertible into the Companys common stock. The acquisition has been
accounted for under the purchase method of accounting, which resulted in the
recognition of approximately $4,758,317 in goodwill, to be amortized over 20
years on a straight-line basis (see Note 8 regarding the
write-off of this goodwill). Operations of County Line are included in the
accompanying consolidated statement of operations beginning November 12, 1999.
On January 11, 2000, the Company acquired all of the land and buildings related
to the operations of County Line Select Cars, Inc. from County Lines former
shareholders. The total purchase price was $5,000,000, with the sellers
providing first mortgage financing for the entire purchase. The mortgage has a
10-year term at an interest rate of 9.5% per annum, with principal and interest
payable monthly based on a 20-year amortization. Due to certain
covenant violations, this mortgage is currently in default.
Accordingly, the Company has classified the entire outstanding
balance, $4,755,657, as current portion of mortgages payable in the
accompanying consolidated balance sheet as of October 31, 2002.
The holders of this note have brought a foreclosure action (see
Note 20).

The performance of the County Line dealerships in fiscal 2001 and 2002 and the
effect of each on the contiguous markets the four dealerships compete in
resulted in the Companys decision to close two dealerships in October, 2001
and one more dealership during the year ended October 31, 2002. The overall
performance in the market was unacceptable to the Company and the Companys
focus was to create one large dealership to service the entire area as compared
to the four dealerships. Management concluded that, given these actions, the
goodwill associated with the two locations closed in fiscal 2001 of $1,572,590
and the one location closed in fiscal 2002 of $922,383 were impaired and
accordingly the Company wrote off the related goodwill in the respective fiscal
years (see Note 8). The Company considers a number of factors to be its primary
indicators of potential impairment. With the Companys overall branding
philosophy under the Recreation USA name, the assignment of goodwill during the
acquisition phase of the Companys growth was location specific and derived
based on past performance of the individual acquired dealerships.

All inventory, furniture and equipment were transferred from the closed
dealerships to other Company dealerships for sale or placed into operation at
their current carrying value. The Company intends to sell the real estate of
the closed dealerships discussed above. Accordingly, the Company recorded a
charge of $600,000, including the $490,000 non-cash charge discussed
in Note 6, to reduce the carrying value of the related real estate to
its fair market value of $3,542,186, which it included in property held for
sale in the accompanying consolidated balance sheet as of October 31, 2002.

F-11



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

On March 1, 2000, the Company acquired 100% of the issued and outstanding stock
of Little Valley Auto & RV Sales, Inc. (Little Valley), a recreational
vehicle dealership in Prosperity, West Virginia. Little Valley also sold marine
products, motorcycles and all terrain vehicles. The total purchase price paid
to the Little Valley shareholders was $3,431,920, consisting of $1,656,036 cash
and $1,731,920 in a note convertible into Holiday common stock. The acquisition
has been accounted for under the purchase method of accounting, which resulted
in the recognition of $1,847,793 in goodwill, to be amortized over 20 years on
a straight-line basis. During July 2002, the Company determined that this
goodwill was impaired and recorded a charge of $1,631,900 to writeoff the
unamortized balance at that time (see Note 8). Operations of Little Valley are
included in the accompanying consolidated statement of operations beginning
March 1, 2000.

On October 31, 2000 the Company acquired 100% of the issued and outstanding
stock of Halls Enterprises, Inc. (Hall), a recreational vehicle dealership
in Lexington, Kentucky. The total purchase price paid to Halls shareholders
was approximately $1,278,000, paid with Companys common stock valued at $42.60
per share based on the average of the stocks trading value for the five days
before and five days after the acquisition was announced. The acquisition has
been accounted for under the purchase accounting method, and, accordingly the
results of operations of Hall have been included in the Companys consolidated
financial statements from October 31, 2000. The excess purchase price over the
fair value of the net identifiable assets acquired of $1,380,637 was recorded
as goodwill, to be amortized over 20 years on a straight line basis. During
July 2002, the Company reevaluated certain tax liabilities which were
established at the acquisition date of a business and the Company has
determined that, due to continued operating losses, those liabilities will not
be incurred which resulted in a reduction of goodwill in the amount of
$667,870. Additionally, during July 2002, the Company determined that the
remaining unamortized goodwill was impaired and recorded a charge of $591,957
to write-off the unamortized balance at that time (see Note 8).

On March 17, 2000 the Company entered into a lease with and acquired from Luke
Potter Winnebago inventory and selected operating assets, in connection with
the relocation of its Orlando, Florida dealership. In September 2002, this
location was closed and consolidated into the Companys
Clermont, Florida operations. Additionally, the Company was released
from its obligations under the related property lease.

ACQUISITION DEBT

In connection with the acquisition of County Line Select Cars, Inc., Holiday
issued two $750,000 notes to the former shareholders of County Line. The notes
had a three-year term and were issued at an interest rate of 8.25% per annum.
Payments of interest only were due quarterly, with the full principal balance
due no later than three years from issuance. The notes were convertible, at the
option of the holder, into common stock of Holiday at a fixed conversion price
per share, at any time after two years from the date of issuance.

In connection with the acquisition of Little Valley Auto & RV Sales, Inc.,
Holiday issued a note to the former shareholders of Little Valley in the amount
of $1,731,920. The note had a three-year term and was issued at an interest
rate of 7.5% per annum. Payments of interest only were due quarterly, with the
full principal balance due no later than three years from issuance. The note
was convertible, at the option of the holder, into common stock of Holiday at a
fixed conversion price per share, at anytime after two years from the date of
issuance.

In April 2001, the former shareholders of County Line Select Cars, Inc. and
Little Valley Auto & RV Sales, Inc. agreed to convert their seller notes into
shares of the Companys common stock. Seller notes with principal balances of
$3,231,920 were exchanged for 91,200 shares of the Companys common stock
valued at $2,688,486 based on the closing market price on the dates of
conversion as reported by the Nasdaq National Market. Since the terms of the
conversion modified the original conversion terms that would have called for
shares to be issued at a fixed conversion price of $75.00 per share resulting
in 43,092 shares, the Company was required to record a conversion expense equal
to the fair value of the incremental shares (48,108) issued, or $1,523,545
including merchandise credits and other consideration of $102,256.

The Company borrowed $1,600,000 in 2000 from Doerge Capital Management in
connection with the Little Valley acquisition. The interest rate was 15.0% per
annum. In connection with the loan, Holiday issued to the lender, warrants to
purchase 2,200 shares of Holiday common stock at the then market price. The
warrants have a five-year term and vest in one year. Approximately $29,000 in
value has been ascribed to the warrants using the Black-Scholes pricing model
and the Company has recognized the value as consulting expense. Principal and
interest were due 90 days from funding. The Company has repaid the loan in
full. A member of the Companys Board of Directors at the time was president of
Doerge Capital Management.

On May 11, 2000, the Company borrowed $1,000,000 from an officer of the
Company, principally to repay acquisition-related debt. The interest rate was
6.75% per annum. The Company paid $36,000 in loan fees to the lender and issued
warrants to purchase 1,000 shares of common stock of the Company at then market
price. The Company paid the loan principal and interest in full in August 2000.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

5. INVENTORIES

Inventories are summarized as follows:

OCTOBER 31,2002
        
        2001New Vehicles
        
        $
        14,461,757
        
        
        $
        27,279,230New Marine
        
        
        987,464
        
        
        
        516,340Used Vehicles
        
        
        2,098,659
        
        
        
        5,150,933Used Marine
        
        
        106,873
        
        
        
        57,440Parts and accessories
        
        
        804,686
        
        
        
        1,359,694$
        18,459,439
        
        
        $
        34,363,637


6. PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows:

OCTOBER 31,2002
        
        2001Land
        
        $
        1,019,244
        
        
        $
        2,988,978Buildings and leasehold improvements
        
        
        4,154,048
        
        
        
        7,630,164Machinery and shop equipment
        
        
        485,483
        
        
        
        315,479Office equipment and furniture
        
        
        1,754,499
        
        
        
        1,804,765Vehicles
        
        
        470,530
        
        
        
        621,2527,883,804
        
        
        
        13,360,638Less accumulated depreciation and amortization
        
        
        (1,704,216
        )
        
        
        (2,021,409
        )$
        6,179,588
        
        
        $
        11,339,229


Depreciation expense for the years ended October 31, 2002, 2001 and 2000 are
$676,860, $695,449 and $484,691, respectively.

On May 7, 2002, the Company entered into a contract to sell its Tampa, Florida
facility for $1,026,000. The transaction closed on May 15, 2002 and the Company
realized proceeds of $967,320, net of transaction costs. The proceeds from the
transaction were used to reduce the aggregate outstanding loan balance on the
Companys primary floor plan agreement. The gain of $333,852 relating to this
sale is included in loss from operations for the year ended October 31, 2002.

Impairment of long-lived assets are recognized when events or changes in
circumstances indicate that the carrying amount of the asset, or related groups
of assets, may not be recoverable and the Companys estimate of undiscounted
cash flows over the assets remaining estimated useful life are less than the
assets carrying value. Measurement of the amount of impairment may be based
upon appraisals, market values of similar assets or estimated discounted future
cash flows resulting from the use and ultimate disposition of the
asset. As a result of
managements continued focus on the operations of the Company and the related
closing and consolidation of one of the Companys dealerships, during the year
ended October 31, 2002, the Company recognized a non-cash charge of $490,000
relating to an impairment of land, buildings and leasehold improvements and fixed assets of the
related operation, which is included in selling, general and administrative
expenses in the consolidated statement of operations for the year ended October
31, 2002.

7. SALE-LEASEBACK

On July 27, 2000, the Company sold its Bakersfield, California dealership
facility for $2,100,000, which was $486,000 over its carrying value at the time
of the sale. Concurrently with the sale, Holiday entered into a lease
arrangement for the dealership facility with the purchaser for an annual lease
payment of $233,400 through 2010. The gain from the sale is being recognized
over the term of the lease. See Note 22 regarding the sale of
the Bakersfield dealership.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

On September 20, 2002, the Company sold the real property at its Las Cruces,
New Mexico dealership to an entity owned by Mr. Adams, the then majority holder of the
Companys Series A Preferred Stock (see Notes 13 and 22) and all of the
Companys Series AA Preferred Stock (see Notes 14 and 22) for $860,000, which
was $270,800 over its carrying value at the time of the sale and
approximately $440,000 less than its appraised value. Concurrent with
the sale, the Company entered into a 15 year lease for the dealership
facility with Mr. Adams for an annual lease payment of $123,000
increasing to $158,400 per year for the last five years of the lease, plus
taxes and insurance. The gain from the sale has been deferred
and is being recognized over the term of the lease.

8. GOODWILL

The excess of the purchase price over the fair values of the net assets
acquired from acquisitions of businesses has been recorded as goodwill and is
being amortized on a straight-line basis over 20 years.

Amortization expense for the years ended October 31, 2002, 2001 and 2000 was
$238,762, $387,834 and $266,438, respectively. Accumulated amortization at
October 31, 2002 and 2001 totaled $972,516 and $654,272, respectively. As
discussed below, a goodwill impairment charge of $4,759,102,
representing all unamortized goodwill, was recorded as a
charge to operations during the year ended October 31, 2002.

The Company continually evaluates whether events and circumstances have
occurred that may warrant revision of the estimated useful life of intangible
assets or whether the remaining balance of intangible assets should be
evaluated for possible impairment. The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the intangible assets and
other economic factors in measuring whether there is impairment. Measurement of
the amount of impairment may be based upon appraisals, market values of similar
assets or estimated discounted cash flow resulting from the use and ultimate
disposition of the asset.

During July 2002, as a result of the
passage of time and the Companys inability to secure an
adequate floor plan credit facility, management performed a detailed
analysis of the realizability of the Companys unamortized
goodwill. In July 2002, the Company decided to close and consolidate one of the Companys
dealerships. At that time, the unamortized goodwill relating to that dealership
was $922,383 and deemed to be not realizable. Accordingly, the Company recorded
a non-cash charge to write off the unamortized balance. Management has
reassessed the realizability of the goodwill associated with a dealership
acquired in March 2000. As of July 2002, this dealership had just completed
three selling seasons and had not been able to
demonstrate that it could generate sufficient cash flows to recover the
unamortized goodwill of $1,631,900 related to the store. Based on its
historical performance, management did not believe that this
goodwill was recoverable. Accordingly, the Company recorded a non-cash charge
to write off the unamortized balance. Additionally, management has reassessed
the realizability of the goodwill associated with a dealership acquired in
November 2000. As of July 2002, this dealership had just completed
two selling seasons and had not been able to demonstrate that
it could generate sufficient cash flows to recover the unamortized goodwill of
$591,957 related to the store. Based on its historical performance,
management did not believe that this goodwill was
recoverable. Accordingly, the Company recorded a non-cash charge to write off
the unamortized balance. Finally, the Company has reassessed the recoverability
of the unamortized goodwill associated with a facility that was previously
destroyed by fire. It was the Companys expectation to have the facility
repaired and placed back in service within several months. Due to delays in
construction the reopening was significantly postponed. Due to the significant
delay in reopening the dealership and the resulting loss of competitive
advantage in the marketplace, management determined that the unamortized
balance of the goodwill of $1,612,862 was no longer realizable. Accordingly,
the Company recorded a non-cash charge to write off the unamortized balance.

9. ENDORSEMENT AGREEMENT

In March 2002, the Company entered into an agreement with Affinity Group Inc.,
a company controlled by Mr. Adams, the then majority holder of the Companys Series A
Preferred Stock (see Notes 13, 19 and 22) and all of the Company Series AA Preferred
Stock (see Notes 14 and 22), concurrent with the sale of the Companys Series AA
Preferred Stock. That agreement grants the Company a non-exclusive right to use
its Good Sam name and logo, including trade names of all of Affinitys service
marks in connection with the sales and service of the Companys products for a
period of three years. Under the agreement, Affinity and the Company agreed to
develop a marketing program for certain products and services offered by
Affinity through its Good Sam program. All of the proceeds from
the sale of the Series AA Preferred Stock, $1,500,000, were used
to acquire the rights to use the Good Sam name and logo. In addition, the Company may
be required to pay additional royalties for the use of licenses and other
trademarks under the agreement. The Company is amortizing the cost of the
endorsement agreement on a straight-line basis over the three-year term of the
agreement. Amortization expense for the year ended October 2002 is $241,668.
During July 2002, the Company re-assessed the realizability of the costs
associated with the Good Sam endorsement agreement. At the time the agreement
was consummated, the Company was operating 10 dealerships and it was
anticipated that Company would be able to recover the costs associated with the
endorsement agreement through benefits derived at all 10 dealerships. During
the year ended October 31, 2002, the Company closed four dealerships and,
because of the Companys inability to acquire sufficient inventory due to its
lack of an adequate floor plan facility, the Company anticipated closing
another three dealerships subsequent to year-end. As a result of the closures,
anticipated closures and, as highlighted in Note 2, relating to
the Companys financial condition and lack of an

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

adequate floor plan agreement
which could effect the Companys ability to realize the benefit of this asset,
the Company recorded an impairment charge of $1,258,332, of which $725,000 was
recorded in the three months ended October 31, 2002, to write off the remaining
unamortized balance associated with this intangible.

10. FLOOR PLAN CONTRACTS

During fiscal 2002, the Company financed substantially all new and used
inventories through floor plan financing arrangements with one primary and
several smaller lenders. These financing agreements generally require that
substantially all new and used vehicles and marine products held in inventory
be pledged as collateral. Advances become due upon sale of the related vehicle
or marine product or as the related item ages beyond the allowable finance
period.

The Companys floor plan agreement with its primary lender expired on October
31, 2001. Subsequently, the Company continued to negotiate a new agreement,
executing a forbearance and amendment to the expired agreement through January
23, 2002 while negotiations continued. The primary floor plan lender amended
the forbearance agreement to extend the floor plan financing agreement to March
15, 2002 at which time the parties agreed to amend the expired forbearance
agreement essentially under the same terms through October 31, 2002 lowering
the maximum borrowing to $20,000,000 and adjusting the financial covenants
based on the Companys fiscal 2002 business plan. The Company was charged a
loan origination fee of $200,000 with $50,000 paid at closing, $50,000 paid on
May 7, 2002 and the remaining balance of $100,000 paid on November 1, 2002. The
maximum borrowing was reduced again to $19,032,679 in May 2002 as a result of
our sale of our Tampa property, which served as collateral for the floor plan
with our primary lender (see Note 6). The maximum borrowing was further
reduced to $18,192,679 in September 2002 as a result of our sale of our Las
Cruces property, which also served as collateral for the floor plan (see
Note 7). In connection with the amendment, the financial covenants were
adjusted effective March 15, 2002. As of October 31, 2002, the Company was not
in compliance with certain covenants contained within the floor plan agreement
and had not received waivers for such events of defaults. On November 14,
2002, the Company executed an amendment to the Companys floor plan which
had expired October 31, 2002. Pursuant to the amendment, until December 13, 2002,
the Companys primary lender agreed to refrain from exercising any rights and
remedies available under the expired amendment. Also pursuant to the
amendment, the Company paid down the amount owed the primary lender
by $4,800,000. The amount available for
borrowing under the amendment was also reduced from $18,192,679 to $13,400,000.
In connection with executing the amendment, Mr. Adams, the then majority owner of the Companys
Series A Preferred Stock (see Notes 13 and 22) and the sole owner of the
Companys Series AA Preferred Stock (see Notes 14 and
22),
issued a commitment to our primary
lender to acquire the Companys debt owed to the lender on or before December
12, 2002. In addition to providing a commitment, Mr. Adams provided
$4,300,000 of additional advances to the Company, which was used to make a
portion of the $4,800,000 pay down. Of the $4,300,000 of additional
advances by Mr. Adams, $1,000,000 was a secured convertible loan
pursuant to the March 20, 2002 AGHI Finance loan agreement (see
Note 12). The remaining $3,300,000 advance was made by AGI
Holding Corp., a company owned by Mr. Adams, for a term of two
years and at an interest rate of 12.75%, payable monthly. The loan is
convertible into shares of common stock of the Company at a price of
$1.99 per share and is secured by all of the assets of the Company.
On December 13, 2002, a company owned by Mr. Adams acquired
the floor plan from the Companys primary floor plan lender for
$7,800,000, making Mr. Adams the Companys primary
lender. Subsequent to the acquisition of the Companys floor
plan by a company owned by Mr. Adams, the $3,300,000 advance was
added to the outstanding floor plan balance under the provisions of the floor plan agreement. Upon the purchase of the floor plan from the primary lender, the
Company was obligated to enter into an additional amendment to the floor plan
agreement whereby the maturity date was extended to November 15, 2004, there
would be no further advances under the floor plan and the interest rate was
changed to 12.75% per annum, payable monthly. On January 14, 2003, the Company
executed a supplemental amendment to the floor plan agreement. Pursuant to
the supplemental amendment, a company owned by Mr. Adams
advanced the Company an additional $1,300,000
for the purpose of paying certain indebtedness. Additionally, pursuant to the
supplemental amendment, the Company was obligated to reduce the principal amount
of the debt owed under its floor plan agreement to $3,500,000 from the proceeds
of sales of certain inventory and certain other assets owned by the Company.
After the $1,300,000 advance and the additional $3,300,000 advance previously
discussed, the Company owed approximately $12,263,000 under the acquired floor
plan agreement, which the Company acknowledged and agreed in the supplemental
agreement is due and payable upon demand. Subsequent to January 14, 2003, the
Company sold its Spartanburg operations, certain inventory specified under the
supplemental amendment and its Las Cruces operations. The proceeds from these
sales have been used to reduce our outstanding floor plan balance. As
of April 25, 2003, the balance outstanding on the floor plan is $5,751,099.

The Company has a floor plan facility at its West Virginia dealership with a
$5,000,000 commitment level and $1,839,060 outstanding on the facility as of
October 31, 2002. The lender previously requested additional
security for the credit facility and had temporarily suspended the facility. As of October 31, 2002,
the Company was not required to provide any additional security and the
suspension was lifted. However, there can be no assurance that the lender will
not request the additional security and suspend and/or call the loan.

The Company has negotiated an arrangement with one of its floor plan providers
that requested to be paid down in February 2001 because of the Companys less
than acceptable performance under its floor plan agreement and because the
provider subsequently exited the business of providing floor plan financing to
RV dealers. On August 26, 2002, the Company entered into a two-year term note
for $253,598 which is net of an initial payment of $100,000 which was due
September 2002. As of October 31, 2002, the Company had paid $75,000 of the
initial $100,000 payment which was due in September 2002. The note is payable
in equal monthly installments beginning in September 2002 and bears interest at
a rate of prime plus 5%. As of October 31, 2002, the remaining
unpaid balance on the term note was $282,465. Additionally, as of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

October 31, 2002, there was a remaining balance of $143,892 still outstanding on the floor plan
that was not converted to the previously mentioned term note. The
Company concluded the pay down of the remaining floor plan in May 2003.
As of April 25, 2003, the Company had paid $75,000 of the initial $100,000 payment which
was due in September 2002.

Maximum borrowings available under the contracts were $23,192,679 of October
31, 2002. The following summarizes certain information about the borrowings under the floor plan contracts:

OCTOBER 31,2002
        
        2001Maximum amount outstanding at any month end
        
        $
        28,633,959
        
        
        $
        54,193,919Average amount outstanding during the period
        
        $
        21,729,928
        
        
        $
        39,829,142Weighted average interest rate during the period
        
        
        15.97
        %
        
        
        10.60
        %Weighted average interest rate at the end of the period
        
        
        17.07
        %
        
        
        9.20
        %


11. OTHER DEBT

Bridge Financing

In December 2000 the Company received $1,000,000 in bridge financing advanced
by an unrelated third party at an annual interest rate of 15%. The Company granted
warrants to purchase 2,500 shares of common stock at $40.20 per share, 110% of
the average market price for the 21 trading days prior to closing. These
warrants were valued at approximately $25,000 and charged to interest expense
during the year ended October 31, 2001 based on a Black-Scholes option pricing
model with the following assumptions: (1) average discount rate of 4.9%, (2)
volatility of 30% and (3) a warrant life of five years. In addition, the
Company provided the unlimited use of a Class A RV charging the cost of the
unit of $127,000 to advertising expense. The loan is currently due on demand.
The Company made a $50,000 principal payment during the year ended October 31,
2002 and the prospective holder of the Companys Series B Preferred Stock (see
discussion below) paid $500,000 directly to the lender on behalf of the Company.
Additionally, the Company transferred title to the RV for which the lender had
been granted rights to unlimited use to the lender in exchange for a reduction
in the amount owed of $25,000. On the date of transfer, the fair
market value of the RV was $110,000 and the difference between the
fair market value and the debt reduction was charged to operations.  To date, the Company has not made any payments of
interest related to this debt. As of October 31, 2002, the outstanding
principal balance was $425,000.

In January 2001, the Company received $500,000 in bridge financing from an
affiliate of a then director and a then officer/director of the Company
(See Note 19). The note had a stated interest rate
of 6.75% with interest and principal due at maturity. The outstanding principal
balance at October 31, 2001 was $340,000. In June 2001, the Company obtained
6,500 shares of the Companys free trading common stock from the affiliate to
combine with a $20,000 cash settlement of all claims under an Amended
Employment Agreement with its former Chief Financial Officer. In connection
with the share settlement of this obligation on behalf of the Company, the
Companys debt to this affiliate was increased by $200,000 based on the trading
value of the 6,500 shares at that time. As of October 31, 2001, the unpaid
balance of this advance was $67,000. During January 2002, the Company agreed to
convert into 47,938 shares of common stock, at a per share conversion price of
$6.00, $287,629 of the unpaid balance including accrued interest of $27,866 of
this bridge financing and demand loan from an affiliate of a former director
and a former officer/director of the Company. The market price of the
Companys common stock at the conversion date was $9.50. Had the conversion
been made at market price, the Company would have issued 30,277 shares. The
incremental shares issued (17,662) valued at market price is $167,784 and this
amount has been recorded as note conversion expense. The remaining balance of
the bridge financing and demand loan of $128,000 was assigned by the former
officer/director of the Company to the Companys then CEO in settlement of
non-Company obligations between these two parties. The then CEO agreed to eliminate
the interest charge prospectively and to structure a repayment schedule to fit
within the Companys cash flow parameters, with payment due on or before
December 31, 2003. On April 17, 2002, the outstanding balance was paid in full
to the Companys then CEO.

In August 2001, the Company received $500,000 in bridge financing from an
unrelated third party. The loan bears an interest rate of 10% with interest
payable on the last business day of each month until maturity, October 31,
2001, with the principal balance due at maturity. In addition, the Company
granted the right to the lender to a second mortgage on certain dealership
properties collateralized by a first mortgage of its primary lender. The
Company also granted 2,500 warrants to purchase the Companys common stock at
$31.60 per share, the market closing price on the date of the grant. The
warrants expire on the fifth anniversary date of the grant. The warrants were
valued at approximately $26,000 based on a Black-Scholes option pricing model
with the following assumptions: (1) average discount rate 3.75%, (2) volatility
of 30% and (3) a warrant life of five years. In January 2002, the Company
agreed to restructure the $500,000, 10% bridge financing received in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

August 2001 by converting $250,000 into common stock and with the per share conversion price
to be determined at a future date to be determined by the Companys management.
Payment of the remaining $250,000 balance will be due no later than December
31, 2003. In addition, the holder agreed to release the junior security
interest in the Tampa, Florida and Las Cruces, New Mexico properties. On July
24, 2002, in exchange for payment of $5,000 the lender agreed to restructure
the bridge financing to waive all accrued and unpaid interest as well as waive
all future interest.

On September 30, 2002, the Company entered into a term sheet with the lender to
further restructure the loan whereby $324,800 of principal would be converted
into shares of the Companys common stock at a conversion rate of $0.80 per
share and $75,200 would be forgiven in exchange for a payment of $30,000 on the
date of the term sheet and seven monthly payments of $10,000. The
restructuring and conversion was effectuated on January 2003.

Notes and Mortgages

The Company has various term notes and mortgages outstanding with an aggregate
principal balance of $12,313,565 at October 31, 2002. The notes are
collateralized by real property or by other assets of the Company. Each of the
Companys mortgages contain certain covenants which have not
been met. Accordingly, all mortgages have been classified as current
in the accompanying consolidated balance sheet as of October 31,
2002. The holders of a $4,700,235 mortgage have brought a foreclosure
action (see Notes 4 and 20).

Series B Preferred

In December 2001 and February 2002 the Company received $250,000, respectively,
as the first and second tranche payments on a proposed investment of $1,250,000
in Series B preferred stock of the Company. The terms were expected to be
essentially identical to the Series A preferred stock, except that the Series B
preferred stock would be junior in status to the Series A preferred stock.
Final placement of the Series B preferred stock was also subject to final
negotiation and completion of definitive documentation and all authorizations
required under applicable law. The proceeds were expected to be used to repay
the Companys 15% $1,000,000 bridge financing obtained in December 2000 (see
discussion above). At October 31, 2002, the $500,000 payment is classified as a current
liability in the current portion of notes payable.

Future principal maturities of term loans and mortgage debt from acquisitions
as of October 31, 2002 are as follows:

YEAR ENDING OCTOBER 31,2003
        
        $
        12,107,0882004
        
        
        167,0922005
        
        
        12,2412006
        
        
        13,1082007
        
        
        14,036Thereafter
        
        
        Total
        
        $
        12,313,565


12. NOTE PAYABLE TO AFFILIATE

On March 20, 2002, AGHI Finance Co., LLC,
which is wholly-owned by
Mr. Adams, the
Companys now majority stockholder (see Note 9), loaned the Company $1,600,000
for a term of one year at an interest rate of 20%, payable quarterly, one half of which may be paid in stock
at the discretion of the Companys board of directors. The loan
is convertible into shares of common stock of the Company, upon
receipt of stockholder approval, which was received on June 21,
2002, at a price equal to the lower of $5.00 per share or the closing
price for the shares of common stock of the Company on the trading
day prior to the issuance date of the shares of common stock subject
to conversion. If certain specified
events of default occur, as defined in the loan agreement, the lender may
declare the principal and interest payable immediately, the interest rate
increases to 25% and the Company is subject to a 6% late fee if the event of
default is a lack of timely payment. As collateral for the note a lien has been
placed on all assets of the Company. Through October 31, 2002, the lender has
not communicated any intention relating to a required prepayment of the note
due to ongoing events of default; however, there can be no assurance that the
lender will not call the loan. As of October 31, 2002, the interest rate on the
note was 25%, as the Company had not paid the interest due in cash relating to
the months of June through October 2002. The Company was charged a $50,000
origination fee, which was deducted from the proceeds of the loan and is being
amortized over the life of the loan. In accordance with the terms of the note,
the Company is committed to pay a fee equal to 10% of the loan amount 91 days
and 181 days from the loan origination date. These fees can be paid in the form
of the Companys common stock with the approval of the Companys Board of
Directors. Accordingly, the Company accrued $320,000 on March 18, 2002 and is
amortizing these fees to interest over the life of the loan. As of October 31,
2002, this fee had not been paid. Additionally, the stockholders of the
Company approved the issuance of a warrant, relating to this note, to purchase
180,000 shares of its common stock exercisable at $5.00 per share with a term
of five years. During the period from September 2002 through November 2002,
AGHI amended this term loan and advanced the Company an additional $3,500,000
of which $2,180,000 was received through October 31, 2002 and
are convertible under the same terms as the initial $1,600,000 loan. The term loan
matured on March 18, 2003 and as of April 25, 2003, the entire balance of
$5,100,000 plus accrued interest is due upon demand.

The variable provisions of the
notes conversion price deemed beneficial value, as it
relates to the initial $1,600,000 loan, to AGHI of
$1,600,000, which is equal to the initial proceeds of the note and is
the maximum beneficial conversion that can be recorded as of
October 31, 2002. The $1,600,000 beneficial conversion value has
been recorded as a charge to interest expense on note payable to
affiliate during the year ended October 31, 2002. This interest
charge, relating to the initial loan, could be reduced in future
periods should the fair market value of the Companys common stock
increase up to the fair market value of the Companys common stock on
the loan commitment date. Additional charges could be recorded to
interest expense should the fair market value of the Companys common
stock exceed the conversion price ceiling of $5.00 per share.
Interest charges resulting from conferred beneficial value could be
recorded in future periods relating the subsequent advances should
the fair market value of the Companys common stock drop below the
fair market value of the Companys common stock on the commitment
date of each subsequent advance.

13. SERIES A PREFERRED

On January 3, 2002, the Companys Board of Directors authorized the issuance of
up to 35,000 shares of Series A Preferred Stock, of which 8,807 have been
designated Sub-Series A-1 Convertible Preferred Stock (the Series A-1 Shares)
and 26,193 have been designated Sub-Series A-2 Stock (the Series A-2 Shares,
collectively the Series A Shares). The holders of the Series A Shares are
entitled to dividends at a rate of 10% of the purchase price per annum, which
accrue on a daily basis and are payable in cash each quarter. If certain specified events of

F-17



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

default occur, that dividend rate
increases to 15%. The Series A-1 and A-2 Shares have identical rights and
preferences, except that the holders of the Series A-1 Shares had the right to convert
immediately into shares of the Companys common stock and the right to vote on
an as converted basis. The Series A-2 Shares were not convertible into shares
of the Companys common stock nor had the right to vote on an as converted
basis until the stockholders of the Company approved the issuance of the shares
of common stock into which the Series A-2 Shares would convert. The Series A
Shares are also entitled to a redemption payment equal to 125% of the original
issuance price plus accrued and unpaid dividends (the Liquidation Price) upon
the sale or liquidation of the Company or upon an event of default, as defined.
Upon the occurrence of a default, as defined in the Certificate of Designation,
Rights and Preference, to include the failure to pay dividends, each holder of
the Series A shares has the right to request redemption of the Series A shares
at their liquidation price.

In January 2002, the Company sold 20,000 shares of Series A
preferred stock, which consisted of 5,032 shares of the
Series A-1 and 14,968 shares of the Series A-2, for
$2,000,000, with warrants to purchase 100,000 shares of common stock at an
exercise price of $5.00 per share. The holders of the Series A-1
Shares had the right to convert immediately into shares of the
Company common stock and the right to vote on an as converted
basis. The voting and conversion rights of the
Series A-2 shares were subject to stockholder approval. The Company received
approval at its 2002 Annual Meeting of its Stockholders in June 2002.

As of October 31, 2002, the dividend rate was 15%, as the Company had not made
the Series A Preferred quarterly dividend payments due March 31, 2002, June 30,
2002 and September 30, 2002, which constitutes an event of default. However,
through October 31, 2002, the Company had not received any notices requesting
the redemption of the Series A preferred. In January 2003,
all the Series A Shares were converted (see Note 22).

Upon the issuance of the Series A Shares and pursuant to the Certificate of
Designation, Rights and Preference the Company was required to redeem the
Series A shares, including any accrued and unpaid dividends, on December 31,
2007 and, therefore, the Series A shares have been classified in the mezzanine
section in the accompanying balance sheet. Redemption could be required sooner
at the Liquidation Price in the event of a change in control, as defined in the
Certificate of Designation, Rights and Preferences, a delisting of the
Companys common stock, or a failure to honor a conversion request and other
events including non-payment of dividends. On February 14, 2002, prior to the
Companys filing of its Form 10-Q for the period ended January 31, 2002, the
Company was notified by the Nasdaq National Market that it had failed to comply
with certain listing requirements and was therefore subject to delisting.
Accordingly, the Company recorded the Series A shares at their Liquidation
Price in January 2002. On April 29, 2002, the Nasdaq Listing Qualifications
Panel approved the Companys transfer from the Nasdaq National Market to the
Nasdaq SmallCap Market. Subsequent to October 31, 2002, the Company was
delisted from Nasdaq Small Cap Market (see Note 22). As a result of
non-payment of dividends due on March 31, 2002, June 30, 2002 and September 30,
2002, an event of default existed at October 31, 2002. Accordingly, the Company
reflected the Series A shares at their Liquidation Price in the condensed
consolidated balance sheet as of October 31, 2002. In
January 2003, all the Series A Shares were converted (see Note 22).

A majority of the Series A Shares (15,000 of the 20,000) issued by the Company
in January 2002, were issued to Mr. Adams in connection with a strategic
business relationship. That relationship is described in Note 9. These shares
were sold as units, together with warrants to purchase shares of
common stock. Also in connection with the issuance of the
Series A Shares to Mr. Adams, the Company entered into an
agreement obligating the Company to issue Mr. Adams 25,000
shares of common stock of the Company if the Company did not
consummate the sale, and leaseback, of the Las Cruces, New Mexico
property to Mr. Adams pursuant to certain terms. Because of the ongoing discussions between the Company
and the investor regarding the Affinity Endorsement Agreement (see Note 9), and
the proximity of the issuance of the Series A preferred stock and the Affinity
Endorsement Agreement, the Company believes that the application of EITF Issue
No. 01-1, Accounting for a Convertible Instrument Granted or Issued to a
Nonemployee for Goods or Services or a Combination of Goods or Services and
Cash(EITF No 01-1) is appropriate. On the date of the issuance of the
Series A Shares, the Companys stock was trading at $10.00 per share and the
conversion feature of the Series A preferred stock was priced at $5.00 per
share. Therefore, the fair market value of the Series A
preferred stock, convertible into 300,000 shares of common stock, was $3,000,000. The related
warrants, valued utilizing the Black-Scholes option-pricing model as discussed
below, had a fair market value of $500,000 on the date of the transaction.
Combined the units had a fair value of $3,500,000 at the date of the
transaction. In accordance with the consensus in EITF Issue No. 01-1, the
Company has recorded a charge of $2,000,000, which is equal to the excess of
the fair market value of the units over the amount received in cash. The
Company considered this cost to be an inducement for Affinity to enter into
future strategic relationships with the Company, as evidenced by the Affinity
Endorsement Agreement. That amount has been classified as marketing expense in
the accompanying statement of operations for the year ended October 31, 2002.

In addition to the 15,000 shares sold to an investor in connection with a
strategic business relationship, the Company sold 5,000 Series A Shares, with
warrants to purchase 25,000 shares of common stock at an exercise
price of $5.00 per share, to another investor for gross proceeds of $500,000.
Because the Series A-1 Shares that comprised a part of those units could
convert to common stock at a conversion price that was less than the quoted
market price of its common stock on the date of the issuance of the Series A-1
Shares, the Company recorded a beneficial conversion as discussed below. On the
date of the issuance of the Series A-1 Shares, the Companys stock was trading
at $10.00 per share and the conversion feature of the Series A Shares was
priced at $5.00 per share. Therefore, the fair market value of these Series A
Shares, convertible into 100,000 shares of common stock, was
$1,000,000. The related warrants, valued utilizing the Black-Scholes
option-pricing

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

model as discussed below, had a fair
market value of $167,000 on the date of the transaction. Accordingly, the portion of the
proceeds ascribed to these Series A Shares is $333,000 (the total proceeds of
$500,000 less the portion ascribed to the warrants of $167,000). The beneficial
conversion value adjusted for the fair value allocation would have been in
excess of $333,000 and, therefore, is limited to that amount. However, because
these Series A Shares were subject to immediate mandatory redemption, given the
potential of default relating to Nasdaq delisting issues previously discussed,
these Series A Shares were accreted to its liquidation price. The beneficial
conversion feature equal to the conversion feature of $333,000 plus additional
accretion up to its liquidation price has been recognized as a deemed dividend
to the Series A stockholders in the accompanying statement of operations for
the year ended October 31, 2002.

The warrants contain certain provisions that may preclude the Company from
settling them in shares at the time they are exercised. Accordingly, in
accordance with EITF Issue No. 00-19, Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Companys Own Stock", the
Company has classified those warrants as a liability in the accompanying
balance sheet. Furthermore, those warrants will be remeasured each period with
changes in their fair value reflected in the Companys statement of operations.
The warrants were valued at the date of issuance utilizing the Black-Scholes
option-pricing model using the Nasdaq closing bid price on the date of the
transaction as the fair value, $5.00 as the exercise price, and historical
volatility rate of 41% and a risk-free six-year interest rate of 5.01%. The
Black-Scholes option-pricing model is also used at each remeasurement
date. Upon the issuance of the warrants the Company recorded a charge
of $500,000 to marketing expense which was included in the $2,000,000
charge previously discussed and a charge of $160,000 to interest
expense. As
of October 31 2002, the Companys consolidated balance sheet includes a Series
A common stock warrant liability of $15,000. The effect of remeasuring the
warrants on the Companys statement of operation for the year ended October 31,
2002, was a reduction of marketing expense of $490,000 for the warrants issued
to an investor in connection with a strategic business relationship (see Notes
9) and an interest expense reduction of $155,000 relating to the remaining
warrants.

The Certificate of Designation, Rights and Preferences also provided for
adjustment in the conversion price of the Series A Shares in the event of
certain future events. However, because the Company recorded the maximum
beneficial conversion feature at issuance, no further beneficial conversion
will be recognized if and when those events occur. Subsequent to October 31,
2002, the holders of the series A Preferred Stock elected to exercise their
right to convert the preferred stock into shares of the Companys preferred
stock (see Note 22).

14. SERIES AA-2 PREFERRED STOCK

In March 2002, the Companys board of directors designated a new series of
preferred stock as Series AA-2 preferred stock and authorized the issuance of
15,000 shares of that series to raise a total of $3,500,000. In March 2002, the
Company sold 150 units (each of which consisted of 100 shares of Series AA-2
preferred stock and warrants to purchase 500 shares of common stock at an
exercise price of $5.00 per share) for a purchase price of $1,500,000, less
transaction costs of approximately $10,000, to Mr. Adams, the majority holder of the
Series A Shares issued in January 2002. The shares of Series AA-2 preferred
stock that are included in the units have the same preferences, rights,
qualifications, limitations and restrictions as the Series A-2 Shares issued in
January 2002.

As of October 31, 2002, the dividend rate was 15% as the Company had not made
the Series AA-2 preferred quarterly dividend payments due June 30, 2002 and
September 30, 2002, which constitutes an event of default under the Certificate
of Designation, Rights and Preferences.

Since the Series AA-2 preferred stock was subject to immediate mandatory
redemption, given the potential of default relating to Nasdaq delisting issues
and event of default due to non-payment of dividends previously discussed, the
Series AA-2 preferred stock was accreted to its liquidation price and
classified as redeemable preferred stock in the mezzanine section of the
Companys condensed consolidated balance sheet as of October 31, 2002.

The shares of Series AA-2 preferred stock were initially convertible at a
conversion price of $5.00 per share. Subsequent to October 31, 2002, the
holder of the Series AA-2 Preferred Stock exercised its right to convert the
Series AA-2 preferred stock in shares of the Companys
common stock (see Note 22).

The units, consisting of shares of Series AA-2 preferred stock and warrants,
were sold to Mr. Adams in combination with establishing a strategic
relationship between an affiliate of Mr. Adams and the Company. That
relationship is described above in Notes 9 and 13. Also in connection with the
issuance of the Series AA-2 preferred stock, the Company granted the purchaser
a right of first refusal with respect to the potential sale by the Company of
certain real property owned by the Company. Those units had a fair value of
approximately $1,680,000 at the date of the transaction. In accordance with the
consensus in EITF Issue No. 01-1, Accounting for a Convertible Instrument
Granted or Issued to a Nonemployee for Goods or Services or a Combination of
Goods or Services and Cash,the Company recorded a charge equal to the excess
of the fair value of the units over the amount received in cash as marketing
expense in its statement of operations for the year ended October 31, 2002. The
accompanying warrants contain certain provisions that may preclude the Company from settling them in shares at the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

time they are exercised. In accordance with EITF Issue No. 00-19, Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Companys Own Stock,the Companys consolidated balance sheet includes a
Series AA-2 common stock warrant liability of $10,000 as of October 31, 2002.
Furthermore, those warrants will be remeasured each period with changes in
their fair value reflected in the Companys statement of operations. The effect
of remeasuring the warrants on the Companys statement of operations for the
year ended October 31, 2002, was a reduction of marketing
expense of $170,000.

15. STOCK OPTIONS AND WARRANTS

The Companys 1999 Stock Option Plan (Plan) provides for the issuance of up
to 50,000 shares of common stock to regular full-time employees. The Plan
allows for the issuance of either non-qualified or incentive stock options. The
option exercise price shall be no less than 100% of the fair market value per
share of common stock on the date of grant, except that such price must be at
least 110% of the fair market value for employees who own more than 10% of the
outstanding shares of the Company. In the case of non-qualified options, the
exercise price shall generally be the fair market value, although the
Compensation Committee of the Board of Directors may grant options with
exercise prices less than fair market value. The options are exercisable, as
determined by the Committee, over a period of time, but not more than ten years
from the date of grant, and will be subject to such other terms and conditions
as the Committee may determine.

During fiscal year 2000, the Companys 1999 Stock Compensation Program (the
Stock Compensation Program) was approved by the Companys shareholders. The
Stock Compensation Program shall be administrated by the Companys Board of
Directors, and provides for the issuance of up to 300,000 shares of common
stock to employees and non-employees. Awards under the Stock Compensation
Program shall be issued under the general provisions of the Stock Option
Program and are exercisable, as determined by the Companys Board of Directors,
over a period of time, but not more than ten years from the date of grant.
Options granted under
the Plan may be incentive stock options or non-qualified stock options. Stock
purchase rights and stock appreciation rights may also be granted under the
Plan. The exercise price of incentive stock options and non-qualified options
shall be no less than 100% and 85%, respectively, of the fair market values of
the Companys common stock on the grant date.

At the Companys January 18, 2001 Board of Directors meeting, the Directors
approved the grant of employee stock options to purchase shares of the
Companys common stock to all employees employed on that date with one year of
continuous employment with the Company. Options to purchase 48,775 shares of
common stock were awarded in connection with this action. These options vest
over two years, have a term of 10 years, and an exercise price of $40.00 per
share based on the fair market value of the Companys common stock at January
18, 2001. The Directors also approved the granting additional future options
under this program to employees employed at January 18, 2001 as they reach one
year of continuous employment.

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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

The following table summarizes the activity of the Companys stock option
plans:

WEIGHTED AVERAGENUMBER OF
        
        EXERCISE PRICEOPTIONS
        
        PER SHAREOptions outstanding, October 31, 1999
        
        
        67,000
        
        
        $
        21.10Granted
        
        
        101,600
        
        
        
        55.50Exercised
        
        
        (13,500
        )
        
        
        18.30Forfeited
        
        
        (20,500
        )
        
        
        36.40Options outstanding, October 31, 2000
        
        
        134,600
        
        
        
        44.70Granted
        
        
        72,875
        
        
        
        38.10Exercised
        
        
        
        
        
        
        Forfeited/Canceled
        
        
        (81,850
        )
        
        
        44.20Options outstanding, October 31, 2001
        
        
        125,625
        
        
        
        41.20Granted
        
        
        
        
        
        
        Exercised
        
        
        
        
        
        
        Forfeited/Cancelled
        
        
        (43,450
        )
        
        
        45.89Options outstanding, October 31, 2002
        
        
        82,175
        
        
        $
        38.74


At October 31, 2002, the 82,175 options outstanding under all stock option
plans are summarized in the following table:

WEIGHTED
        
        AVERAGE
        
        
        
        AVERAGE WEIGHTEDRANGE OF
        
        
        
        AVERAGE
        
        EXERCISE
        
        
        
        EXERCISEEXERCISE
        
        NUMBER
        
        REMAINING
        
        PRICE
        
        NUMBER
        
        PRICEPRICES
        
        OUTSTANDING
        
        LIFE(1)
        
        PER SHARE
        
        EXERCISABLE
        
        PER SHARE$17.00 - $25.50
        
        
        12,500
        
        
        
        2.21
        
        
        $
        17.00
        
        
        
        12,500
        
        
        $
        17.00$25.60 - $38.30
        
        
        20,000
        
        
        
        6.79
        
        
        $
        31.50
        
        
        
        18,000
        
        
        $
        31.54$38.40 - $57.40
        
        
        39,675
        
        
        
        7.61
        
        
        $
        41.50
        
        
        
        15,500
        
        
        $
        43.84$57.50 - $86.10
        
        
        10,000
        
        
        
        7.21
        
        
        $
        67.50
        
        
        
        10,000
        
        
        $
        67.50Total
        
        
        82,175
        
        
        
        
        
        
        
        
        
        
        
        56,000


(1) Average remaining contractual life in years

On April 13, 2000, the Company entered into a financial consulting and
investment agreement with Schneider Securities, Inc. for a term of one year.
Compensation for these services consists of $20,000 payable upon execution of
the agreement and $60,000 in installments over the remaining term of the
agreement. In addition, the Company issued to Schneider warrants to purchase up
to 35,000 shares of common stock as follows: 15,000 shares at $50.00 per share;
10,000 shares at $75.00 per share; and 10,000 shares at $100.00 per share. The
warrants have a one-year vesting period and a term of five years. Approximately
$360,000 has been ascribed to the warrants under the Black-Scholes option
pricing model valuation with the following assumptions: (1) an average discount
rate of 5.5%, (2) volatility of 31% and (3) an option life of five years. The
value was recognized as consulting expense by the Company over the warrants
vesting period. None of these warrants have been exercised as of October 31,
2002.

In December 2000 and August 2001, the Company issued 2,500 warrants each under
bridge financings (see Note 11 ).

F-21



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

In January 2002 and
March 2002, the Company issued warrants to purchase 175,000
shares of the Companys common stock in connection with the sale of the
Companys Series A Preferred Stock and Series AA
Preferred Stock (see Notes 13
and 14) to Mr. Adams and another investor.

In March 2002, the Company issued warrants to purchase 180,000 shares of the
Companys common stock in connection with the origination of a note
payable to a company owned by Mr. Adams (see Note 12).

Certain employee stock options were granted in fiscal 2000 at an exercise price
below fair value of the common shares on the date of grant. The Company will
recognize expense for the intrinsic value of approximately $122,000 in
connection with this grant. Approximately $73,000 of expense was recognized in
fiscal 2000 with the remaining amount recognized over the remaining vesting
period in 2001.

Had compensation expense been determined based upon the fair value of the
options at their grant dates in accordance with SFAS 123, the net loss and net
loss per share for fiscal 2002 and 2001 would have been increased by
approximately $259,000 and $696,000, respectively and $.28 and $.85,
respectively. The weighted average fair value of the options granted in fiscal
2001 was $2.32 per share. There were no options issued in fiscal 2002.

The fair value of each option grant during fiscal 2001 is estimated on the date
of the grant using the Black-Scholes option-pricing model with the following
assumptions:

2001Average discount rate
        
        
        5.25
        %Volatility
        
        
        41
        %Average option life
        
        10 years


16. INCOME TAXES

On March 9, 2002, the Job Creation and Worker Assistances Act (H.R. 3090)
became effective. The new law made numerous changes to the U.S. corporate tax
laws, including the temporary extension of the general net operating loss carry
back period to five years (from two years under prior law) for net operating
losses arising in taxable years ending in 2001 and 2002. As a result of the
change in tax law, the Company was able to carry back net operating losses,
which were fully reserved with a valuation allowance. Accordingly, the Company
recorded an income tax benefit of $1,670,492 to reflect the change in the
Companys tax valuation allowance.

The components of income taxes (benefit) are as follows:

OCTOBER 31,2002
        
        2001
        
        2000Current:Federal
        
        $
        (1,670,492
        )
        
        $
        
        
        
        $
        (1,302,000
        )State
        
        
        (110,042
        )
        
        
        
        
        
        
        (135,000
        )(1,780,534
        )
        
        
        
        
        
        
        (1,437,000
        )Deferred:Federal
        
        
        
        
        
        
        (53,343
        )
        
        
        (302,120
        )State
        
        
        
        
        
        
        
        
        
        
        (36,000
        )
        
        
        
        (53,343
        )
        
        
        (338,120
        )Total income taxes (benefit)
        
        $
        (1,780,534
        )
        
        $
        (53,343
        )
        
        $
        (1,775,120
        )


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

The components of deferred tax assets and liabilities consist of the following:

OCTOBER 31,2002
        
        2001Deferred tax assets:Accrued warranty
        
        $
        350,456
        
        
        $
        113,000Property and equipment
        
        
        (40,384
        )
        
        
        51,000State NOL carryover
        
        
        633,650
        
        
        
        551,000Non-compete agreement
        
        
        
        
        
        
        73,000Inventory
        
        
        434,235
        
        
        
        786,000Deferred finance income
        
        
        783,526
        
        
        
        917,000Deferred
gains on sale leasebacks
        
        
        (144,708
        )
        
        
        Accrued vacation
        
        
        28,032
        
        
        
        38,000AMT Credit
        
        
        
        
        
        
        122,000Federal NOL Carryover
        
        
        7,074,092
        
        
        
        2,632,000Good Sam Endorsement Intangible
        
        
        553,600
        
        
        
        Other
        
        
        103,392
        
        
        
        34,000Total deferred tax assets
        
        
        9,775,891
        
        
        
        5,317,000Less current deferred tax assets
        
        
        
        
        
        
        Less deferred tax asset valuation allowance
        
        
        9,775,891
        
        
        
        (5,317,000
        )Long-term deferred tax assets
        
        $
        
        
        
        $
        


The Company provides a valuation
allowance against deferred tax assets if, based on the weight of
available evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized. The Company and its
consolidated subsidiaries have established a valuation allowance
against deferred tax assets of $9,775,891 and $5,317,000 at
October 31, 2002 and 2001, respectively. At October 31,
2002, the Company had state net operating losses available for
carryforwards of approximately $633,650. Such carryforwards begin
to expire in year 2011.

Due to a possible change in ownership
control of the Company, as defined under the Internal Revenue Code
Section 382, net operating losses may be limited in their
availability to offset future taxable income.

The following summary reconciles differences from taxes at the federal
statutory rate with the effective rate:

OCTOBER 31,2002
        
        2001AMOUNT
        
        PERCENT
        
        AMOUNT
        
        PERCENTIncome taxes (benefits) at statutory
rate
        
        $
        (7,086,452
        )
        
        
        34.00
        %
        
        $
        (5,313,000
        )
        
        
        34.0
        %State income taxes, net of federal
benefit
        
        
        (1,287,324
        )
        
        
        6.18
        %
        
        
        (544,000
        )
        
        
        3.5
        %Debt conversion
        
        
        57,047
        
        
        
        (.27
        )%
        
        
        539,000
        
        
        
        (3.5
        )%Increase in valuation allowance
        
        
        4,458,891
        
        
        
        (21.39
        )%
        
        
        5,317,000
        
        
        
        (34.03
        )%Goodwill
Impairment
        
        
        1,699,274
        
        
        
        (8.15
        )%
        
        
        666,544
        
        
        
        (4.27
        )%Other
        
        
        378,030
        
        
        
        (1.83
        )%
        
        
        (718,544
        )
        
        
        4.60
        %Income taxes (benefits) at effective
rates
        
        $
        (1,780,534
        )
        
        
        8.54
        %
        
        $
        (53,000
        )
        
        
        


At October 31, 2002, the Company had federal net operating loss carryforwards
of approximately $12,908,305 available to reduce future taxable income which
expires October 31, 2022. Under the provisions of the Internal Revenue Code,
certain substantial changes in the Companys ownership may result in a
limitation on the amount of the net operating loss carry forwards which can be
used in future years.

F-23



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

17. EMPLOYEE BENEFIT PLANS

The Company has a Profit Sharing and Employee Investment Plan, which covers
substantially all employees meeting certain minimum age and service
requirements. Employee contributions to the investment plan may, at the
Companys discretion, be matched 25% up to a maximum employee contribution of
6% of the employees compensation. Also, at the Companys discretion, a
profit-sharing contribution may be made. Company contributions to the plan,
included in selling, general and administrative expenses, were approximately
$69,000 and $58,000 for the years ended October 31, 2001 and 2000,
respectively. The Company did not elect to match the employees contribution
nor did it elect to make a profit sharing contribution for the year ended
October 31, 2002.

Employee Stock Purchase Plan: Employees of the Company who are employed for at
least five consecutive months in any calendar year, are employed at least
twenty hours per week, and own less than 5% of the common stock, may purchase
common stock at a 15% discount of fair market value.

18. CAPITAL AND OPERATING LEASE COMMITMENTS

Capital Lease: The Company leases computer equipment under agreements, which
are classified as capital leases. Upon expiration of each of the leases, the
Company will have an option to purchase the computer equipment for a nominal
amount. The equipment is included in property and equipment in the amount of
approximately $297,000 and $243,000 as of October 31, 2002 and 2001
respectively, net of accumulated amortization of $449,167 at October 2001.
There was no related accumulated amortization at October 31, 2002 as the
Company placed the related computer equipment in service on October 31, 2002.

As of October 31, 2002, the future minimum lease payments under non-cancelable
capital and operating leases with initial or remaining terms of one year or
more are as follows:

|                                        |  |         |         |           |  |               |           |  |  |   |           | 
|--------------------------------------- |  | ------- | ------- | --------- |  | ------------- | --------- |  |  | - | --------- | 
|                                        |  |         |         |           |  | RELATED PARTY
|                                        |  | CAPITAL |         | OPERATING |  | OPERATING    
|                                        |  | LEASE   |         | LEASE     |  | LEASES       
|                                        |  |         |         |           |  |              
|Year ending October 31,                 |  |         |         |           |  |               |           |  |  |   |           | 
|2003                                    |  | $       | 120,881 |           |  | $             | 835,847   |  |  | $ | 126,000   | 
|2004                                    |  |         | 115,410 |           |  |               | 819,292   |  |  |   | 126,000   | 
|2005                                    |  |         | 98,988  |           |  |               | 712,788   |  |  |   | 126,000   | 
|2006                                    |  |         | 89,277  |           |  |               | 418,306   |  |  |   | 126,000   | 
|2007                                    |  |         | 75,681  |           |  |               | 233,412   |  |  |   | 126,000   | 
|Thereafter                              |  |         |        |           |  |               | 758,589   |  |  |   | 1,249,500 | 
|                                        |  |         |         |           |  |               |           |  |  |   |           | 
|Total minimum lease payment             |  | $       | 500.238 |           |  | $             | 3,778,234 |  |  | $ | 1,879,500 | 
|                                        |  |         |         |           |  |               |           |  |  |   |           | 
|                                       
|Less amount representing interest       |  |         | 98,638  |           |  |               |           |  |  |   |           | 
|                                        |  |         |         |           |  |               |           |  |  |   |           | 
|Present value of minimum lease payments |  |         | 401,600 |           |  |               |           |  |  |   |           | 
|Less current portion                    |  |         | 80,586  |           |  |               |           |  |  |   |           | 
|                                        |  |         |         |           |  |               |           |  |  |   |           | 
|Long-term capital lease obligation      |  | $       | 321,014 |           |  |               |           |  |  |   |           | 
|                                        |  |         |         |           |  |               |           |  |  |   |           | 

The Companys rental expense under operating leases for the fiscal years ended
October 31, 2002, 2001 and 2000 was $2,056,825, $1,369,043 and $652,683
respectively.

Related party operating lease
represents the Companys lease associated with the Las Cruces,
New Mexico store which is with REC LC, LLC, a company wholly-owned by
Mr. Adams (see Notes 7 and 19). During fiscal 2002, the
Company incurred rent expense of $13,995 relating to this lease.

19. RELATED PARTY TRANSACTIONS

Lease Payments

During fiscal 2000, the Company leased facilities from an officer of the
Company for an aggregate of $147,000. There were no rents paid to related
parties during the fiscal year ended October 31, 2001.

During fiscal 2002, the Company leased
facilities from a company wholly-owned by Mr. Adams for an
aggregate rent of $13,995.

Imperial Group Holdings

In January 2001, the Company received $500,000 in bridge financing from
Imperial Group Holdings, LLC , an affiliate of a director and a
officer/director of the Company (See Note 11) at that time. In January 2002,
the Company agreed to convert $324,307 of the $452,307 debt owed to Imperial
Group Holdings into 479,382 shares of common stock of the Company. The
remaining balance of debt, $128,000, was

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

assigned by Imperial to Mr. Lemonis, the then Chief
Executive Officer of the Company, in settlement of obligations Imperial had to
Mr. Lemonis. In connection with the assignment, Mr. Lemonis agreed to
eliminate the interest charge and to structure a repayment schedule to fit
within the Companys cash flow parameters, with payment due on or before
December 31, 2003. On April 17, 2002, the outstanding balance was paid in full
to Mr. Lemonis.

Former Chief Financial
Officer

On January 15, 2001, the Companys Chief Financial Officer resigned. The
employment agreement provided for a termination payout of approximately
$220,000, which was accrued and expensed at that time. In June 2001, an
affiliate of the then chairman and director, settled a portion of the Companys
obligation with the former CFO by giving him 6,500 shares of the Companys
common stock. The Company issued an unsecured note for $200,000 representing
the market value of the shares. The Company partially offset the liability by
transferring to the holder vehicles and marine inventory at the book carrying
value. The unpaid balance at October 31, 2001 is $67,000, which
was paid in 2002 (See Note 11).

Mr. Adams

In January 2002, Mr. Adams
purchased 15,000 shares of Series A Convertible Preferred Stock (Series A,
consisting of 3,774 shares of Sub-Series A-1 Convertible Preferred Stock
(Series A-1) and 11,226 shares of Sub-Series A-2 Convertible Preferred Stock
(Series A-2)), plus warrants to purchase 75,000 shares of common
stock of the Company, for
$1,500,000. The Series A-1 had voting rights on an as converted basis. This
voting right represented approximately 3.4% of the Companys outstanding
shares. The shares of Series A-2 were not convertible and did not have voting
rights until approval by the Companys stockholders, which occurred in June
2002.

In conjunction with the
sale of the Series A Preferred Stock to Mr. Adams, the
Companys then Chief Executive Officer, without the knowledge or
authorization of the Companys Board of Directors, entered into an
agreement (the January 2002 agreement) with
Mr. Adams that would require the
Company to issue to Mr. Adams 25,000 shares of common stock if the Company
did not consummate the sale, and leaseback, of the Las Cruces, New Mexico
property to Mr. Adams subject to certain terms. In September 2002,
to pay down the Bank
of America loan, the Company sold the real property at
the Las Cruces, New Mexico dealership to Mr. Adams for $860,000, which was
$270,800 over its carrying value and approximately $440,000 less than its
appraised value. Concurrent with the sale of the property, the Company entered
into a 15-year lease for the property with Mr. Adams for an annual lease
payment of $123,000 increasing to $158,400 per year for the last five years of
the lease, plus all taxes imposed on the property and premiums for property and
casualty insurance as requested by the lessor. In October 2002 the
Companys Board of Directors authorized the issuance of the 25,000 shares of common stock of the
Company to Mr. Adams since the sale/leaseback transaction had not been
consummated pursuant to the terms of the prior agreement entered into
by the Companys then Chief Executive Officer.

On March 20, 2002, Mr. Adams purchased 15,000 shares of Series AA-2 Convertible
Preferred Stock (Series AA-2) for $1,500,000. The shares of Series AA-2,
like the Series A-2, were not convertible and did not have voting rights until
approval by the stockholders of the Company, which occurred in June 2002.
All of the proceeds of the Series AA-2 shares, $1,500,000, were
used to acquire from a company controlled by Mr. Adams a non-exclusive
right to use the Good Sam  name and logo (see Note 9).

Also on March 20, 2002, the Company entered into a loan agreement (Loan
Agreement) with a company wholly-owned by Mr. Adams, pursuant to which the
Company was loaned $1.6 million. The initial terms of the Loan Agreement
provided for an annual interest rate of 20%, a one-year term and the right to
convert into shares of common shares of the Company, upon receipt of
stockholder approval, at the price of the lower of $5.00 per share or
the closing price for the shares of common stock of the Company on
the trading day prior to the issuance date of the shares of common
stock subject to conversion. There was also a $50,000 fee, plus an
additional fee of $160,000 if 10% of the loan had not been repaid within 90
days of the loan, plus an additional fee of $160,000 if an additional 10% of
the loan had not been repaid within 180 days of the loan. The Company also
issued warrants to purchase 180,000 shares of common stock at $5.00 per share.

Also in March, 2002, the Company entered into agreements with Mr. Adams
granting Mr. Adams the right of first refusal to purchase our property located
in Las Cruces, New Mexico and in Spartanburg, South Carolina.

In June 2002, stockholders of the Company approved the right of the holders of
the Series A and Series AA-2 Preferred Stock to convert their shares of
Preferred Stock into shares of common stock of the Company; the right of Mr.
Adams to convert the $1.6 million note into shares of common stock of the
Company; and the right of the holders of the warrants issued with respect to
the Preferred Stock and the $1.6 million note to exercise their warrants to
purchase 355,000 shares of common stock. After such approval, Mr. Adams had
voting rights, on an as converted basis of 428,250 shares, representing
approximately 30.1% of the outstanding shares of the Company, and had the right to acquire
approximately 1,250,000 shares of common stock of the Company, which would represent more
than 50% of outstanding shares of the Company.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

In October 2002, the Company
entered into an amendment to its Loan Agreement
with Mr. Adams for additional loans of $1.4 million. The terms of the Loan
Agreement remained the same: an annual interest rate of 20%, a one-year term
and the right to convert into our common shares, at the price of the
lower of $5.00 per share or the closing price for the shares of
common stock of the Company on the trading day prior to the issuance
date of the shares of common stock subject to conversion. Later in
October 2002, we entered into a term sheet (Term Sheet)
with Mr. Adams whereby Mr. Adams agreed to make an
additional investment of up to $3.5 million, of which $1.7 million
had already been advanced, in the form of secured debt convertible
into shares of our common stock at $.62 per share, the closing price
on the last trading day prior to the execution of the Term Sheet. The
convertible debt issued pursuant to the Term Sheet would mature on
May 1, 2003 and have an annual interest rate of 20%. The
additional investment pursuant to the Term Sheet was subject to
certain conditions, which when satisfied, Mr. Adams would also
convert all of his shares of Series A Preferred Stock and
Series AA Preferred Stock and the existing $1.6 million
convertible note into shares of our common stock at $.62 per share. In November
2002, the Company entered into another amendment to the Loan Agreement with Mr.
Adams loaning an additional $2.1 million, and modifying the terms of the Loan
Agreement as follows: an annual interest rate of 12.75%, the loan was
due on demand, and the loan was convertible into shares of common
stock of the Company, on the terms subject to the conditions set
forth in the Term Sheet. In addition, in
November 2002, Mr. Adams provided the Company another loan of $3.3 million
convertible into shares of common stock, with an annual interest rate of
12.75%, a conversion rate of $1.99 per share and a maturity date of November
15, 2004. Furthermore, in November 2002, Mr. Adams issued a commitment to Bank
of America, the senior lender to the Company at that time, to acquire debt of
the Company owed to Bank of America. It was also agreed that upon Mr. Adams
purchase of the Bank of America debt, the Companys loan agreement with Bank of
America would be modified whereby the maturity date would be November 15, 2004,
the interest rate would be 12.75% per annum and that there would be no further
advances. Mr. Adams purchased the Bank of America loan on December 13, 2002.

In January 2003, the Company entered into another amendment to the Loan
Agreement with Mr. Adams for an additional loan of $1.3 million. Under the
terms of the January 2003 amendment to the Loan Agreement, the
Company acknowledged and agreed that the approximate
$12.3 million the Company owed at the time was due and payable upon demand by
Mr. Adams and that the conditions under the Term Sheet had not
been satisfied. Also pursuant to the January 2003 amendment to the Loan Agreement,
Mr. Adams converted all of his Series A and Series AA-2 Preferred Stock into
4,838,710 shares of common stock of the Company at a conversion price of $.62
per share. After the issuance of the shares of common stock, Mr. Adams owned
approximately 69% of the outstanding common stock of the Company.

At the end of February 2003, Mr. Adams sent a conversion notice to the Company
requesting that the Company convert $150,000 in principal and $150,000 in
accrued and unpaid interest owing under an outstanding convertible promissory
note. The notice requested a conversion price of $.02 per share, which Mr.
Adams asserts is the conversion price under the terms of the note. Were the
shares of common stock issued pursuant to the conversion request, Mr. Adams
ownership would increase from approximately 69% to more than 90%, allowing Mr.
Adams to effect a short form merger whereby the shares of common stock not
owned by Mr. Adams could be acquired by Mr. Adams in exchange for consideration
solely determined by Mr. Adams (subject only to dissenters appraisal rights
under Delaware law). The Company has not issued the shares of common stock
referenced in the conversion notice as it continue evaluating its rights,
responsibilities and options with regard to this matter.

Larry J.
Hughes, a member of the Board of Directors of the Company since
October 2002, is a consultant to a company controlled by
Mr. Adams.

Mr. Adams/Holiday Kamper

In November 2002, the Company entered
into a term sheet with Holiday Kamper of Columbia, Inc. to acquire
Holiday Kamper, subject to certain conditions including, the Company obtaining
the approvals of its lender and board of directors. The Company never
was able to obtain financing for the transaction or get lender
approval and, therefore, the Company did not consummate the
acquisition of Holiday Kamper. Mr. Adams was a secured lender to
the Company and became the Companys primary lender on
December 13, 2002.

In March 2003, the Company entered
into an agreement with Holiday Kamper to sell the assets, including
the new and used RV inventory, of its dealership in Spartanburg,
South Carolina to Holiday Kamper. The Company leased the property
related to the dealership to the purchaser, Holiday Kamper, at a
lease rate below current market rates and equal to the Company's
current mortgage payment on the property. The RV inventory that was
sold to Holiday Kamper was financed by a company owned by
Mr. Adams. The Company used the net proceeds from the sale,
approximately $2,967,000, to pay down debt owed to Mr. Adams.

Management of the Company understands
that in April or May 2003, a company owned by Mr. Adams entered
into an agreement to acquire Holiday Kamper.

Mr. Lemonis/Mr. Adams

In May 2002, Mr. Lemonis, the
then Chief Executive Officer of the Company, borrowed $100,000 from
the chief executive officer of a company controlled by
Mr. Adams. Mr. Lemonis repaid the loan in fiscal 2002.

Management of the Company also
understands that Mr. Lemonis is currently actively engaged with
Mr. Adams in business related to the retail RV industry,
including the acquisition of Holiday Kamper and the monitoring of the
operations of the Company.

20. COMMITMENTS AND CONTINGENCIES

Concentration Of Credit Risk: The Companys financial instruments that are
exposed to concentrations of credit risk consist primarily of cash and cash
equivalents and accounts receivable. The Company places its funds with high
credit quality institutions. At times, the monies may be in excess of the FDIC
or other insurance limits. With regard to receivables, the Company routinely
assesses the financial strength and collectibility of its customers and, as a
consequence, believes that its accounts receivable risk is limited.

The Company relies on several manufacturers as suppliers for its product lines.
Approximately 50%, 43% and 47% of the Companys new vehicle sales for the years
ended October 31, 2002, 2001 and 2000, respectively, consists of vehicles
purchased from the same two manufacturers. In the opinion of management, the
loss of all brands sold by either of the two largest manufacturers would have a
material effect on the Companys sales.

Third-Party Financing: The Company uses indirect lenders consisting of
third-party banks and/or finance companies to assist its customers in locating
financing for vehicle purchases. The Company refers customer to one or more of
these indirect lending sources and earns a commission if the third-party lender
consummates a loan contract with the customer. These contracts represent
third-party financing, and the Company provides no underwriting or credit
approval services for the lender. The Companys commissions are typically based
upon the difference between the interest rate the customer pays under the
contract with the lender and an interest rate designated by the lender. At no
time does the Company service or guarantee the collection of these loans or
receivables. The Company could be charged back the commission by the lender if
the loan is terminated for any reason in a specified period of time, limited to
the first six months of the term. Effective November 1, 2000, the Company
changed its revenue recognition policy related to commissions earned by the
Company for placing retail financing contracts with indirect lending
institutions in connection with customer vehicle and marine and customer
purchases of credit life insurance products to defer these commissions until
the chargeback period has lapsed. This change made in accordance with the
implementation of the U.S. Securities and Exchange Commission Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101). The
effect of this change is reported as the cumulative effect of a change in
accounting principle in the year ended October 31, 2001 (See Note 2).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

Legal Proceedings: In November 2002, the Company, and the former Chief
Executive Officer, were sued by Doerge Capital Collaterized Bridge Fund, L.P.
in the Circuit Court of Lake county, Illinois. Doerge Capital had loaned
$500,000 to the Company. The suit alleges breach of contract and fraudulent
inducement and seeks $500,000 plus costs. Management believes the Company has
valid defenses to this suit and the Company intends to vigorously defend this
suit. Nevertheless, unfavorable resolution of this suit could have a material
adverse effect on the financial condition of the Company.

In January 2003, the Company was sued by Armando and Francisco Alonso in the
Circuit Court of Orange County, Florida. The Alonsos had sold their business
to the Company, taking back $1.5 million of convertible notes. The Alonsos,
who converted the notes into shares of common stock of the Company, allege
breach of contract and seek rescission of the contract and unspecified money
damages. Management believes the Company has valid defenses to this suit and
the Company intends to vigorously defend this suit. Nevertheless, unfavorable
resolution of this suit could have a material adverse effect on the financial
condition of the Company.

In March 2003, the Company was sued by Ernest and Lori Davis in the Circuit
Court of Orange County, Florida. The Davis had sold their business to the
Company, taking back a $1,731,920 million convertible note. The Davis, who
converted the note into shares of common stock of the Company, allege breach of
contract and seek rescission of the contract and unspecified money damages.
Management believes the Company has valid defenses to this suit and the Company
intends to vigorously defend this suit. Nevertheless, unfavorable resolution
of this suit could have a material adverse effect on the financial condition of
the Company.

In February 2003, the Company settled a suit, filed in August 2002 in District
Court of Clark County, Nevada, by Century Partnership, LTD. involving an
alleged breach of a lease. The court approved settlement provides that the
Company pay $300,000, payable in monthly installments of $10,000 per month,
commencing June 1, 2003 with interest accruing at 10% per annum. Should the
Company default in making payments under the settlement agreement, a judgment
of $350,000, plus interest and less any payments made by the Company, will be
entered against the Company.

In March 2003, the Company received an
inquiry from the United States Department of Labor about
contributions the Company is required to make to the Recreation USA,
Inc. 401(k) Plan which is maintained by the Company. The Company has
provided the Department of Labor with much of the information that
has been requested and is in the process of compiling information
requested by the Department of Labor that has not yet been submitted
to such agency. The Company is also reviewing its internal records to
confirm that all contributions that it was required to make to the
plan have been made. At this time, management is unable to determine
whether this inquiry may lead to a potentially adverse action.

On May 23, 2003, the Company was
sued by Armando and Francisco Alonso in the Circuit Court of Lake
County, Florida. In January 2000, the Company purchased from the
Alonso's sold the real property related to the business the Alonso's
had previously sold to the Company. In conjunction with the purchase
of the real property by the Company, the Alonso's took back a
$5,010,864 note secured by a mortgage on the real property. The
Alonso's allege a default under the note (with a current balance of
$4,700,235) for failure to pay the May 2003 payment as required and
by encumbering the real property with a second mortgage in violation
of the loan documents. The Company made the May payment under the
note within the cure period as provided for in the note. At this time
management is unable to determine the defenses to the allegation of
encumbering the real property with a second mortgage. An unfavorable
resolution of this suit would have a material adverse effect on the
financial condition and cash flow of the Company.

The Company is also involved in various lawsuits and other contingencies
arising out of the Companys operations in the normal course of business. In
the opinion of management, the ultimate resolution of these claims will not
have a material adverse effect upon the business, financial position or results
of operations of the Company.

21. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of unaudited quarterly results for the fiscal years
ended October 31, 2002 and October 31, 2001.

FISCAL 2002 QUARTER(RESTATED)FIRST
        
        SECOND
        
        THIRD
        
        FOURTH(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)Revenue
        
        $
        18,417,909
        
        
        $
        19,886,374
        
        
        $
        22,859,570
        
        
        $
        16,715,471Gross Profit
        
        
        3,734,828
        
        
        
        3,122,888
        
        
        
        2,143,071
        
        
        
        1,636,016Net loss
        
        
        (3,780,925
        )
        
        
        (511,445
        )
        
        
        (10,312,616
        )
        
        
        (4,456,988
        )Basic and diluted loss per
common share(a)
        
        
        (4.86
        )
        
        
        (1.02
        )
        
        
        (10.95
        )
        
        
        (4.69
        )


In connection with the preparation of
the Company's annual financial statements, the Company determined its
financial statements for the three and nine month periods ended
July 31, 2002 required revision, as the Company had not recorded
a charge to marketing expense of $298,652 relating to the value of
warrants issued in connection with the origination of a note payable
to an affiliate (see Note 12). Additionally, the Company did not
record a charge to interest expense of $426,667 relating to the
deemed beneficial value relating to the variable provision of the
note payable to an affiliate. Accordingly, the as reported net loss
for the Quarter ended July 31, 2002, $9,587,297, was increased to
$10,312,616.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

Effective November 1, 2000, the Company changed its revenue recognition policy
related to commissions earned by the Company for placing retail financing
contracts with indirect lending institutions in connection with customer
vehicle and marine purchases and customer purchases of credit life insurance
products to defer these commissions until the chargeback period has lapsed.
Also effective November 1, 2000, the Company changed its revenue recognition
policy related to commissions earned on the sale of administrative obligor
extended warranty and service contracts to defer these commissions until this
100% chargeback period has lapsed and to recognize revenue ratably over the
remaining life of the contracts as commissions are earned and not subject to
chargeback. This change was made in accordance with the implementation of the
U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 101,
Revenue Recognition in Financial Statements (SAB 101) (See Note 2). The
quarters ended January 31, 2001, April 30, 2001 and July 31, 2001 have been
restated to reflect the adoption of SAB 101.

FISCAL 2001 QUARTERFIRST
        
        SECOND
        
        THIRD
        
        FOURTH(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)Pre-SAB 101:(as originally reported)Revenue
        
        $
        33,220
        
        
        $
        41,654
        
        
        $
        36,397
        
        
        $
        22,984Gross Profit
        
        
        5,188
        
        
        
        7,363
        
        
        
        6,685
        
        
        
        (682
        )Net income (loss)
        
        
        (2,883
        )
        
        
        (1,635
        )
        
        
        (427
        )
        
        
        (10,629
        )Basic and diluted earnings (loss) per common
share(a)
        
        
        (0.38
        )
        
        
        (0.20
        )
        
        
        (0.05
        )
        
        
        (1.28
        )


FISCAL 2001 QUARTERFIRST
        
        SECOND
        
        THIRD
        
        FOURTH(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)(RESTATED)
        
        (RESTATED)
        
        (RESTATED)
        
        (RESTATED)Post-SAB 101:(as restated)Revenue
        
        $
        33,342
        
        
        $
        41,182
        
        
        $
        36,172
        
        
        $
        23,392Gross Profit
        
        
        5,310
        
        
        
        6,891
        
        
        
        6,460
        
        
        
        (274
        )Net income (loss)
        
        
        (4,950
        )
        
        
        (2,107
        )
        
        
        (652
        )
        
        
        (10,313
        )Basic and diluted earnings (loss) per
common share(a)
        
        
        (0.65
        )
        
        
        (0.26
        )
        
        
        (0.07
        )
        
        
        (1.21
        )


(a) Calculated independently for each period, and consequently, the sum of the
quarters may differ from the annual amount.

The fourth quarter of fiscal 2001 reflects a $1,580,000 charge to consulting
expense related to stock issuable for services (See Note 20).

The fourth quarter of fiscal 2001 reflects a $1,573,000 charge for goodwill
impairment based on an annual evaluation and events in the quarter (See Note
4).

The fourth quarter of fiscal 2001 reflects provisions of $2,257,000 for
additional reserves on vehicles, marine products and parts and accessory
inventory based on inventory aging, reassessment of wholesale market value and
salability, historical sales activity and the condition of the merchandise.

The second quarter of fiscal 2001 reflects a debt conversion expense charge of
$1,440,000 (See Note 4). An additional $83,000 was expensed in the fourth
quarter of fiscal 2001.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

22. SUBSEQUENT EVENTS

Primary Floor Plan

On November 1, 2002, the Company paid the $100,000 final installment on a loan
origination fee incurred in connection with the Companys March 2002 amendment
to its primary floor plan credit facility. This fee could have been avoided if
the Company were able to refinance the outstanding floor plan balance on or
before October 31, 2002. On November 13, 2002, the Company reached an
agreement to amend its primary floor plan, which expired on October 31, 2002.
The credit facility was extended through December 13, 2002. In connection with
the amendment, the Company paid an additional loan fee of $50,000, paid down
the credit facility by $4,800,000 and obtained a commitment from the majority
holder of the Companys Series A Preferred Stock (see Note 13) and the sole
holder of the Companys Series AA-2 Preferred Stock (see Note 14), to purchase
the floor plan credit facility from the Companys primary floor plan lender and
an additional advance of $4,300,000 to the Company. Of the $4,300,000
of additional advances by Mr. Adams, $1,000,000 was a secured
convertible loan pursuant to the March 20, 2002 AGHI Finance loan
agreement (see Note 12). The remaining $3,300,000 advance was
made by AGI Holding Corp., a company owned by Mr. Adams, for a
term of two years and at an interest rate of 12.75%, payable monthly.
The loan is convertible into shares of common stock of the Company at
a price of $1.99 per share and is secured by all of the assets of the
Company. On December 13, 2002, a company owned by Mr. Adams
acquired the floor plan from the Companys primary floor plan
lender for $7,800,000, making Mr. Adams also the Company's
primary lender. Subsequent to the acquisition of the Companys
floor plan by a company owned by Mr. Adams, the $3,300,000
advance was added to the outstanding floor plan balance under the provisions of the floor plan agreement.
Simultaneous with the acquisition of the floor plan, the floor plan credit
facility was amended to, among other things, increase the interest rate to
12.75%, extend the maturity date until November 14, 2004 and
terminated the lenders obligations to make future
advances thereunder. On January 14, 2003, the Companys primary floor plan credit
facility was further amended to, among other things, allow for an additional
advance of $1,300,000 and to make the credit facility due on demand. For a
complete discussion regarding transactions effecting the Companys primary
floor plan credit facility, see Note 10 Floor Plan Contracts.

Sale of Company Stores

On December 6, 2002, the Company sold its Bakersfield, California operations to
pay down the Companys primary floor plan lender. Under the terms of the
Sale and Purchase of Assets Agreement by and between Holiday RV Superstores
West, Inc. and Venture Out RV Centers, Inc., certain assets were sold to Venture Out and Venture
Out assumed certain liabilities for a net purchase price of $3,402,400. The
net proceeds from this transaction, $3,335,700, were paid to the Companys
primary floor plan lender to reduce the floor plans outstanding balance. In
connection with this transaction, the Company recognized a gain of $928,510,
which will be reflected in the Companys results of operations for fiscal 2003.

On March 7, 2003, the Company sold its Spartanburg, South Carolina operations
due to the Companys inability to finance inventory and to curtail the losses
from that dealership. Under the terms of the Sale and Purchase of Assets
Agreement by and between Holiday RV Superstores of South Carolina, Inc. and
Holiday Kamper Company of Columbia, Inc., all of the assets of the Spartanburg operation were
sold and certain of the liabilities were assumed for a net purchase price of
$3,199,050. The Company reduced its obligations to a company
owned by Mr. Adams, the Companys primary lender, by
$2,967,000. In connection with this transaction, the Company recognized a loss
of $244,175, which will be reflected in the Companys results of operations for
fiscal 2003.

On April 3, 2003, the Company sold its Las Cruces, New Mexico operations due to
the Companys inability to finance inventory. Under the terms of the Sale and
Purchase of Assets Agreement by and between Holiday RV Superstores West, Inc.
and Holiday World of Las Cruces, LLC (Holiday World), certain assets were
sold to Holiday World and Holiday World assumed certain liabilities for a net
purchase price of $2,844,038. The net proceeds from this transaction,
$2,642,795, were paid to a company owned by Mr Adams, the
Companys primary lender, to reduce the outstanding
balance. In connection with this transaction, the Company recognized a loss of
$99,829, which will be reflected in the Companys results of operations for
fiscal 2003.

Conversion of Series A and Series AA Preferred Stock

On January 14, 2003, the holders of the Companys Series A and Series AA
Preferred Stock exercised their rights to convert their preferred stock into
shares of the Companys common stock at a conversion price of $0.62 per share.
Accordingly, the Company issued 3,225,807 shares of the Companys common stock
in exchange for the outstanding Series A Preferred Stock, of which 2,419,335
shares were issued to Mr. Adams, the Companys primary
lender and now majority stockholder. Additionally, the Company
issued 2,419,355 shares of the Companys common stock in exchange for the
outstanding Series AA Preferred Stock, all of which was owned by
Mr. Adams. As a result of the conversion, Mr. Adams
obtained ownership of approximately 69% of the Companys outstanding
common stock. Due to the Companys financial position at January 14, 2003 and
the Companys results of operations for the years ended October 31, 2002 and
2001, Delaware law prohibits the payment of dividends. Therefore, the accrued
and unpaid dividends relating to the Series A and AA Preferred Stock as of
January 14, 2003 have been classified as other accrued liabilities as of that
date. All deemed dividends resulting from the recording the Series A and AA
Preferred Stock on a liquidation basis (see Notes 13 and 14) were recorded as
an increase in the Companys paid in capital account on
January 14, 2003. The reduction of the conversion price to
$0.62 per share from the original conversion price of $5.00 per share
provided beneficial value to the holders of the Series A and
Series AA Preferred Stock of $3,461,613 that will be recorded as
a deemed dividend in January 2003.

F-29



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)

Conversion of Other Debt

In accordance with the term sheet entered into on September 30, 2002 by and
between the Company and a lender (see Note 11), the Company issued 406,250
shares of the Companys common stock at a per share price of $0.80 per share in
exchange for forgiveness of $324,800 of outstanding debt. Also, in connection
with this transaction, the lender agreed to forgive an additional $75,200 of
outstanding principle on the debt. The gains related to the conversion and
debt forgiveness will be included in the Companys results of operations for
the three months ended January 31, 2003.

Nasdaq SmallCap Market Delisting

On February 19, 2003, the Company received notification from the Nasdaq Listing
Qualifications Panel stating that the Companys common stock would be delisted
from the Nasdaq SmallCap Market effective with the open of business on Friday,
February 21, 2003. In addition, the Companys common stock is not be
immediately eligible to trade on the OTC Bulletin Board because the Company is
not current in all of its periodic reporting requirements under the Securities
Exchange Act of 1934, as amended, but is currently quoted on the pink sheets.

New Chairman and Acting Chief
Executive Officer; Resignation of Acting Chief Executive Officer

On February 4, 2003, the Company announced the appointment of Lee B. Sanders as
the new Chairman of the Board of Directors and Casey L. Gunnell as Acting Chief
Executive Officer and President and the resignation of Marcus A.
Lemonis, the former Chairman, Chief Executive Officer and President. Mr. Gunnell has given
notice of his resignation as Acting Chief Executive Officer,
President and Director effective immediately after the filing of the
Companys Annual Report of Form 10-K. In addition, Lee Iacocca resigned from the Board
in February 2003.

Notice to Convert

On February 28, 2003 the Company received notice from Mr. Adams, the Companys
primary lender and majority stockholder, requesting conversion of $150,000
principal amount and $150,000 of accrued but unpaid interest owed under a
convertible note. The conversion price sought by Mr. Adams is $0.02 per share,
which Mr. Adams asserts is the conversion price established in accordance with
the terms of the convertible note.

If the shares of common stock are issued on the basis of the conversion
request, Mr. Adams ownership of the Companys common stock would increase from
approximately 69% to more than 90%. Were the Company to issue the shares of
common stock subject to the conversion request, thus increasing Mr. Adams
ownership interest to over 90 percent, Mr. Adams would be able to effect a
short form merger in which the shares of common stock not owned by Mr. Adams
could be acquired in exchange for consideration solely determined by Mr. Adams
(subject only to dissenters appraisal rights under Delaware corporate law).
The Company has not yet issued the shares of common stock referenced in the
conversion request and the Company is evaluating its rights, responsibilities
and options with respect to this issue.

Mr. Adams Amendment to
Schedule 13D  Removal of Certain Directors by Written Consent.

On May 23, 2003, Mr. Adams
filed an amendment to his Schedule 13D relating to his ownership
in the Company (the Amendment). The Amendment states that
Mr. Adams has been informed that Board of Directors of the
Company had determined to issue shares to Mr. Adams subject to
the conversion notice (see above) after the completion of the audit
for its fiscal year ended October 31, 2002. The Companys
Board of Directors has not made that determination, and as stated
above, is evaluating its rights, responsibilities and options with
respect to issuing shares subject to the conversion notice.

The Amendment further states that, on
May 16, 2003, Mr. Adams determined that if the Company had
not filed its Form 10-K for the year ended October 31, 2002
and its Form 10-Q for the quarter ended January 31, 2003 by
May 23, 2003, Mr. Adams would take action by means of
written consent pursuant to the Delaware General Corporation Law and
the Companys certificate of incorporation to remove Lee Sanders
and Casey Gunnell as directors and replace them with other persons
who would, among other things, issue the shares to Mr. Adams
subject to the conversion notice. The Amendment continues stating
that after the issuance of the shares subject to the conversion
notice, Mr. Adams would consider effecting a short
form merger. As stated above, the issuance of the shares
subject to the conversion notice would increase Mr. Adams
ownership to more than 90%, thus allowing Mr. Adams to effect a
short form merger in which shares of common stock not owned by
Mr. Adams could be acquired in exchange for consideration solely
determined by Mr. Adams (subject only to dissenters
appraisal rights under Delaware corporate law). The Amendment further
states that Mr. Adams understands that the Company has made
arrangements to file its Form 10-K by May 23, 2003 and
therefore Mr. Adams has not taken the proposed action to replace
certain members of the Companys Board of Directors.

Lawsuit Against the Former Chief Executive Officer

On April 24, 2003, the Company filed suit against Marcus Lemonis, the former
Chairman, Chief Executive Officer and President of the Company who resigned on
January 30, 2003, for breach of contract, breach of fiduciary duty and unjust
enrichment. The Company is seeking the return of a $41,006 unauthorized bonus
payment and over $70,000 of expenses reimbursed to Mr. Lemonis that were
non-business related, excessive and/or unsubstantiated and contrary to the
policies contained in the Companys Employee Handbook. There can
be no assurance as to the outcome of this litigation.

Legal Proceedings

Subsequent to October 31, 2002,
legal proceedings have been initiated against the company. See
Note 20.

F-30



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##### Table of Contents



SCHEDULE II

HOLIDAY RV SUPERSTORES, INCORPORATED AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEARS ENDED OCTOBER 31, 2002, 2001 AND 2000

|     |  |                                            |  |           |           |            |  |          |           |              |  |                 |   |           |  |        |         |         |  |   |            |   |  |   |           |  |  | 
|---- |  | ------------------------------------------ |  | --------- | --------- | ---------- |  | -------- | --------- | ------------ |  | --------------- | - | --------- |  | ------ | ------- | ------- |  | - | ---------- | - |  | - | --------- |  |  | 
|     |  |                                            |  |           |           |            |  |          |           | CHARGES      |  |                 |   |           |  |        |         |         |  |   |            |   |  |   |           | 
|     |  |                                            |  |           |           | BALANCE AT |  | TO COST  |           | CHARGES      |  |                 |   |           |  | OTHER  |         | BALANCE
|     |  |                                            |  |           |           | BEGINNING  |  | AND      |           | TO OTHER     |  | OTHER           |   | CHARGES-  |  | AT END
|YEAR |  | DESCRIPTION                                |  | OF PERIOD |           | EXPENSES   |  | ACCOUNTS |           | ADDITIONS(A) |  | (DEDUCTIONS)(B) |   | OF PERIOD
|     |  |                                            |  |           |           |            |  |          |           |              |  |                 |   |          
|2002 |  | Finance Commission Chargeback Reserves     |  | $         | 146,985   |            |  | $        |          |              |  | $               |  |           |  | $      |        |         |  | $ | (146,985   | ) |  | $ |          | 
|2002 |  | Deferred Tax Valuation Allowance           |  | $         | 5,317,000 |            |  | $        | 6,643,263 |              |  | $               |  |           |  | $      |        |         |  | $ | (2,184,372 | ) |  | $ | 9,775,891 | 
|2001 |  | Finance Commissions Chargeback Reserves(c) |  | $         | 245,246   |            |  | $        | 54,765    |              |  | $               |  |           |  | $      |        |         |  | $ | (153,026   | ) |  | $ | 146,985   | 
|2001 |  | Deferred Tax Valuation Allowance           |  | $         |          |            |  | $        | 5,317,000 |              |  | $               |  |           |  | $      |        |         |  | $ |           |   |  | $ | 5,317,000 | 
|2000 |  | Finance Commissions Chargeback Reserves    |  | $         | 63,309    |            |  | $        | 296,132   |              |  | $               |  |           |  | $      | 245,247 |         |  | $ | (359,442   | ) |  | $ | 245,246   | 



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|(a) |  | Finance commissions chargeback reserves from business acquisitions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Finance commissions chargebacks paid and impact of the utilization of
NOL carryback.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(c) |  | Effective November 1, 2000, we changed our revenue recognition
policy related to commissions earned for placing retail financing
contracts with indirect lending institutions in connection with
customer vehicle and marine purchases and customer purchases of
credit life insurance products to defer these commissions until
the chargeback period has lapsed. Also, effective November 1,
2000, we changed our revenue recognition policy related to
commissions earned on the sale of administrator obligor extended
warranty and service contracts to defer these commissions until
the 100% chargeback period has lapsed and to recognize ratably
over the remaining life of the contract as commissions are earned
and not subject to chargeback. The reserve that remains is for
preacquisition chargeback exposures related to these types of
products sold by companies we acquired and considered as part of
the original purchase accounting.

All other schedules have been omitted as they are either not applicable, not
required or the information is included in the Consolidated Financial
Statements or notes thereto.

Report of Independent Certified Public Accountants on Financial Statements
Schedule

Shareholders and Board of Directors of Holiday RV Superstores, Inc.

Our audits of the consolidated financial statements referred to in our report,
which includes an explanatory paragraph indicating substantial doubt as to the
Companys ability to continue as a going concern and an explanatory paragraph
indicating a change in the Companys method of accounting for certain revenues
to conform to the U.S. Securities and Exchange Commission Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements,
dated May 28, 2003, appearing in this Annual Report on Form 10-K, also
included an audit of the financial statement schedule listed in
Item 15(a)(2)
of this Form 10-K. In our opinion, this financial statement schedule presents
fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated financial statements.

PricewaterhouseCoopers LLP

Fort Lauderdale, Florida
May 28, 2003.





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##### Table of Contents



INDEX TO EXHIBITS

EXHIBITNUMBER
        
        DESCRIPTION OF EXHIBIT3.1
        
        Amendment in the Entirety of By-Laws (incorporated by reference to Exhibit 3.5 to the Registration
Statement on Form S-18 dated September 14, 1987 (File No. 33-17190-A) (the Form S-18).3.2
        
        Amendment to By-Laws (incorporated by reference to Exhibit 3.6 to the Form S-18).3.3
        
        Agreement and Plan of Merger between Holiday RV Superstores, Incorporated, a Florida corporation and
Holiday RV Superstores, Inc., a Delaware corporation (incorporated by reference to Exhibit 3.7 to the
Annual Report on Form 10-K for fiscal year ended October 31, 1999 filed on January 28, 2000 (the 1999
10-K)).3.4
        
        Restated Certificate of Incorporation of Holiday RV Superstores, Inc., a Delaware corporation
(incorporated by reference to Exhibit 3.8 to the 1999 10-K).3.5
        
        Certificate of Designation, Rights and Preferences of the Series A Preferred Stock of Holiday RV
Superstores, Inc. (incorporated by reference to Exhibit 3.1 to the Form 8-K dated January 7, 2002 filed
on January 11, 2002 (the January 2002 8-K)).3.6
        
        Amended Certificate of Designation, Rights and Preferences of the Series A Preferred Stock of Holiday RV
Superstores, Inc. (incorporated by reference to Exhibit 3.2 to the January 2002 8-K).3.7
        
        Certificate of Designation, Rights and Preferences of the Series AA-2 Preferred Stock of Holiday RV
Superstores, Inc. (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the
fiscal quarter ended January 31, 2002 (the January 2002 10-Q)).4.1
        
        Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Form S-18).4.2
        
        Holiday RV Superstores, Inc. 1999 Stock Compensation Program (incorporated by reference to Exhibit 4.1 to
the Registration Statement on Form S-8 dated September 28, 2000 (File No. 333-46822) (the S-8)).4.3
        
        Holiday RV Superstores, Inc. 1999 Stock Option Plan (incorporated by reference to Exhibit 4.2 to the S-8).4.4
        
        Form of Consulting Agreement (incorporated by reference to Exhibit 4.3 to the S-8).4.5
        
        Form of Consultant Stock Option Agreement (incorporated by reference to Exhibit 4.4 to the S-8).4.6
        
        Form of 1999 Board of Director Stock Option Agreement (incorporated by reference to Exhibit 4.5 to the
S-8).4.7
        
        Form of Warrant to Purchase Shares of Common Stock of Registrant dated April 13, 2000 issued to Schneider
Securities, Inc. (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to Registration Statement
on Form S-3 filed on September 21, 2001 (File No. 333-64898) (the S-3)).4.8
        
        Form of Warrant dated May 10, 2001 registered to KC (incorporated by reference to Exhibit 4.1 to the
Quarterly Report on Form 10-Q for the period ended April 30, 2001 (the April 2001 10-Q)).4.9
        
        Form of Warrant dated January 8, 2002 issued to The Stephen Adams Living Trust UTA dated September 15,
1997 (incorporated by reference to Exhibit 4.1 to the January 2002 8-K).4.10
        
        Form of Warrant dated as of March 12, 2002 issued to AGHI Finance Co., LLC (incorporated by reference to
Exhibit 4.1 to the January 2002 10-Q).4.11
        
        Form of Warrant dated as of March 18, 2002 issued to The Stephen Adams Living Trust UTA dated September
15, 1997 (incorporated by reference to Exhibit 4.2 to the January 2002 10-Q).10.1
        
        Debt Conversion and Mutual Settlement and Release Agreement dated as of March 1, 2001 between Registrant,
County Line Select Cars, Inc., Armando Alonso and Francisco Alonso (incorporated by reference to Exhibit
10.7 of the April 2001 10-Q).10.2
        
        Debt Conversion and Mutual Settlement and Release Agreement dated as of March 1, 2001 between Registrant,
Little Valley Auto & RV Sales, Inc., Ernest Davis, Jr. and Lori A. Davis (incorporated by reference to
Exhibit 10.8 of the April 2001 10-Q).10.3
        
        Amendment to Debt Conversion and Mutual Settlement and Release Agreement dated as of March 1, 2001
between Registrant, County Line Select Cars, Inc., Armando Alonso and Francisco Alonso (incorporated by
reference to Exhibit 10.9 of the April 2001 10-Q).10.4
        
        Amendment and Restated Loan and Security Agreement by and between the Registrant, Banc of America
Specialty Finance, Inc. and Bank of America, N.A. dated March 8, 2001 (incorporated by reference to
Exhibit 10.9 of the April 2001 10-Q).






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EXHIBITNUMBER
        
        DESCRIPTION OF EXHIBIT10.5
        
        Warrant to Purchase Securities between Registrant and R.B.F. International, Inc. dated August 1, 2001
(incorporated by reference to Exhibit 10.11 to the July 2001 10-Q).10.6
        
        [Consulting Agreement between Registrant and Steven Antebi dated August 1, 2001 (incorporated by
reference to Exhibit 10.12 to the July 2001 10-Q).]10.7
        
        Settlement Agreement between Registrant and W. Hardee McAlhaney dated June, 2001 (incorporated by
reference to Exhibit 10.13 to the July 2001 10-Q).10.8
        
        Securities Purchase Agreement dated as of December 31, 2001 among Holiday RV Superstores, Inc and the
purchasers named therein (incorporated by reference to Exhibit 10.1 to the January 2002 8-K).10.9
        
        Registration Rights Agreement dated as of December 31, 2001 between the investors identified on the
signature pages thereto and Holiday RV Superstores, Inc. (incorporated by reference to Exhibit 10.2 to
the January 2002 8-K).10.10
        
        Second Amendment to Amended and Restated Loan and Security Agreement and Forbearance Agreement, dated as
of January 8, 2002, effective November 30, 2001 among Holiday RV Superstores, Inc and Bank of America,
N.A. (incorporated by reference to Exhibit 10.3 to the January 2002 8-K).10.11
        
        Letter Agreement between Holiday RV Superstores, Inc and Steven Antebi, dated December 27, 2001
(incorporated by reference to Exhibit 10.4 to the January 2002 8-K).10.12
        
        Form of Leasehold Mortgage and Security Agreement to Secure Guaranty dated March 12, 2002 made between
Holiday RV Superstores, Inc. and AGHI Finance Co., LLC for the lease property in Bakersfield, California,
Roseville, California, Wintergarden, Florida, Lexington, Kentucky, Prosperity, West Virginia, Ripley West
Virginia, Sanford, Florida, Fort Lauderdale, Florida and Las Vegas, Nevada (incorporated by reference to
Exhibit 10.8 to the January 2002 10-Q).10.13
        
        Trademark Security Agreement dated March 12, 2002 between Holiday RV Superstores, Inc. and AGHI Finance
Co. LLC (incorporated by reference to Exhibit 10.10 to the January 2002 10-Q).10.14
        
        Intercreditor and Subordination Agreement dated March 15, 2002 among AGHI Finance Co., LLC, Holiday RV
Superstores, Inc., Banc of America Specialty Finance, Inc. and Bank of America, N.A. (incorporated by
reference to Exhibit 10.12 to the January 2002 10-Q).10.15
        
        Endorsement Agreement dated March 20, 2002 between Holiday RV Superstores, Inc. and Affinity Group, Inc.
(incorporated by reference to Exhibit 10.13 to the January 2002 10-Q).10.16
        
        Right of First Refusal dated March [  ], 2002 (incorporated by reference to Exhibit 10.14 to the
January 2002 10-Q).10.17
        
        Right of First Refusal dated March [  ], 2002 (incorporated by reference to Exhibit 10.15 to the
January 2002 10-Q).10.18
        
        Lease agreement dated November 12, 2001 between Century Partnership, Ltd. and Holiday RV Superstores, of
Nevada, Inc. (incorporated by reference to Exhibit 10.16 to the January 2002 10-Q).10.19
        
        Securities Purchase Agreement dated March 18, 2002 between the Purchasers set forth on Schedule I thereto
and Holiday RV Superstores, Inc. (incorporated by reference to Exhibit 10.1 to the January 2002 10-Q).10.20
        
        Registration Rights Agreement dated March 18, 2002 between the investors identified on the signature
pages thereto and Holiday RV Superstores, Inc. (incorporated by reference to Exhibit 10.2 to the January
2002 10-Q).10.21
        
        Registration Rights Agreement dated March 12, 2002 by and between AGHI Finance Co., LLC and Holiday RV
Superstores, Inc. (incorporated by reference to Exhibit 10.3 to the January 2002 10-Q).10.22
        
        Loan and Security Agreement dated March 12, 2002 among AGHI Finance Co., LLC and Holiday RV Superstores,
Inc. (incorporated by reference to Exhibit 10.4 to the January 2002 10-Q).10.23
        
        Secured Promissory Note dated March 20, 2002 from Holiday RV Superstores, Inc., as borrower to AGHI
Finance Co., LLC, as payee in the original principal amount of $1,600,000 (incorporated by reference to
Exhibit 10.5 to the January 2002 10-Q).10.24
        
        Form of Guaranty dated March 12, 2002 from each of Holiday RV Superstores of South Carolina, Inc.,
Holiday RV Superstores West, Inc., Holiday RV Superstores of New Mexico, Inc., Holiday RV Assurance
Service, Inc., County Line Select Cars, Inc., Little Valley Auto and RV Sales, Inc., Hall Enterprises,
Inc. and Recreation USA Insurance Corporation in favor of AGHI Finance Co., LLC (incorporated by
reference to Exhibit 10.6 to the January 2002 10-Q).10.25
        
        Form of Security Agreement dated March 12, 2002 from each of Holiday RV Superstores of South Carolina,
Inc., Holiday RV Superstores West, Inc., Holiday RV Superstores of New Mexico, Inc., Holiday RV Assurance
Service, Inc., County Line Select Cars, Inc., Little Valley Auto and RV Sales, Inc., Hall Enterprises,
Inc. and Recreation USA Insurance Corporation in favor of AGHI Finance Co., LLC (incorporated by
reference to Exhibit 10.7 to the January 2002 10-Q).






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EXHIBITNUMBER
        
        DESCRIPTION OF EXHIBIT10.26
        
        Form of Mortgage and Security Agreement dated March 12, 2002 made between Holiday RV Superstores, Inc.
and AGHI Finance Co., LLC for the owned real property located in Clermont, Florida, Inverness, Florida,
Ocala North, Florida, Ocala South, Florida and Spartanburg, South Carolina (incorporated by reference to
Exhibit 10.8 to the January 2002 10-Q).10.27
        
        Term Sheet, dated October 25, 2002, by and between the Company, AGHI Finance Co., LLC and the Steven
Adams Living Trust (incorporated by reference to Exhibit 99.1 to Form 8 K dated October 25, 2002 filed
on October 30, 2002 (the October 2002 8-K)).10.28
        
        Amendment No. 1 to Loan and Security Agreement, dated October 9, 2002, by and among the Company, AGHI,
the Steven Adams Living Trust and certain subsidiaries of the Company (incorporated by reference to
Exhibit 99.2 to the October 2002 8-K).10.29
        
        Term Sheet, dated October 25, 2002, by and between the Company and Arc Capital (incorporated by reference
to Exhibit 99.3 to the October 2002 8-K).10.30
        
        Agreement between the Company and R.B.F. International, Inc., dated September 30, 2002 (incorporated by
reference to Exhibit 99.4 to the October 2002 8-K).10.31
        
        Fourth Amendment to Amended and Restated Loan and Security Agreement and Forbearance Agreement Extension,
dated November 11, 2002, effective October 31, 2002, by and among, Holiday RV Superstores, Inc., Bank of
America, N.A., Banc of America Specialty Finance, Inc. and all of the subsidiaries of the Company
(incorporated by reference to Exhibit 99.1 to the Form 8-K dated November 11, 2002 filed on November 18,
2002 (the November 11, 2002 8-K)).10.32
        
        Commitment Letter, dated November 11, 2002, issued by Stephen Adams to Bank of America (incorporated by
reference to Exhibit 99.2 to the November 11, 2002 8-K).10.33
        
        Amendment No. 2 to Loan and Security Agreement, dated as of November 11, 2002, by and among the Company,
AGHI Finance Co., LLC, AGI Holding Corp., the Stephen Adams Living Trust and certain subsidiaries of the
Company (incorporated by reference to Exhibit 99.3 to the November 11, 2002 8-K).10.34
        
        Secured Promissory Note, dated November 11, 2002, issued by the Company to AGI Holding Corp. in the
amount of $3,300,000 (incorporated by reference to Exhibit 99.4 to the November 11, 2002 8-K).10.35
        
        Agreement for Purchase and Sale of Assets, dated November 22, 2002, by and among, Holiday RV Superstores,
Inc., Holiday RV Superstores West, Inc., a subsidiary of the Company, and Venture Out RV Centers, Inc.
(incorporated by reference to Exhibit 10.1 to the Form 8-K dated November 22, 2002 filed on November 27,
2002).10.36
        
        Fifth Amendment to Amended and Restated Loan and Security Agreement, dated December 16, 2002, by and
among, Holiday RV Superstores, Inc., AGHI Finance Co., LLC and all of the subsidiaries of the Company
(incorporated by reference to Exhibit 99.1 to the Form 8-K dated December 13, 2002 filed on December 19,
2002).10.37
        
        Third Amendment to Amended and Restated Loan and Security Agreement and Forbearance Agreement Extension
dated March 15, 2002 among Holiday RV Superstores, Inc., Holiday RV Superstores of South Carolina, Inc.,
Holiday RV Superstores West, Inc., Holiday RV Superstores of New Mexico, Inc., Holiday RV Assurance
Service, Inc., County Line Select Cars, Inc., Little Valley Auto and RV Sales, Inc., Hall Enterprises,
Inc and Recreation USA Insurance Corporation, Holiday RV Rental/Leasing, Inc. and Holiday RV Assurance
Service, Inc., F/K/A Holiday RV Assurance Corporation and Banc of America Specialty Finance, Inc. and
Bank of America, N.A. (incorporated by reference to Exhibit 10.11 to the January 2002 10-Q).10.38
        
        Supplemental Agreement to Amended and Restated Loan and Security Agreement, dated January 14, 2003, by
and among the Company, AGHI Finance Co., LLC, AGI Holding Corp. and the subsidiaries of the Company
(incorporated by reference to Exhibit 10.1 to the Form 8-K dated January 14, 2003 filed on January 17,
2003).10.39
        
        January 8, 2002 Letter Agreement between Stephen Adams and the
Company related to the sale and lease back transaction of the Las
Cruces, New Mexico property. +10.40
        
        Asset Purchase Agreement, dated March 7, 2003, between Holiday
RV Superstores of South Carolina, Inc. and Holiday Kamper Company of
Columbia, Inc. +10.41
        
        Agreement for Purchase and Sale of Assets, dated March 28, 2003,
by and among Holiday World of Las Cruces, LLC, Holiday World of
Houston, L.P., Holiday RV Superstores of New Mexico, Inc., a
subsidiary of the Company, and Holiday RV Superstores, Inc. +10.42
        
        Lease
Agreement between REC LC, LLC and Holiday RV Superstores, Inc. dated
September 20, 2002. +21.1
        
        Subsidiaries of Registrant +99.1
        
        Certification of
the Acting Chief Executive Officer +99.2
        
        Certification of
the Chief Financial Officer +


+ Filed Herewith