UNITED STATES 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 December 31, 2002

                                       OR

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

                          Commission File No. 33-87024C

                          TAYLOR INVESTMENT CORPORATION
             (Exact name of Registrant as specified in its charter)

          Minnesota                                       41-1373372
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

              43 Main Street S.E., Suite 506, Minneapolis, MN 55414
              -----------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                  Registrant's telephone number: (612) 331-6929
                                                 --------------

        Securities registered pursuant to Section 12(b) of the Act: None
                                                                    ----

        Securities registered pursuant to Section 12(g) of the Act: None
                                                                    ----

Check whether the issuer (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 _X_ No ___

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements 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.
Yes ___ No _X_

State the aggregate market value of the voting stock held by non-affiliates of
the registrant computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of June 30, 2002:
$1,224,637.

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

      Common Stock, $.01 Par Value - 486,317 shares as of February 28, 2003
      ---------------------------------------------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of certain exhibits hereto are incorporated by reference to the
Company's Registration Statement on Form SB-2 (No. 33-87024C), effective January
12, 1995.


<PAGE>


                                TABLE OF CONTENTS

                                     PART I
ITEM 1.   BUSINESS.............................................................1

          General..............................................................1

          Principal Business...................................................1

          Competition..........................................................2

          Regulation...........................................................3

          Employees............................................................3

ITEM 2.   PROPERTIES...........................................................3

ITEM 3.   LEGAL PROCEEDINGS....................................................4

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

                                    PART II
ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.............4

ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA.................................5

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS............................................5

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........13

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.........................15

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE............................................28

                                   PART III
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..................28

ITEM 11.  EXECUTIVE COMPENSATION..............................................29

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT..........................................................30

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................30

ITEM 14.  CONTROLS AND PROCEDURES.............................................31

                                    PART IV
ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.....31

SIGNATURES....................................................................33


                                       i
<PAGE>


                                     PART I

ITEM 1.  BUSINESS

         GENERAL

         Taylor Investment Corporation (Taylor or the Company) was incorporated
         in 1979 by its president, Philip C. Taylor, who then had 11 years of
         experience in the development and sale of rural recreational
         properties. The Company's principal business is the purchase,
         development and sale of previously undeveloped tracts of land within a
         reasonable driving distance of major metropolitan areas, primarily in
         Minnesota, Wisconsin, Georgia, Texas and Tennessee. The Company
         subdivides these tracts into lots and markets them through its Four
         Seasons sales offices for use as primary residences, vacation retreats,
         retirement residences, and investment. The size of lots sold by the
         Company typically ranges from 1.5 to 2 acres each, but on occasion may
         be as large as 40 acres. Historically, the Company has not participated
         on a regular basis in the construction of homes on the lots which it
         sells, but has contracted for the construction of homes on an isolated
         basis. The Company believes it is the largest developer of waterfront
         properties for the construction of primary and secondary homes in
         Minnesota and Wisconsin and is not aware of any other major developer
         in those states.

         To simplify and facilitate the purchasing process for its customers,
         the Company offers qualified customers loans collateralized by
         mortgages on the lots. Customers desiring financing must submit credit
         applications to the Sales and Marketing Department, which then has a
         credit analysis completed on such customers to determine their
         creditworthiness. Depending on the results of this analysis, the Sales
         and Marketing Department approves or disapproves the loan or submits
         the information to the Finance and Accounting Department for further
         analysis. The number of lot purchases financed with Company-originated
         mortgage loans depends on the availability and terms of alternative
         sources of credit to the customer.

         The Company believes it must position itself to take advantage of the
         current and expected future demand for rural properties for primary and
         secondary homes. The Company's strategy is to expand the organization
         by continuing to explore its current markets as well as exploring new
         markets outside its current locations.

         PRINCIPAL BUSINESS

         Taylor's operations are organized into four primary departments:
         Acquisitions, Development, Sales and Marketing, and Finance and
         Accounting.

         ACQUISITIONS - Taylor's Acquisition Department reviews plat maps for
         the areas served by its sales offices and identifies undeveloped tracts
         of land for purchase, development, and sale. The Acquisitions
         Department then obtains additional information regarding the property
         and any nearby amenities from such sources as topographical maps and
         reports from government agencies. Other due diligence activities
         conducted to determine the suitability of the property for purchase by
         the Company may include studies of local maps and development
         ordinances, reviews of zoning regulations, soil testing, water testing,
         trees and foliage typing, a study of local road access, and a
         consideration of potential lot layout. The Acquisitions Department also
         estimates the costs of development. If the results of these studies and
         estimates are favorable, an offer is made for the property in
         accordance with established pricing guidelines developed by the Company
         based on its past experience. Negotiations then typically commence and,
         if successful, a purchase agreement is entered into. The Company's
         obligations under a purchase agreement are generally conditioned upon
         Taylor obtaining the necessary subdivision approval from the local
         governmental authority. Negotiations typically take 90 days or less,
         but may take as long as a year before a purchase can be concluded.


                                       1
<PAGE>


         DEVELOPMENT - After purchase negotiations are completed, the Company's
         Development Department is responsible for obtaining regulatory approval
         for the planned development. This process typically involves
         determining the layout of lots, or platting the property, attending
         public hearings, and conducting on-site inspections with governmental
         and regulatory personnel. To date, the Development Department has
         typically been successful in obtaining the necessary regulatory and
         governmental approvals; however, there can be no assurance that any
         particular transaction will be approved and ultimately consummated. The
         Development Department also works with a title insurance company in
         obtaining title abstracts, ordering title insurance, and preparing
         other facets of the acquisition for closing. After closing, the
         property is physically developed using road contractors, surveyors, and
         Company work crews. Lots are platted to maximize their attractiveness,
         privacy, and road and water access, taking into account view corridors
         and the layout of trees on the lot. Roads are installed, the property
         is prepared to receive telephone and electrical service, trails are
         cut, underbrush is removed, shorelines are cleared, and the property is
         otherwise prepared for marketing and sales to the buying public. The
         Company then assigns prices to each lot based on market prices for
         similar properties in the area. These sales prices generally range from
         $25,000 - $100,000 per lot.

         SALES AND MARKETING - Taylor's strategy is to purchase and develop
         high-quality properties and then market the lots to residents of
         metropolitan areas. Most properties developed by the Company are within
         reasonable driving distances of major metropolitan areas. The Company's
         lots are targeted toward buyers who desire property with many
         attractive features on which to build primary and secondary homes for
         use as primary residences, vacation retreats, retirement residences, or
         investments. The primary purchasers of the Company's vacation
         properties are individuals ranging from 30 to 60 years old. The
         Company's strategy for remaining competitive in this market involves
         building on its reputation of offering quality properties; using its
         own regional sales offices and personnel; offering "on-the-spot"
         financing for qualified purchasers; and offering properties with many
         appealing features, such as trails, water access, creeks, attractive
         views and shorelines.

         The Company's sales and marketing activities are conducted principally
         through its Four Seasons subsidiaries in Minnesota, Wisconsin, Georgia,
         Texas and Tennessee. A principal element of the Company's strategy and
         success to date has been the establishment and use of regional sales
         offices in general proximity to the developed properties. The Company's
         eight existing regional sales offices are located near Brainerd,
         Minnesota; Spooner, Minocqua, and Stevens Point, Wisconsin; Watersmeet,
         Michigan; Jasper, Georgia; Austin, Texas; and Knoxville, Tennessee. The
         Company advertises in major metropolitan newspapers and other
         publications and on television and radio and participates in home and
         garden, outdoors, and sports shows to attract potential customers.
         Sales personnel are compensated based on sales performance but are not
         permitted to use "hard" sales techniques or enticements to prospective
         purchasers (such as free products) to visit property sites. To
         consummate sales, the Company relies heavily upon the quality of its
         properties combined with the availability of "on-the-spot" financing
         for qualified buyers.

         FINANCE AND ACCOUNTING - The Finance and Accounting Department is
         responsible for maintaining records of account for each project
         developed by the Company and managing the Company's trade receivables
         and payables and mortgages receivable. This department prepares
         management information reports, prepares and services mortgage loans
         extended to lot purchasers, projects cash flow and capital needs for
         acquisition and lending activities, and performs collection activities.

         The Company regularly offers financing for the purchase of its
         properties. Upon execution of a purchase agreement, a customer may
         submit an application for credit, which, combined with a credit report
         from a credit rating agency, is given to the Sales Manager for
         approval. Applications from customers who have experienced credit
         problems in the past are submitted to the Controller for ultimate
         approval or rejection. Approved customers execute notes secured by
         first mortgages on the lots purchased.


                                       2
<PAGE>


         COMPETITION

         The Company operates in a highly competitive environment. It competes
         with other real estate development companies and real estate brokers in
         developing and selling its properties. In addition, and to a lesser
         extent, it competes with banks and other financial institutions and
         with several private companies and individual lenders in making
         mortgage loans. The Company's competitive factors in the market for
         developed lots include the ability to acquire quality inventory and the
         quality of the sales force, and the principal competitive factor in the
         mortgage loan market is the ability to offer favorable terms, including
         interest rates. The Company believes that it competes successfully in
         its market because of the quality of its product, access to capital
         (which enables it to purchase large tracts at more favorable prices
         than smaller industry participants), its dedicated sales staff, its
         reputation, and its financial strength. Management believes that the
         Company's ability to facilitate and simplify purchases by offering
         competitive financing to qualified lot purchasers offers another
         competitive advantage.

         REGULATION

         The Company's sales personnel, consisting primarily of those based in
         its sales offices, must be registered as real estate brokers and
         maintain such registration with the Minnesota Department of Commerce,
         the Wisconsin Department of Registration and Licensing, the Michigan
         Department of Consumer and Industry Services, and the Tennessee Real
         Estate Commission. Michigan requires registration of subdivisions
         containing more than 25 lots. Minnesota requires registration of
         subdivisions containing more than ten lots. The Minnesota Department of
         Commerce granted a waiver of the registration and instead requires
         notification of the sale of any subdivision containing more than ten
         lots, which will be offered to Minnesota residents. No registration is
         required in Wisconsin, Georgia, Texas or Tennessee. In addition, the
         development of properties requires compliance with state and local
         zoning laws and regulations and local laws and ordinances regarding
         such matters as the size of lots, the construction of roads, and the
         amount of setback required from roads and bodies of water.

         The Company is subject to the Interstate Land Sales Full Disclosure
         Act, which requires registration with the Department of Housing and
         Urban Development of any project that consists of 100 or more lots. The
         Company has received a Multiple Site Subdivision Exemption from the
         Department of Housing and Urban Development allowing it to sell
         projects consisting of no more than 99 lots in any given noncontiguous
         site without registration.

         The Company is also subject to consumer protection laws, such as the
         Truth in Lending Act, in connection with its mortgage lending
         activities.

         EMPLOYEES

         As of December 31, 2002, the Company has 85 full-time and 11 part-time
         employees. None of the Company's employees are represented by a labor
         union or are covered by a collective bargaining agreement. The Company
         has not experienced any work stoppages and believes employee relations
         are good.


ITEM 2.  PROPERTIES

         The Company leases its administrative office located at 43 Main Street
         SE, Suite 506, in Minneapolis, Minnesota, consisting of 3,276 square
         feet in an office/residential complex. The lease expires March 31,
         2007.

         The Company leases regional sales, acquisition and development offices
         at various locations in Minnesota, Wisconsin, Michigan, Georgia, Texas
         and Tennessee. These offices typically range from 1,000 to 2,500 square
         feet and are leased on terms ranging from month-to-month to five years.


                                       3
<PAGE>


         Management believes that these facilities provide sufficient space to
         support its current activities, and that additional space will be
         available in the future as needed.












                                       4
<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

         In the ordinary course of its business, the Company from time to time
         becomes subject to claims or proceedings relating to the purchase,
         subdivision, sale and/or financing of real estate. Additionally, from
         time to time, the Company becomes involved in disputes with existing or
         former employees. The Company believes that substantially all of the
         above are incidental to its business.

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

         There were no matters submitted to a vote of security holders during
         the year ended December 31, 2002.


                                     PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's authorized capital stock consists of 10,000,000 shares of
         common stock, $.01 par value, of which 486,317 shares were outstanding
         and held of record by 22 stockholders as of December 31, 2002. There is
         currently no public trading market for the Company's capital stock, and
         the Company does not expect such a market to develop in the foreseeable
         future. Holders of common stock have no preemptive or other rights to
         acquire stock or other securities of Taylor. Cumulative voting for
         directors is not permitted. Holders of common stock are entitled to one
         vote per share on matters submitted to a vote of stockholders. All
         shares of common stock presently outstanding are fully paid and
         non-assessable. The Company's Credit Agreement contains a covenant
         requiring the Company to obtain written approval for the declaration
         and payment of cash distributions. Distributions declared and paid in
         the future, if any, are subject to the discretion of the Board of
         Directors and will depend on the Company's earnings, financial
         condition, capital requirements, debt covenant limitations and other
         relevant factors. In addition, the Board of Directors is authorized to
         issue additional shares of common stock and to issue options and
         warrants for the purchase of such shares, the aggregate of which may
         not exceed the number of shares authorized by the Company's Articles of
         Incorporation.








                                       5
<PAGE>


ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

         The selected consolidated financial data set forth below should be read
         in conjunction with the consolidated financial statements, related
         notes, and other financial information appearing elsewhere in this
         Annual Report.

<TABLE>
<CAPTION>
                                                                         As of or for the Year Ended December 31,
                                                               -----------------------------------------------------------
                                                                 2002         2001         2000         1999        1998
                                                                      (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
         STATEMENT OF OPERATIONS DATA:
<S>                                                            <C>          <C>          <C>          <C>         <C>
         Revenues:
            Sales                                              $ 38,635     $ 35,994     $ 28,838     $ 23,519    $ 19,934
            Interest income on contracts receivable               1,057        1,051        1,058          988       1,086
            Equity in (losses) earnings from joint ventures         (98)        (172)        (121)          58          35
            Other revenue                                           826          377          546          409         318
                                                               --------     --------     --------     --------    --------
         Total revenue                                           40,420       37,250       30,321       24,974      21,373

         Costs and expenses:
            Cost of sales                                        22,594       21,001       15,874       12,453      11,672
            Reduction of inventory to net realizable value          294          138
            Selling, general and administrative                  11,862       11,750        9,338        7,955       5,959
            Interest                                                784        1,141        1,370        1,213       1,482
                                                               --------     --------     --------     --------    --------
         Total costs and expenses                                35,240       33,892       26,582       21,915      19,251

         Minority interest                                         (116)          --           --           --          --

         Net income(1)                                            5,064        3,358        3,739        3,059       1,273
         Net income per common share outstanding               $  10.44     $   6.94     $   7.72     $   6.32    $   2.63
         Dividends paid per common share outstanding           $   5.34     $   3.42     $   4.25     $   3.20    $   0.62

         BALANCE SHEET DATA:

         Inventory                                             $ 24,506     $ 19,463     $ 18,463     $  9,939    $ 11,469
         Contracts and mortgages receivable                      11,768       12,114       10,453        8,695       9,365
         Total assets                                            40,627       35,144       32,883       21,505      23,294
         Total debt                                              22,633       19,859       21,410       12,249      15,748
         Stockholders' equity                                    13,460       10,930        9,226        7,543       6,033
         Book value per common share                           $  27.68     $  22.58     $  19.06     $  15.58    $  12.46
</TABLE>

         (1) In January 1999, the Company obtained status as a Subchapter
             S-Corporation under the Internal Revenue Code. Accordingly, taxable
             income from operations in all fiscal years beginning after 1998 is
             allocated to the individual shareholders with no income tax expense
             recorded in the financial statements. Net income in 1998 is after
             tax expense of $849.

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

         The following analysis of the consolidated results of operations and
         financial condition of the Company should be read in conjunction with
         the Company's consolidated financial statements and notes thereto
         included elsewhere in this document.

         OVERVIEW

         LAND AND STRUCTURE SALES - The Company's principal business is the
         purchase, development and sale of previously undeveloped tracts of
         land. The Company identifies, acquires and develops raw land inventory
         through its Acquisition and Development departments. Financing for the
         acquisition and development of real estate is provided primarily by a
         network of financial institutions located in proximity to the Company's
         properties as well as by an asset-based credit facility (the Credit


                                       6
<PAGE>


         Agreement). On average, 80% of the purchase price of the acquired
         property is financed with loans from financial institutions, which are
         secured by mortgages on the acquired property. In addition, property
         sellers may also agree to provide financing for up to 70% of the
         purchase price.

         The Company records its inventory, which consists primarily of land
         held for sale, at the purchase price plus amounts expended for the
         acquisition, development and improvement of the land. Structure
         inventory consists of structures that existed on a property at the time
         of acquisition. The Company currently attempts to maintain its
         inventory at a level that, at any time, will meet its sales goals for
         the next twelve months. Inventory balances were $24.5 million and $19.5
         million as of December 31, 2002 and 2001, respectively.

         Revenues from the sale of developed lots and structures are recognized
         upon closing of the sale of the property and receipt of at least 10% of
         the purchase price.

         OTHER REVENUES - Other revenues consist primarily of commissions
         collected on sales of property owned by an unaffiliated company. Also
         included in other revenues is interest income from the Company's
         financing operation. The Company records the finance receivables as
         contracts and mortgages receivable. Generally, mortgage loans on lots
         are originated for terms of up to ten years while loans on structures
         are offered for a maximum term of five years. The Company's
         underwriting parameters require a minimum down payment of 10%. Interest
         rates currently range from 6.0% to 14.5% depending principally on the
         amount of the down payment and program under which the loans were
         originated. Company-financed sales were 29% and 31% of sales for the
         years ended December 31, 2002 and 2001, respectively. The Company is
         able to maintain a consistent percentage of financed sales because it
         offers competitive finance programs with zero or low initial interest
         rates to customers. The weighted average interest rate on outstanding
         contracts and mortgages receivable was approximately 10.5% and 11.7% as
         of December 31, 2002 and 2001, respectively.

         Other revenues also include closing fee income the Company collects for
         sales and equity in the income or loss of joint ventures.

         CRITICAL ACCOUNTING POLICIES

         In preparing the financial statements, the Company follows accounting
         principles generally accepted in the United States of America, which in
         many cases require assumptions, estimates and judgments that affect the
         amounts reported. Many of these policies are relatively
         straightforward. There are, however, a few policies that are critical
         because they are important in determining the financial condition and
         results of operations and they can be difficult to apply. The most
         critical accounting policies applied in the preparation of the
         Company's financial statements relate to:

         o  measuring assets, including inventory held for sale, for impairment;
            and

         o  accounting for tax increment financing receivables because of the
            importance of management's judgment in making the estimates
            necessary to apply these policies.

         The difficulty in applying these policies arises from the assumptions,
         estimates and judgments that have to be made currently about matters
         that are inherently uncertain, such as future economic conditions,
         operating results and valuations as well as management intentions. As
         the difficulty increases, the level of precision decreases, meaning
         that actual results can and probably will be different from those
         currently estimated. The Company bases its assumptions, estimates and
         judgments on a combination of historical experiences and other
         reasonable factors.

         Measuring assets for impairment requires estimating intentions as to
         holding periods, future operating cash flows and residual values of the
         assets under review. Changes in management intentions, market
         conditions or operating performance could indicate that impairment
         charges may be necessary.


                                       7
<PAGE>


         Accounting for tax increment financing receivables involves estimating
         property values and tax rates well into the future, as well as
         estimating the length of time the property will remain vacant. To
         accomplish this, assumptions are made regarding real estate market
         inflation, tax rates and collectibility of taxes.

         See ITEM 8, Note 1 of the Notes to Consolidated Financial Statements,
         included in this Form 10-K for a further discussion of certain specific
         accounting policies.

         COMPARISON OF THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000

         The Company reported a 7.3% increase in sales for the year ended
         December 31, 2002 to $38.6 million, including sales of structure of
         $0.3 million, or 0.8% of sales. For the same period in 2001, sales were
         $36.0 million, including $0.7 million in sales of structures, or 2.0%
         of sales. The increase in sales is attributable to a strong real estate
         market in certain areas of the country, higher available inventory
         levels in the Midwest, high consumer demand in the Company's newer
         markets, and the Company's ability to retain knowledgeable sales staff
         and successfully apply its marketing programs in those markets expanded
         to by the Company in recent years.

         The Company reported a 24.8% increase in sales for the year ended
         December 31, 2001 to $36.0 million, including sales of structures of
         $0.7 million, or 2.0% of sales. For the same period in 2000, sales were
         $28.8 million, including $0.6 million in sales of structures, or 2.1%
         of sales. The increase in sales is attributable to a strong real estate
         market in certain areas of the country, higher available inventory
         levels in the Midwest, and the Company's ability to retain
         knowledgeable sales staff and successfully apply its marketing programs
         in those markets expanded to by the Company in recent years.

         The following table sets forth the sales, cost of sales and gross
         profit information for the years ended December 31:

<TABLE>
<CAPTION>
               2002         Land                        Structures                    Total
<S>                       <C>                 <C>      <C>                 <C>     <C>                  <C>
         Sales            $38,335,614         100.0%   $   299,616         100.0%  $ 38,635,230         100.0%
         Cost of sales     22,380,600          58.4        213,799          71.4     22,594,399          58.5
                          -----------    ----------    -----------    ----------    -----------    ----------
         Gross profit     $15,955,014          41.6%   $    85,817          28.6%   $16,040,831          41.5%

<CAPTION>
               2001         Land                        Structures                    Total
<S>                       <C>                 <C>      <C>                 <C>     <C>                  <C>
         Sales            $35,268,589         100.0%   $       725         100.0%   $35,993,667         100.0%
         Cost of sales     20,354,927          57.7        645,807          89.1     21,000,734          58.3
                          -----------    ----------    -----------    ----------    -----------    ----------
         Gross profit     $14,913,662          42.3%   $    79,271          10.9%   $14,992,933          41.7%

<CAPTION>
               2000         Land                        Structures                    Total
<S>                       <C>                 <C>      <C>                 <C>     <C>                  <C>
         Sales            $28,245,169         100.0%   $   592,830         100.0%   $28,837,999         100.0%
         Cost of sales     15,365,177          54.4        508,598          85.8     15,873,775          55.0
                          -----------    ----------    -----------    ----------    -----------    ----------
         Gross profit     $12,879,992          45.6%   $    84,232          14.2%   $12,964,224          45.0%
</TABLE>

         For 2002, gross profit was $16.0 million or 41.5% of sales, compared to
         $15.0 million or 41.7% of sales for the same period in 2001. The
         decrease in gross profit, as a percentage of sales, is a result of a
         slightly softer real estate market in Wisconsin as well as the
         Company's focus on the sale of aged inventory, primarily in the
         Midwest.

         For 2001, gross profit was $15.0 million or 41.7% of sales, compared to
         $13.0 million or 45.0% of sales for the same period in 2000. The
         decrease in gross profit, as a percentage of sales, is principally


                                       8
<PAGE>


         due to lower margins on projects in Wisconsin as a result of a slightly
         softer real estate market and an increase in sales in new markets where
         slightly lower margins were achieved as compared with the Company's
         more established markets.













                                       9
<PAGE>


         Other revenues increased $448,000, or 119%, to $826,000 in 2002 from
         $378,000 the same period in 2001. The increase was primarily due to
         $679,000 of commissions collected on sales of property owned by an
         unaffiliated company, partially offset by a $250,000 fee collected in
         2001 for development services performed on behalf of a joint venture,
         as well as a 35% reduction in sale closing fees charged to customers.

         Other revenue was $378,000 in 2001, a decrease of $168,000 from the
         same period in 2000. The decrease was primarily due to $80,000 in
         nonrecurring marketing fees received related to land sales brokered by
         the Company during 2000. Additionally, in 2000, the Company revised its
         estimates of anticipated future tax collections under its tax increment
         financing receivable contracts with tax districts based on property
         value changes and changes in property tax assessments. These changes in
         estimate resulted in an increase in the value of such receivables and a
         corresponding increase in other revenue in 2000.

         Equity in losses from joint ventures decreased $74,000 in 2002 to
         $98,000, resulting from one of the land development joint ventures
         formed by the Company turning profitable in 2002. Equity in losses from
         joint ventures was $172,000 in 2001 as compared to $121,000 in 2000.

         Interest income in 2002 remained consistent with 2001, which was the
         result of a higher average balance of contracts and mortgages
         receivable during 2002 offset by slightly lower average interest rates
         on contracts during the same period. Interest income in 2001 remained
         consistent with 2000 due to the same set of circumstances.

         Selling, general and administrative expenses for 2002 were $11.9
         million or 30.7% of sales, compared to $11.7 million or 32.6% of sales
         for the same period in 2001. The decrease in selling, general and
         administrative expense, as a percent of sales, is attributable to sales
         and management's continued efforts to control expenses.

         Selling, general and administrative expenses for 2001 were $11.7
         million or 32.6% of sales, compared to $9.3 million or 32.4% of sales
         for the same period in 2000. The increase in selling, general and
         administrative expense, as a percent of sales, is due primarily to
         $550,000 in costs written off associated with two parcels of land
         previously under contract that were ultimately not acquired. Factors
         offsetting this increase include a reduction of compensation and office
         expenses, as a percentage of sales. Compensation, primarily
         commissions, represented 79% of total selling, general and
         administrative expenses in 2001 as compared with 81% in 2000. Office
         expenses represented 9% and 11% of total selling, general and
         administrative expenses in 2001 and 2000, respectively.

         Interest expense in 2002 decreased $358,000, or 31%, to $784,000 from
         $1,142,000 in the same period in 2001. The decrease is the result of a
         significant reduction in interest rates on the Company's variable rate
         borrowings throughout 2002, which include its lines of credit and
         substantially all real estate notes payable. The decrease was partially
         offset by higher average borrowings during 2002 as a result of a growth
         in inventory. Interest expense of $1,142,000 in 2001 decreased by 17%
         from $1,370,000 in 2000, also due to a reduction in interest rates
         throughout 2001, partially offset by higher average borrowings during
         2001.

         The Company entered into a new joint venture during 2002 in which the
         Company is a 67% shareholder. All financial information of this joint
         venture is consolidated in the Company's financial statements. The
         minority interest on the consolidated balance sheet and consolidated
         statement of income represents the minority shareholder's portion of
         the joint venture financial information.

         LIQUIDITY AND CAPITAL RESOURCES

         OVERVIEW - The Company's capital resources are provided from both
         internal and external sources. The Company's primary capital resources
         from internal operations are: (i) cash sales, (ii) down


                                       10
<PAGE>


         payments on sales which are financed, (iii) principal and interest
         payments on contracts and mortgages receivable, and (iv) borrowings
         collateralized by contracts and mortgages receivable. External sources
         of liquidity include borrowings under the Company's Credit Agreement,
         notes and mortgages payable to finance inventory acquisitions and
         development, and the issuance of debt securities. The Company's capital
         resources are used to support the Company's operations, including (i)
         acquiring and developing inventory, (ii) providing financing for
         customer purchases, (iii) meeting operating expenses, (iv) shareholder
         distributions, and (v) satisfying the Company's debt and other
         obligations. The Company anticipates that it will continue to require
         external sources of liquidity to support its operations, satisfy its
         debt and other obligations and to provide funds for future strategic
         inventory acquisitions and growth.

         The following table sets forth the Company's net cash flows for
         operating, investing and financing activities for the years ended
         December 31:

<TABLE>
<CAPTION>
                                                  2002            2001            2000
<S>                                           <C>             <C>             <C>
         Net cash provided by (used in):
           Operating activities               $ 1,419,034     $ 4,815,558     $  (107,860)
           Investing activities                (1,080,864)        646,722      (1,311,324)
           Financing activities                  (457,201)     (5,514,207)      1,523,042
                                              -----------     -----------     -----------
           Net (decrease) increase in cash    $  (119,031)    $    51,927     $  (103,858)
                                              ===========     ===========     ===========
</TABLE>

         Cash provided by operating activities in 2002 consisted primarily of
         $10.0 million of payments on contracts and mortgages receivable and
         $5.1 million in net income. These were primarily offset by $9.7 million
         of funded contracts and mortgages receivable and a net increase in
         inventory of $4.1 million. Cash provided by operating activities in
         2001 consisted primarily of $8.1 million of payments on contracts and
         mortgages receivable, $3.4 million of net income, a $2.5 million net
         increase in accounts payable, and a $0.6 million net decrease in
         inventory. These were primarily offset by $9.7 million of funded
         contracts and mortgages receivable. Cash used in operating activities
         in 2000 consisted primarily of $7.9 million in funded contracts and
         mortgages receivable and a net increase in inventory of $3.0 million.
         These were offset primarily by $6.1 million of payments on contracts
         and mortgages receivable and $3.8 million in net income.

         Cash used for financing activities in 2002 consisted primarily of
         principal payments on notes, contracts, mortgages payable and
         subordinated debt of $14.9 million and distributions to shareholders of
         $2.6 million. These were primarily offset by $16.7 million in proceeds
         from new notes, contracts, and mortgages payable and net borrowings on
         lines of credit. Cash used in financing activities in 2001 consisted
         primarily of principal payments on notes, contracts, and mortgages
         payable and subordinated debt and net repayments on lines of credit of
         $15.4 million, and distributions to shareholders of $1.7 million. These
         were offset by $11.5 million in proceeds from new notes, contracts, and
         mortgages payable. Cash provided by financing activities in 2000
         consisted primarily of net borrowings on lines of credit and proceeds
         from new notes, contracts, and mortgages payable of $12.6 million.
         These were offset by $9.0 million in payments on notes, contracts, and
         mortgages payable and subordinated debt and distributions to
         shareholders of $2.1 million.

         Cash used in investing activities in 2002 represents a $0.8 million
         increase of receivables from joint ventures, $0.2 million investment in
         joint ventures and $0.2 million for purchases of land, buildings and
         equipment. Cash provided by investing activities in 2001 primarily
         related to $0.6 million of repayment of receivables from joint
         ventures, a $0.6 million reduction in funds held by trustee offset by a
         $0.3 million investment in joint ventures. Cash used for investing
         activities in 2000 primarily related to investments in joint ventures
         of $0.5 million and an increase in funds held by trustee of
         approximately $0.6 million.

         FINANCING SOURCES - The Company's financing sources consist of
         short-term financing under its Credit Agreement, seller financing,
         financing from a network of commercial banks, and sales of contracts


                                       11
<PAGE>


         and mortgages receivable. Long-term financing has been obtained through
         the issuance of $4.0 million of Senior Subordinated Debt of which $1.9
         million is still outstanding. The source of repayment for the Company's
         working capital financing is the sale of lots and the receipt of
         principal and interest on contracts and mortgages receivables. As a lot
         is sold, a portion of the proceeds is used to pay down the respective
         financing and release a portion of the related mortgage. On average,
         the Company finances 80% of the cost of land acquisitions and
         development. Based on the terms of the Company's loan agreements, a
         loan is usually paid in full when approximately 75% of the lots in a
         development are sold. Principal and interest received by the Company
         from customer contracts or mortgages receivable are applied to the
         outstanding balance under its Credit Agreement.

         The following table sets forth the Company's sources of financing, the
         amount of such financing and the weighted average interest rates on
         such borrowings at December 31, 2002.

         SOURCES OF FINANCING
<TABLE>
<CAPTION>
                                                                       Average                     Average
                                                          2002          Rate           2001          Rate
<S>                                                   <C>               <C>        <C>               <C>
                 Lines of credit                      $ 7,173,374       5.26%      $ 7,037,999       5.77%
                 Notes payable (1)                     12,981,170       5.26         9,274,646       6.24
                 Contracts and mortgages payable          580,812       5.76           874,243       5.17
                 Senior subordinated debt               1,898,000      11.60         2,672,000      11.41
                                                      -----------      -----       -----------      -----
                   Total debt                         $22,633,356       5.81%      $19,858,888       6.72%
                                                      ===========      =====       ===========      =====
</TABLE>
         ----------------------
         (1) Notes payable includes the real estate line of credit in the
             amounts of $4,929,419 and $ $3,266,101 as of December 31, 2002 and
             2001, respectively.

         CREDIT AGREEMENT - The Company began its borrowing relationship in 1986
         and may currently borrow a total aggregate of up to $25 million under
         the Credit Agreement which includes the following four lines of credit:

         DESCRIPTION OF LINES OF CREDIT



                                                                    Balance
                                                   Amount of   Outstanding as of
                                                    Line(1)    December 31, 2002

         Mortgages and Contracts Receivable      $14,000,000      $ 7,053,495
         Real Estate Mortgage                     12,000,000        4,929,419
         Project                                     120,000          119,879
         Interim Financing                         4,000,000               --
                                                                  -----------
                                                                  $12,102,793
                                                                  ===========

         ----------------------
         (1) These totals are the maximum principal amounts that may be
             outstanding under each of the lines of credit; however, the maximum
             aggregate principal amount outstanding under all of the lines of
             credit cannot exceed $25 million.

         The amounts borrowed by the Company under the Mortgages and Contracts
         Receivable line of credit are at the discretion of the lender, are
         based on 90% of eligible contracts receivable, and are to be used to
         finance the development of properties. Borrowings under this credit
         line bear interest at the lender's base rate plus 1.0% (5.25% as of
         December 31, 2002). The lender's base rate is equal to the interest
         rate publicly announced by the lender from time to time as its "Base"
         rate.

         The Company also may borrow up to $12 million under the Real Estate
         Mortgage line of credit based on 80% of the purchase price of the real
         estate plus 80% of eligible development costs. Funds obtained by the
         Company under the Real Estate Mortgage credit line are to be used to
         purchase real estate


                                       12
<PAGE>


         pending development or sale. Borrowings under the Real Estate Mortgage
         line of credit bear interest at a rate equal to 1.0% over the lender's
         base (5.25% at December 31, 2002). The Project line of credit of
         $120,000 is to be used to finance project development costs and the
         purchase of real estate in connection with a project in northern
         Minnesota. The assets of the project secure this line of credit.
         Borrowings of up to $4,000,000 under the Interim Financing line are
         available to the Company at the discretion of the lender to cover
         demand overages on the other lines of credit. Borrowings under the
         Project and Interim Financing lines of credit bear interest at a rate
         equal to 1.5% over the lender's base rate (5.75% as of December 31,
         2002). At December 31, 2002, $4,574,242 is available under the
         Company's mortgage and contracts receivable and interim financing
         credit facilities for operating needs and $7,070,581 is available under
         its real estate loan facility.

         All amounts borrowed by the Company under the Credit Agreement are due
         April 30, 2004 under an amendment to the Credit Agreement. All funds
         advanced by the lender under the Credit Agreement are collateralized by
         an assignment by the Company of first mortgages, contracts for deed,
         security interests, or other rights or property interests acquired by
         the Company in connection with specific property development projects
         and a security interest in virtually all of the Company's assets. In
         addition, the Credit Agreement also contains a number of restrictive
         covenants and is personally guaranteed by the Company's president,
         Philip C. Taylor.

         NETWORK BANKS - Another recurring source of capital is a network of
         community banks, the majority of which Taylor has been utilizing as
         financing sources since the mid-1980s. These financial institutions,
         which are typically in proximity to the land being purchased, provide
         loans that are secured by a first mortgage on the land. Interest
         payments are made monthly and generally payments are made as the
         individual lots are sold. The Company's borrowings through the network
         of banks are shown as "Notes payable" in the table entitled "Sources of
         Financing."

         SELLER FINANCING - Seller financing or mortgages payable are equivalent
         to accounts payable that are due on resale and result from the
         Company's ordinary course of business. Seller financing typically
         consists of a purchase agreement evidencing the sale and outlining the
         terms of payment. The Company makes interest and principal payments on
         a scheduled amortization which varies by transaction. The Company's use
         of seller financing is shown as "Contracts and mortgages payable" in
         the table entitled "Sources of Financing."

         SENIOR SUBORDINATED DEBT - In April 1994, the Company issued $1.0
         million of Senior Subordinated Notes, Series 1994 pursuant to Rule 504
         of Regulation D under the Securities Act of 1933, as amended. The
         proceeds were initially used to pay down existing debt. Ultimately the
         funds were used to acquire additional inventory. The Company issued an
         additional $3.0 million of Senior Subordinated Debt pursuant to a
         Registration Statement on Form SB-2, which became effective January 12,
         1995. The proceeds of this offering were used to reduce existing debt,
         finance inventory, fund customer mortgage financing and open new
         offices during 1995.

         THE FOLLOWING SUMMARIZES THE COMPANY'S SIGNIFICANT CONTRACTUAL
         OBLIGATIONS AND COMMITMENTS, AS OF DECEMBER 31, 2002, THAT IMPACT
         LIQUIDITY.

<TABLE>
<CAPTION>
         Contractual obligations                                        Payments due by period
                                                    ----------------------------------------------------------------
                                                    Within                                    After
         In thousands                               1 year      2-3 years      4-5 years     5 years         Total
         -----------------------------------------------------------------------------------------------------------
<S>                                                 <C>        <C>               <C>          <C>        <C>
         Lines of credit                                       $ 7,173,374                               $ 7,173,374
         Notes, contracts and mortgages payable     $2,229          10,853       $ 169        $ 311           13,562
         Senior subordinated debt                      713           1,185           -            -            1,898
         Operating leases                              249             269         127            -              645
         -----------------------------------------------------------------------------------------------------------
         Total contractual cash obligations         $3,191     $ 7,185,681       $ 296        $ 311      $ 7,189,479
         ===========================================================================================================
</TABLE>


                                       13
<PAGE>


         SALES OF CONTRACTS AND MORTGAGES RECEIVABLE - The general level of
         stability in its contracts and mortgages receivable portfolio has
         provided the Company with the opportunity to sell portfolios of
         receivables to raise cash when needed and to take advantage of positive
         interest rate spreads. Depending on the current interest rates, the
         sale can be at a discount or premium to par. The typical structure
         involves the Company selling the rights to payment on the contracts and
         mortgages with recourse, and also requires a small percentage of the
         sales price, approximately 5%, to be "held-back" and subsequently paid
         to the Company as the portfolio is paid down. In order to obtain more
         favorable pricing, the Company may retain servicing rights or grant put
         options to the purchasers in connection with the receivables sold. The
         put options typically require the Company to repurchase, at the option
         of the purchaser, the balance of the receivables within 60 days of the
         five-year anniversary of the sale. The sale of receivables with put
         options is accounted for as a financing transaction in the Company's
         consolidated financial statements. Future sales of contracts and
         mortgages receivable will depend on the Company's cash needs and
         prevailing interest rates.

         Put options were granted to three purchasers in 1996 on an initial
         aggregate amount of $5.6 million in contracts and mortgages receivable.
         As of December 31, 2001, $96,141 in contracts and mortgages receivable
         were outstanding with recourse, all of which had put options. In March
         2002, the put options were exercised and the Company repurchased the
         receivable for $92,573.

         The following table lists, as of December 31, 2002 and 2001, the
         balance of the Company's contracts and mortgages receivable
         outstanding, the amount of the portfolio 90 days past due, average
         portfolio term and weighted average interest rate. The table also sets
         forth the amounts foreclosed and the contracts and mortgages foreclosed
         during the years ended December 31.

                                                      2002              2001
         Contracts and mortgages receivable:
           Balance outstanding                      $11,768,447      $12,113,780
             Amount 90 days past due                    229,758          386,338
             Percentage of balance                        1.95%            3.19%
             Amount foreclosed during period             77,857           45,071
             Percentage of balance                        0.66%            0.37%
         Average portfolio term                         3 years          3 years
         Weighted average interest rate                   10.2%            11.7%

         The Company works aggressively and closely with its customers as soon
         as an account becomes overdue to attempt to avoid default and
         foreclosure. After the Company begins collection proceedings, most
         accounts are eventually made current and the Company receives full
         payment. On occasion, the Company must cancel the contract and begin
         foreclosure proceedings. During 2002, there were $77,857 in contract
         and mortgage receivable balances where the foreclosure process was
         complete, and an additional $89,551 were in the process of foreclosure.
         Subsequent to a completed foreclosure, the Company returns the
         underlying property to inventory and begins re-marketing the lot.
         Properties that are foreclosed upon and returned to inventory are
         generally resold at a profit resulting in minimal bad debt exposure.

         Based on expected cash generated from operations and the above
         available financing resources, management believes it has adequate
         sources of funds to meet the Company's anticipated working capital,
         capital expenditure, and debt service requirements for the foreseeable
         future.

         NEW ACCOUNTING STANDARDS - In June 2001, the Financial Accounting
         Standards Board (FASB) issued Statement of Financial Accounting
         Standards (SFAS) No. 141, BUSINESS COMBINATIONS, and SFAS No. 142,
         GOODWILL AND OTHER INTANGIBLE ASSETS. SFAS No. 141 requires that the
         purchase method of accounting be used for all business combinations
         initiated after June 30, 2001. SFAS No. 142 changes the accounting for
         goodwill and certain other intangible assets from an amortization
         method to an impairment only approach. The standard also requires a
         reassessment of the useful lives of


                                       14
<PAGE>


         identifiable intangible assets other than goodwill and test for
         impairment of goodwill and intangibles with indefinite lives annually,
         or more frequently if events and circumstances indicate that the
         carrying amounts may not be recoverable. The adoption of SFAS No. 142
         had no impact on the Company's financial position, results of
         operations or cash flows.

         The FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL
         OF LONG-LIVED ASSETS, in August of 2001. SFAS No. 144 establishes
         accounting and reporting standards for the impairment or disposal of
         long-lived assets. The Company adopted SFAS No. 144 on January 1, 2002,
         and the adoption had no impact on the Company's historical financial
         position, results of operations or cash flows.

         In November 2002, the FASB issued FASB Interpretation No. (FIN) 45,
         GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES,
         INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS. FIN 45
         clarifies the requirements for a guarantor's accounting for and
         disclosure of certain guarantees issued and outstanding. The initial
         recognition and initial measurement provisions of FIN 45 are applicable
         to guarantees issued or modified after December 31, 2002. The
         disclosure requirements of FIN 45 are effective for financial
         statements of interim or annual periods ending after December 15, 2002.
         The adoption of FIN 45 did not have an impact on the Company's
         financial statement disclosures and is not expected to have an impact
         on the Company's consolidated results of operations, financial
         position, or cash flows.

         The FASB also issued FIN 46, CONSOLIDATION OF VARIABLE INTEREST
         ENTITIES, which applies to variable interest entities created after
         January 31, 2003. FIN 46 addresses consolidation by business
         enterprises of variable interest entities which meet certain criteria.
         The Company does not have entities that would require consolidation or
         meet the criteria of a variable interest entity.

         SAFE HARBOR DISCLOSURE - Various forms filed by the Company with the
         Securities and Exchange Commission, including the Company's Form 10-K
         and Form 10-Q, and other written documents and oral statements released
         by the Company, may contain forward-looking statements. Forward-looking
         statements generally use words such as "expect," "anticipate,"
         "believe," "project," "should," "estimate," and similar expressions,
         and reflect the Company's expectations concerning the future. Such
         statements are based upon currently available information, but various
         risks and uncertainties may cause the Company's actual results to
         differ materially from those expressed in these statements. Among the
         factors which management believes could affect the Company's operating
         results are the following:

         o  Changing economic conditions, including economic downturns or
            recessions;
         o  The ability of the Company to maintain and enhance its market
            position relative to its competitors, realize productivity, and
            continue to control expenses;
         o  The availability of suitable tracts of undeveloped land in proximity
            to the marketplace;
         o  Changes in zoning and subdivision regulations;
         o  The availability and cost of financing; and
         o  Continuity of management.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         INTEREST RATE RISK

         The Company is exposed to changes in interest rates primarily as a
         result of its borrowing activities used to fund operations and to
         acquire land. The Company uses both floating interest rate credit
         facilities and notes payable and fixed rate notes payable to accomplish
         this. At December 31, 2002 the Company currently has $19.8 million of
         floating interest rate debt under its credit facilities or under notes
         payable, $0.9 million of fixed rate notes payable and $1.9 million of
         fixed rate subordinated debt. The floating interest rates are based
         either upon the prevailing prime or three-month LIBOR interest


                                       15
<PAGE>


         rates. A hypothetical one-percent change in the prevailing prime or
         LIBOR, as applicable, would decrease net income of the Company by
         approximately $198,000 per year, based on the increased interest
         expense on variable rate debt. The fair value of fixed rate notes
         payable would not be impacted as approximately 50% of the $0.9 million
         in fixed rate notes payable mature in one year or less.

         Additionally, an environment of increased interest rates may adversely
         affect the Company's ability to successfully market and sell its
         properties because the increased costs of borrowing would inflate the
         cost of inventory and make it more difficult for customers to finance
         purchases. The Company believes it can protect itself from sustained
         high interest rates by selling its contracts and mortgages receivable
         portfolios, originating loans with shorter maturities, and increasing
         the rates it charges to customers who utilize Company financing, or by
         incurring fixed rate debt. Such increases in rates would, however, have
         an adverse impact on the Company's cost of carrying inventory. The
         Company believes the best defense against rising interest rates is to
         buy only the best property, which can be turned quickly. However,
         sustained increases in interest rates could impact future sales levels.
         If demand for product was to decline for an extended period of time,
         the Company believes it could minimize the impact by reducing the sales
         price of the product to stimulate sales and would discontinue
         purchasing properties until the level of inventory more closely matched
         customer demand.












                                       16
<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Independent Auditors' Report........................................16

         Consolidated Balance Sheets.........................................17

         Consolidated Statements of Income...................................18

         Consolidated Statements of Stockholders' Equity.....................19

         Consolidated Statements of Cash Flows...............................20

         Notes to Consolidated Financial Statements..........................21













                                       17
<PAGE>


INDEPENDENT AUDITORS' REPORT


Board of Directors
Taylor Investment Corporation
Minneapolis, Minnesota

We have audited the accompanying consolidated balance sheets of Taylor
Investment Corporation and subsidiaries (the Company) as of December 31, 2002
and 2001 and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 2002. Our audits also included the financial statement schedule listed in
the Table of Contents at Item 15. These consolidated financial statements and
the financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Taylor Investment Corporation and
subsidiaries at December 31, 2002 and 2001 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2002, in conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects, the
information set forth therein.


DELOITTE & TOUCHE LLP

March 7, 2003
Minneapolis, Minnesota


                                       18
<PAGE>


TAYLOR INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                  2002           2001
ASSETS
<S>                                                                           <C>            <C>
INVENTORY - Principally land held for sale                                    $24,505,606    $19,462,763

CONTRACTS AND MORTGAGES RECEIVABLE                                             11,768,447     12,113,780

INVESTMENT IN JOINT VENTURES                                                      557,887        529,048

OTHER ASSETS:
   Cash                                                                            91,807        210,838
   Restricted cash                                                                552,192        519,716
   Tax increment financing receivable                                             478,470        556,909
   Receivable from joint ventures                                               1,317,775        556,889
   Other receivables                                                              261,695        203,245
   Prepaid expenses and earnest money deposits                                    443,839        325,530
   Funds held by trustee                                                           42,500         44,500
   Land, buildings, and equipment, less accumulated
      depreciation of $304,561 and $1,113,821, respectively                       453,019        431,484
   Loan acquisition costs and debt issuance costs, less accumulated
      amortization of $538,855 and $487,969, respectively                         153,891        189,521
                                                                              -----------    -----------
                    Total other assets                                          3,795,188      3,038,632
                                                                              -----------    -----------
                                                                              $40,627,128    $35,144,223
                                                                              ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

LINES OF CREDIT                                                               $ 7,173,374    $ 7,037,999

NOTES PAYABLE                                                                  12,981,170      9,274,646

CONTRACTS AND MORTGAGES PAYABLE                                                   580,812        874,243

SENIOR SUBORDINATED DEBT                                                        1,898,000      2,672,000

OTHER LIABILITIES:
   Accounts payable                                                             2,244,683      3,195,037
   Accrued liabilities                                                          1,703,494      1,081,978
   Amounts due to joint ventures                                                  320,207
   Deposits on land sales and purchase agreements                                  69,800         27,607
                                                                              -----------    -----------
                    Total other liabilities                                     4,338,184      4,304,622

DEFERRED INCOME TAXES                                                              33,994         51,041

MINORITY INTEREST                                                                 161,239

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Common stock, $.01 par value; 10,000,000 shares authorized; 486,317 and
      484,129 shares issued and outstanding at December 31, 2002 and 2001,
      respectively                                                                  4,863          4,841
   Additional paid-in capital                                                     803,773        740,136
   Retained earnings                                                           12,651,719     10,184,695
                                                                              -----------    -----------
                    Total stockholders' equity                                 13,460,355     10,929,672
                                                                              -----------    -----------
                                                                              $40,627,128    $35,144,223
                                                                              ===========    ===========
</TABLE>

See notes to consolidated financial statements.


                                       19
<PAGE>


TAYLOR INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                     2002             2001             2000
REVENUES:
<S>                                             <C>              <C>              <C>
     Sales                                      $ 38,635,230     $ 35,993,667     $ 28,837,999
     Interest income on contracts receivable       1,056,885        1,051,041        1,057,980
     Equity in losses of joint ventures              (98,161)        (172,333)        (121,082)
     Other revenue                                   825,974          377,743          546,321
                                                ------------     ------------     ------------
            Total revenue                         40,419,928       37,250,118       30,321,218

  COSTS AND EXPENSES:

     Cost of sales                                22,594,399       21,000,734       15,873,775
     Selling, general, and administrative         11,861,900       11,749,931        9,338,661
     Interest                                        783,937        1,141,549        1,369,712
                                                ------------     ------------     ------------
            Total costs and expenses              35,240,236       33,892,214       26,582,148
                                                ------------     ------------     ------------

  INCOME BEFORE MINORITY INTEREST                  5,179,692        3,357,904        3,739,070

  MINORITY INTEREST IN EARNINGS OF
     SUBSIDIARY                                     (115,739)
                                                ------------     ------------     ------------

  NET INCOME                                    $  5,063,953     $  3,357,904     $  3,739,070
                                                ============     ============     ============

  NET INCOME PER COMMON SHARE
     OUTSTANDING - basic and diluted            $      10.44     $       6.94     $       7.72
                                                ============     ============     ============

  AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                               485,116          484,129          484,129
                                                ============     ============     ============
</TABLE>

See notes to consolidated financial statements.


                                       20
<PAGE>


TAYLOR INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                              ADDITIONAL
                                                 COMMON STOCK                   PAID-IN           RETAINED
                                           SHARES            AMOUNT             CAPITAL           EARNINGS             TOTAL
                                          ---------------------------         ----------         ---------          -----------
<S>                                       <C>             <C>                 <C>                <C>                <C>
  BALANCE AT DECEMBER 31, 1999            484,129         $     4,841         $   740,136        $ 6,798,353        $ 7,543,330

    Dividends paid                                                                                (2,056,577)        (2,056,577)
    Net income                                                                                     3,739,070          3,739,070
                                      -----------         -----------         -----------        -----------        -----------


  BALANCE AT DECEMBER 31, 2000            484,129               4,841             740,136          8,480,846          9,225,823

    Dividends paid                                                                                (1,654,055)        (1,654,055)
    Net income                                                                                     3,357,904          3,357,904
                                      -----------         -----------         -----------        -----------        -----------


  BALANCE AT DECEMBER 31, 2001            484,129               4,841             740,136         10,184,695         10,929,672

    Dividends paid                                                                                (2,596,929)        (2,596,929)
    Net income                                                                                     5,063,953          5,063,953
    Issuance of common stock                2,188                  22              63,637                                63,659
                                      -----------         -----------         -----------        -----------        -----------


  BALANCE AT DECEMBER 31, 2002            486,317         $     4,863         $   803,773        $12,651,719        $13,460,355
                                      ===========         ===========         ===========        ===========        ===========
</TABLE>

See notes to consolidated financial statements.







                                       21
<PAGE>


TAYLOR INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                            2002            2001           2000
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                      <C>            <C>             <C>
   Net income                                                            $ 5,063,953    $ 3,357,904     $ 3,739,070
   Adjustments to reconcile net income to net cash provided
       (used in) by operating activities:
     Depreciation and amortization                                           331,574        290,626         320,027
     Loss (gain) on disposal of fixed assets                                   5,125         28,732            (907)
     Deferred income taxes                                                   (17,047)      (166,302)       (156,689)
     Equity in losses from joint ventures                                     98,161        172,333         121,082
     Contracts and mortgages receivables funded                           (9,685,586)    (9,716,675)     (7,856,127)
     Payments on contracts and mortgages receivable                       10,030,919      8,055,484       6,098,472
     Minority interest in earnings of subsidiary                             115,739             --              --
     Changes in assets and liabilities:
       Inventory - land held for sale                                     (4,106,363)       578,529      (3,013,105)
       Restricted cash                                                       (32,476)       (92,014)        382,700
       Other receivables                                                      19,989         88,878        (507,521)
       Prepaid expenses and earnest money deposits                          (118,309)       (57,205)         74,277
       Accounts payable                                                     (950,354)     2,457,506         371,912
       Accrued liabilities                                                   621,516       (180,615)        337,334
       Deposits on land sales and purchase agreements                         42,193         (1,623)        (18,385)
                                                                         -----------    -----------     -----------
           Net cash provided by (used in) operating activities             1,419,034      4,815,558        (107,860)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of land, buildings and equipment                                (194,978)      (232,713)       (226,324)
   Proceeds from sale of land, buildings and equipment                            --          9,000           3,500
   Investment in joint ventures                                             (167,000)      (333,000)       (500,000)
   Proceeds from distributions of joint ventures                              40,000          8,250           9,000
   (Increase) decrease in joint venture receivables                         (760,886)       601,685              --
   Decrease (increase) in funds held by trustee                                2,000        593,500        (597,500)
                                                                         -----------    -----------     -----------
           Net cash (used in) provided by investing activities            (1,080,864)       646,722      (1,311,324)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net borrowings (payments) on lines of credit                              135,375     (1,223,039)      4,463,530
   Repayment of notes, contracts, and mortgage payables                  (14,115,455)   (13,309,470)     (8,807,615)
   Proceeds from notes, contracts, and mortgage payables                  16,592,068     11,534,004       8,144,943
   Loan acquisition costs                                                   (127,626)       (39,647)        (35,239)
   Dividends paid to stockholders                                         (2,596,929)    (1,654,055)     (2,056,577)
   Issuance of common stock                                                   63,659
   Repayment of subordinated debt                                           (774,000)      (822,000)       (186,000)
   Amount due to joint ventures                                              320,207
   Contribution from minority interest investor in subsidiary                100,000
   Distribution to minority interest investor in subsidiary                  (54,500)
                                                                         -----------    -----------     -----------
           Net cash (used in) provided by financing activities              (457,201)    (5,514,207)      1,523,042
                                                                         -----------    -----------     -----------

(DECREASE) INCREASE IN CASH                                                 (119,031)       (51,927)        103,858

CASH AT BEGINNING OF YEAR                                                    210,838        262,765         158,907
                                                                         -----------    -----------     -----------

CASH AT END OF YEAR                                                      $    91,807    $   210,838     $   262,765
                                                                         ===========    ===========     ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the year for:
     Interest                                                            $ 1,442,890    $ 1,067,672     $ 1,773,121
                                                                         ===========    ===========     ===========
     Income taxes                                                        $    23,046    $   166,302     $   156,689
                                                                         ===========    ===========     ===========
   Noncash financing activity - inventory and equipment
     purchased with notes, contracts and mortgages payable               $   936,480    $ 3,969,030     $ 5,546,177
                                                                         ===========    ===========     ===========
   Noncash financing activity - inventory transferred to
     joint venture                                                       $        --    $ 2,378,597     $        --
                                                                         ===========    ===========     ===========
   Noncash financing activity - note payable transferred
     to joint venture                                                    $        --    $ 1,700,000     $        --
                                                                         ===========    ===========     ===========
</TABLE>

See notes to consolidated financial statements.


                                       22
<PAGE>


TAYLOR INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
--------------------------------------------------------------------------------

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         ORGANIZATION AND PRINCIPLES OF CONSOLIDATION - Taylor Investment
         Corporation and subsidiaries (the Company) is a Minnesota corporation
         organized in 1979 which is engaged in land development activities. The
         Company owns 100% of Four Seasons Realty of Minnesota, Inc. (FSM), Four
         Seasons Realty of Wisconsin, Inc. (FSW), Four Seasons Realty of
         Michigan, Inc. (FSMI), Four Seasons Properties of Georgia, LLC (FSG),
         Four Seasons Properties of Tennessee, LLC (FST), FSP Development of
         Texas (FSPT), Laurentian Development Corporation, and 67% of Lakeridge
         Community Center, LLC. FSM, FSW, FSMI, and Lakeridge Community Center,
         LLC are engaged in the sale of recreational property while FSG, FST,
         FSPT and Laurentian Development Corporation are engaged in both the
         development and sale of recreational and residential property.

         The consolidated financial statements include the accounts of the
         Company and its subsidiaries. All significant intercompany accounts and
         transactions have been eliminated.

         INVENTORY - PRINCIPALLY LAND HELD FOR SALE - Land held for sale is
         recorded at the purchase price plus amounts expended for development
         and improvement of the land but not at a price more than its net
         realizable value. Property sold and subsequently repossessed under the
         terms of a defaulted sales contract is recorded at the lower of the
         remaining unpaid contract balance or the net realizable value of the
         property.

         Total costs of a development are allocated to individual lots on the
         basis of the estimated selling price of each lot, as a percentage of
         the total estimated gross selling price of the entire development. In
         addition, development costs are allocated to individual lots for the
         purpose of recording cost of sales.

         Interest is capitalized on all projects during the development stage.
         Interest capitalized into inventory was $617,852 and $570,261 in 2002
         and 2001, respectively.

         LAND, BUILDINGS, AND EQUIPMENT - Depreciation of buildings and
         equipment is computed using the straight-line method on the cost of the
         assets based on their estimated useful lives, which range from three to
         thirty years.

         Land, buildings, and equipment consist of the following at December 31:

                                                   2002          2001

         Land                                   $   62,544    $   11,022
         Buildings and improvements                177,885       168,095
         Equipment                                 517,151     1,366,188
                                                ----------    ----------
                                                   757,580     1,545,305
         Less accumulated depreciation             304,561     1,113,821
                                                ----------    ----------
         Land, buildings, and equipment, net    $  453,019    $  431,484
                                                ==========    ==========

         LOAN ACQUISITION AND DEBT ISSUANCE COSTS - Such costs are amortized
         over the term of the related loan using the straight-line method.

         REVENUE RECOGNITION - The Company recognizes revenue when a sale has
         closed and the buyer's cumulative down payment and principal paid total
         at least 10% of the sale price. Until 10% of the sale price is
         received, no revenue is recognized and all payments received are
         recorded as a current liability in the consolidated balance sheets
         under the caption "deposits on land sales and purchase agreements."
         During


                                       23
<PAGE>


         2002, 2001 and 2000, down payments on sales financed by the Company
         averaged 12%, 14% and 12% of the sale price, respectively.

         EARNINGS PER COMMON SHARE (EPS) - As the Company has no dilutive items
         that would require disclosure of diluted EPS, the Company calculates
         basic EPS as net income divided by the weighted average number of
         common shares outstanding during the year.

         INVESTMENT IN JOINT VENTURES - The Company owns 33% of two limited
         liability companies, which were formed to acquire and develop specific
         plots of land. The Company accounts for these investments using the
         equity method of accounting. The Company invested $167,000 and $333,000
         in the joint ventures in 2002 and 2001, respectively. In 2001, the
         Company transferred inventory valued at $2,378,597 and debt of
         $1,700,000 to one of the joint ventures in return for a receivable,
         which was repaid during 2001. At December 31, 2002 and 2001, the
         Company has loans outstanding of $1,317,775 and $556,889, respectively,
         to these limited liability companies. The Company also has amounts due
         to the limited liability companies of $320,207. Such amounts are
         reflected as due from joint ventures on the consolidated balance
         sheets. In addition, as of December 31, 2002, the Company had $320,207
         due to one of the joint ventures.

         RESTRICTED CASH - Restricted cash represents cash that is designated
         for a specific business transaction. The cash is segregated and
         maintained in separate accounts.

         FUNDS HELD BY TRUSTEE - Amounts represent cash paid to trustee for the
         purpose of paying scheduled maturities on senior subordinated debt.

         MINORITY INTEREST - The Company owns 67% of a limited liability company
         (LLC) which was formed to acquire and develop a specific plot of land.
         The Company invested $200,000 in the LLC in 2002. The financial
         information of the LLC is included in the consolidated financial
         statements of the Company.

         ESTIMATES - The preparation of consolidated financial statements, in
         conformity with accounting principles generally accepted in the United
         States of America, 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.

         FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying values of contracts
         and mortgages receivable, lines of credit, notes payable, contracts and
         mortgages payable, and senior subordinated debt are reasonable
         estimates of the fair value of these financial instruments based on the
         short-term nature of these instruments and, if applicable, the interest
         rates of these financial instruments.

         IMPAIRMENT OF LONG-LIVED ASSETS - The Company periodically reviews the
         carrying amounts of all its long-lived assets and identifiable
         intangibles based on expected future cash flows from the use of those
         assets. If impairment indicators are present and the estimated future
         undiscounted cash flows are less than carrying value of the assets, the
         carrying value is reduced to the estimated fair value as measured by
         the discounted cash flows.

         NEW ACCOUNTING STANDARDS - In June 2001, the Financial Accounting
         Standards Board (FASB) issued Statement of Financial Accounting
         Standards (SFAS) No. 141, BUSINESS COMBINATIONS, and SFAS No. 142,
         GOODWILL AND OTHER INTANGIBLE ASSETS. SFAS No. 141 requires that the
         purchase method of accounting be used for all business combinations
         initiated after June 30, 2001. SFAS No. 142 changes the accounting for
         goodwill and certain other intangible assets from an amortization
         method to an impairment only approach. The standard also requires a
         reassessment of the useful lives of identifiable intangible assets
         other than goodwill and test for impairment of goodwill and intangibles
         with indefinite lives annually, or more frequently if events and
         circumstances indicate that the carrying amounts may not be
         recoverable. The


                                       24
<PAGE>


         adoption of SFAS No. 142 had no impact on the Company's financial
         position, results of operations or cash flows.

         The FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL
         OF LONG-LIVED ASSETS, in August of 2001. SFAS No. 144 establishes
         accounting and reporting standards for the impairment or disposal of
         long-lived assets. The Company adopted SFAS No. 144 on January 1, 2002,
         and the adoption had no impact on the Company's historical financial
         position, results of operations or cash flows.

         In November 2002, the FASB issued FASB Interpretation No. (FIN) 45,
         GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES,
         INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS. FIN 45
         clarifies the requirements for a guarantor's accounting for and
         disclosure of certain guarantees issued and outstanding. The initial
         recognition and initial measurement provisions of FIN 45 are applicable
         to guarantees issued or modified after December 31, 2002. The
         disclosure requirements of FIN 45 are effective for financial
         statements of interim or annual periods ending after December 15, 2002.
         The adoption of FIN 45 did not have an impact on the Company's
         financial statement disclosures and is not expected to have an impact
         on the Company's consolidated results of operations, financial
         position, or cash flows.

         The FASB also issued FIN 46, CONSOLIDATION OF VARIABLE INTEREST
         ENTITIES, which applies to variable interest entities created after
         January 31, 2003. FIN 46 addresses consolidation by business
         enterprises of variable interest entities which meet certain criteria.
         The Company does not have entities that would require consolidation or
         meet the criteria of a variable interest entity.

2.       CONTRACTS AND MORTGAGES RECEIVABLE

         Contracts and mortgages receivable result from the sale of land or land
         and structures. Generally, these fixed rate receivables are collected
         in monthly installments, including interest, with a balloon payment at
         the end of two to three years. The Company also has certain mortgage
         receivables which are collected in monthly installments, including
         interest, over eight to ten years. The weighted average maturity of
         contracts and mortgages receivable at December 31, 2002 and 2001 was
         approximately three years, and the weighted average interest rate on
         outstanding contracts and mortgages receivable was approximately 10.2%
         and 11.7%, respectively.

         Maturities of contracts and mortgages receivable at December 31, 2002
         are as follows:

         Year ending December 31:
         2003                                                        $ 1,262,427
         2004                                                          1,387,451
         2005                                                          7,407,377
         2006                                                            480,499
         2007                                                            420,887
         Thereafter                                                      940,735
                                                                     -----------
                                                                      11,899,376
         Less allowance for uncollectible contracts
         and mortgages receivable                                        130,929
                                                                     -----------
                                                                     $11,768,447
                                                                     ===========

                                       25
<PAGE>


3.       TAX INCREMENT FINANCING RECEIVABLES

         Several taxing authorities have established tax increment financing
         districts whereby the Company will be reimbursed for costs incurred in
         the development of community infrastructure to the extent the community
         improvements and related development increase property taxes collected
         by the taxing authority. The Company recognizes these receivables,
         which are generally noninterest-bearing, upon the sale of the developed
         property or upon the completion of the structure by the owner.
         Estimated amounts receivable under these agreements were $478,470 and
         $556,909 at December 31, 2002 and 2001, respectively. Estimated
         maturity of these receivables at December 31, 2002 is as follows:

         Year ending December 31:
         2003                                                        $   157,807
         2004                                                             78,307
         2005                                                             78,630
         2006                                                             36,518
         2007                                                             36,852
         Thereafter                                                      347,607
                                                                     -----------
                                                                         735,721
        Less imputed interest at an average rate of 8.8%                 257,251
                                                                     -----------
                Net receivable                                       $   478,470
                                                                     ===========

4.       LINES OF CREDIT

         The Company has a credit agreement that provides for total borrowings
         of up to $25,000,000 at the discretion of the lender. The credit
         agreement expires April 30, 2004. The credit agreement provides for
         various lines of credit. Total borrowings outstanding under the credit
         agreement are secured by substantially all of the Company's assets and
         are guaranteed by the president of the Company. The credit agreement
         contains certain financial and restrictive covenants, including
         maintenance of minimum net worth (as defined), and limitation of
         capital expenditures. The Company was in compliance with all such
         covenants in the credit agreement at December 31, 2002 and 2001.

         At December 31, 2002 and 2001, the Company had borrowings outstanding
         of $7,053,495 and $6,790,999, respectively, under the line of credit
         based on 90% of eligible contracts receivable. In addition, the Company
         may borrow up to $12,000,000 for real estate purchases. The real estate
         borrowings are at the discretion of the lender based on 80% of the
         purchase price of the real estate plus 80% of eligible development
         costs. At December 31, 2002 and 2001, the Company had borrowings of
         $4,929,419 and $3,266,101, respectively, which are included in real
         estate notes payable (see Note 5). Borrowings under the line of credit
         and real estate loan facility bear interest at the lender's "base" rate
         plus 1.0% (5.25% and 5.75% at December 31, 2002 and 2001,
         respectively). The "base" rate is equal to the interest rate publicly
         announced by the lender from time to time as its "base" rate.

         Also, under the credit agreement, the Company has a $120,000 line to
         support financing of a major project. Borrowings under the project line
         bear interest at the lender's "base" rate plus 1.5% (5.75% and 6.25% at
         December 31, 2002 and 2001, respectively). Borrowings under the project
         line outstanding at December 31, 2002 and 2001 were $119,879 and
         $172,000, respectively, and are secured by a mortgage on the project.

         The credit agreement also provides the Company up to $4,000,000 in
         interim financing at the discretion of the lender. Borrowings under
         this facility at December 31, 2002 and 2001 were $0 and $75,000,
         respectively. Borrowings bear interest at the lender's "base" rate plus
         1.5% (5.75% and 6.25% at December 31, 2002 and 2001, respectively).

         At December 31, 2002, $4,574,242 is available under the Company's
         mortgage and contracts receivable and interim financing credit
         facilities and $7,070,581 is available under its real estate loan
         facility.


                                       26
<PAGE>



5.       NOTES PAYABLE

         Notes payable consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                            2002              2001
<S>                                                                     <C>              <C>
          Fixed rate notes payable, due through 2005 at
            various rates of interest ranging from 6.15% to 10.00%      $     437,172    $    2,439,566
          Variable rate notes payable, due through 2010
            at various rates of interest ranging from 3.99% to 7.76%       12,543,998         6,835,080
                                                                        -------------    --------------
                                                                        $  12,981,170    $    9,274,646
                                                                        =============    ==============
</TABLE>

         At December 31, 2002, notes payable were secured by certain land held
         for sale, contracts and mortgages receivable, and equipment. The
         president of the Company personally guarantees the notes payable.

         Maturity requirements on notes payable at December 31, 2002 are as
         follows:

         Years ending December 31:
         2003                                                       $  2,132,874
         2004                                                          8,518,213
         2005                                                          1,966,100
         2006                                                             25,334
         2007                                                             27,372
         Thereafter                                                      311,277
                                                                    ------------
                                                                    $ 12,981,170
                                                                    ============

6.       CONTRACTS AND MORTGAGES PAYABLE

         The Company has entered into contracts for deed and mortgages for the
         purchase of land. At December 31, 2002, the agreements provide for
         interest rates from 0% to 8% and maturity dates through 2006. The
         contracts and mortgages payable are secured by land held for sale and
         certain letters of credit. Due to their short-term nature, imputed
         interest for relevant contracts with no stated interest rate is not
         significant.

         Maturity requirements on the contracts and mortgages payable at
         December 31, 2002 are as follows:

         Years ending December 31:
         2003                                                       $     95,779
         2004                                                            103,256
         2005                                                            265,824
         2006                                                            115,953
                                                                    ------------
                                                                    $    580,812
                                                                    ============
7. SENIOR SUBORDINATED DEBT

         The Company has $160,000 in senior subordinated notes outstanding which
         bear interest at 10% and are unsecured. In addition, the Company has
         $1,738,000 of senior subordinated debt that bears interest at 11.5% to
         12% and is unsecured. These notes contain certain restrictive covenants
         (as defined), including such items as maintenance of minimum net worth,
         limitation of dividend payments, maximum debt to equity ratio, and
         other financial ratios. The Company was in compliance with these
         financial covenants at December 31, 2002 and 2001. At December 31,
         2002, principal maturities of senior subordinated debt are as follows:

         Years ending December 31:
         2003                                                       $    713,000
         2004                                                            595,000
         2005                                                            590,000
                                                                    ------------
                                                                    $  1,898,000
                                                                    ============

                                       27
<PAGE>


8.       COMMITMENTS AND CONTINGENCIES

         The Company has sold certain contracts receivable to financial
         institutions under recourse sales agreements. In the event of default
         under these contracts receivable, the Company is required to pay the
         outstanding balance of the contract, whereupon the Company will
         reacquire title to the underlying land. Put options that typically
         require the Company to repurchase, at the option of the purchaser, the
         balance of the receivables within 60 days of the five-year anniversary
         of the sale, were also granted for these contracts receivable. At
         December 31, 2001 the balance on contracts and mortgages receivable
         under such recourse sales agreements was approximately $96,141. In
         March 2002, the put options were exercised and the Company repurchased
         the receivables for $92,573.

         The Company has guaranteed $5,029,358 notes payable outstanding at
         December 31, 2002 for two limited liability companies in which it has a
         33% ownership interest.

9.       OPERATING LEASES

         The Company has entered into noncancelable leases for office space.
         Estimated payments under these lease agreements at December 31, 2002
         are approximately as follows:

         Years ending December 31:
         2003                                                        $   248,727
         2004                                                            173,635
         2005                                                             95,393
         2006                                                             89,087
         2007                                                             37,899
                                                                    ------------
                                                                    $    644,741
                                                                    ============

         Total rental expense for all operating leases was approximately
         $290,000, $310,000 and $260,000 for the years ended December 31, 2002,
         2001 and 2000, respectively.

10.      INCOME TAXES

         In January 1999, the Company filed with the Internal Revenue Service
         and obtained status as a Subchapter S Corporation. Accordingly, taxable
         income from operations is allocated to the individual shareholders with
         no income tax expense recorded in the financial statements. The Company
         will continue to pay "built-in-gain" taxes related to deferred tax
         liabilities existing at December 31, 1998 for installment sales, until
         all installments of such sales have been received.

         The Company's deferred tax liability at December 31, 2002 and 2001 of
         $33,994 and $51,041, respectively, consists entirely of
         "built-in-gains" on installment sales.

11.      EMPLOYEE 401(k) PLAN

         The Company's 401(k) plan covers substantially all employees meeting
         minimum eligibility requirements. The plan provides for employee
         contributions of up to a maximum of 15% of each employee's
         compensation, with the Company matching 50% of the first 6% of each
         employee's contribution. The Company's contributions to the plan
         totaled approximately $128,000, $109,000 and $96,000 for the years
         ended December 31, 2002, 2001 and 2000, respectively.


                                       28
<PAGE>


12.      TRANSACTIONS WITH OFFICERS AND EMPLOYEES

         Included in contracts and mortgages receivable at December 31, 2002 and
         2001 are contracts receivable from employees of the Company in the
         amount of $18,600 and $177,200, respectively. During the years ended
         December 31, 2002, 2001 and 2000, the Company had sales to officers and
         employees of approximately $99,000, $138,000 and $52,000, respectively.

13.      SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

         Summarized quarterly financial information for the years ended December
         31, 2002 and 2001 is presented below.

<TABLE>
<CAPTION>
                                           1st Quarter         2nd Quarter         3rd Quarter        4th Quarter
         2002
<S>                                        <C>                 <C>                 <C>                <C>
         Revenue                           $ 9,170,599         $ 7,505,055         $10,372,924        $13,371,350
         Minority interest earnings           (102,006)            (13,733)
         Costs and expenses                  8,460,825           7,092,437           8,384,980         11,301,994
                                           -----------         -----------         -----------        -----------
         Net income                            709,774             412,618           1,885,938          2,055,623
         Net income per share              $      1.47         $      0.85         $      3.88        $      4.23


         2001

         Revenue                           $ 6,633,504         $ 8,540,544         $ 9,400,419        $12,675,651
         Costs and expenses                  6,008,643           7,535,355           8,295,255         12,052,961
                                           -----------         -----------         -----------        -----------
         Net income                            624,861           1,005,189           1,105,164            622,690
         Net income per share              $      1.29         $      2.08         $      2.28        $      1.29
</TABLE>








                                       29
<PAGE>


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

         No changes in or disagreements with accountants have occurred during
         the two-year period ended December 31, 2002.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         EXECUTIVE OFFICERS AND DIRECTORS

         The Company's executive officers and directors and their ages and
         positions with the Company are as follows:

               Name                Age           Positions with Company

         Philip C. Taylor          51        President, Chairman of the Board,
                                               Secretary and Treasurer
         Joel D. Kaul              43        Vice President and Chief Operating
                                               Officer
         W. John Driscoll          74        Director
         John H. Hooley            51        Director
         Charles J. McElroy        48        Director
         William R. Sieben         50        Director

         PHILIP C. TAYLOR is the founder, President, Chairman of the Board and
         majority shareholder of the Company. Mr. Taylor has been actively
         involved in real estate investment and development for over 20 years.
         Since 1979, management of the Company has been his full-time
         occupation. Mr. Taylor graduated in 1973 from the College of St.
         Thomas, St. Paul, Minnesota, with a Bachelor of Arts degree in
         Economics. In 1978, Mr. Taylor received his Juris Doctorate degree from
         William Mitchell College of Law, St. Paul, Minnesota. Mr. Taylor has
         been Chairman, President, Secretary, and Treasurer since the Company's
         formation.

         JOEL D. KAUL is Vice President and Chief Operating Officer. Mr. Kaul
         joined the Company in June 1995 and has over 10 years of experience in
         the real estate finance industry. From 1989-1995, Mr. Kaul served as
         senior asset manager for Dain Corporation. In this capacity, Mr. Kaul
         directed a staff of fifteen people in the management of a $300 million
         national real estate portfolio. Prior to joining Dain Corporation, Mr.
         Kaul spent four years employed as a CPA with Ernst and Young and
         Coopers and Lybrand. Mr. Kaul also served as the Chief Financial
         Officer for a Minnesota-based developer for four years. Mr. Kaul
         graduated cum laude in 1981 from the University of Wisconsin-LaCrosse,
         with a double major in finance and accounting.

         W. JOHN DRISCOLL has been a director of the Company since 1986. Mr.
         Driscoll is a director of Rock Island Company, a private investment
         firm where he served as Chairman of the Board from May 1993 to June
         1994 and as President prior to May 1993. Mr. Driscoll also serves as a
         member of the board of directors of Comshare, Inc.; John Nuveen & Co.;
         Xcel Energy; The St. Paul Companies, Inc. and Weyerhaeuser Company.

         JOHN H. HOOLEY has been a director of the Company since 1986. Mr.
         Hooley is President of Cub Foods, a division of Super Valu, Inc. He
         received a Bachelor of Arts degree in economics in 1974 from St. John's
         University, Collegeville, Minnesota. In 1980, he received his Juris
         Doctorate degree from William Mitchell College of Law, St. Paul,
         Minnesota.


                                       30
<PAGE>


         CHARLES J. MCELROY has been a director of the Company since 1986. Mr.
         McElroy is a partner with the firm of Larson, Allen, Weishair &
         Company, a regional certified public accounting firm. He received his
         Bachelor of Arts degree in accounting from the College of St. Thomas,
         St. Paul, Minnesota, in 1976. Mr. McElroy is Mr. Philip C. Taylor's
         brother-in-law.

         WILLIAM R. SIEBEN has been a director of the Company since 1986. Mr.
         Sieben is a partner in the law firm of Schwebel, Goetz & Sieben, P.A.,
         of Minneapolis, Minnesota. He received his Bachelor of Arts in 1972
         from St. Cloud State University and a Juris Doctorate degree from
         William Mitchell College of Law in 1977. He is past President of the
         Minnesota Trial Lawyers Association and has written several legal
         publications.

         All members of the Board of Directors hold office until the next annual
         meeting of stockholders or until their successors are elected and
         qualified. The Company pays each director an annual fee of $7,500
         ($4,500 in 2001), plus reimbursement of out-of-pocket expenses. During
         2002, the Board of Directors were given the option to purchase stock
         with their annual fee in lieu of cash. Three out of the five Directors
         elected to receive stock in lieu of cash.

         The Company does not have a class of equity securities registered
         pursuant to Section 12 of the Securities Exchange Act of 1934 (the
         Exchange Act) and therefore is not subject to Section 16 of the
         Exchange Act.

ITEM 11. EXECUTIVE COMPENSATION

         The following table sets forth the compensation paid or accrued by the
         Company for services rendered during the years ended December 31, 2002
         and 2001 with respect to the President (Chief Executive Officer) and
         all officers of the Company whose total annual salary and bonus for
         2002 exceeded $100,000:

         SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                    Annual Compensation
                                                     -------------------------------------------------------
                  Name and                                                                      Other Annual
             Principal Position                      Year         Salary         Bonus(1)       Compensation
<S>                                                  <C>         <C>             <C>             <C>
         Philip C. Taylor, President                 2002        $150,000        $354,859        $  7,500(2)
                                                     2001         150,000         280,395           4,500
         Joel D. Kaul, Vice President                2002         100,000         344,479              --
                                                     2001         100,000         346,775              --
         Stephen J. Roman,
           Executive Vice President -
             Four Seasons Realty of Wisconsin        2002         100,000         355,231              --
                                                     2001          85,000         240,752              --
</TABLE>
         ----------------
         (1) The amount of Mr. Taylor's bonus is approved by the Board of
             Directors and is related to the Company's profitability.
         (2) Annual fee paid to Mr. Taylor for serving as a member of the
             Company's Board of Directors.



                                       31
<PAGE>


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth as of December 31, 2002, the number of
         shares of the Company's common stock beneficially owned by (i) each
         director of the Company, (ii) each executive officer of the Company
         named in the Summary Compensation Table, (iii) each person known by the
         Company to beneficially own more than five percent of the outstanding
         shares of the Company's common stock, and (iv) all executive officers
         and directors as a group. Unless otherwise indicated, each person has
         sole voting and dispositive power over such shares.

                                                                     Shares
               Name and Address of                Outstanding     Beneficially
                Beneficial Owner                   Shares(2)         Owned(1)

         Philip C. Taylor
           43 Main Street SE, Suite 506
           Minneapolis, Minnesota  55414           387,804(3)         79.7%
         Charles J. McElroy
           Pillsbury Center
           220 South Sixth Street
           Suite 1000
           Minneapolis, Minnesota 55402            120,000(4)         24.7
         Joel D. Kaul
           2821 Overlook Lane North
           Stillwater, Minnesota  55082              9,000             1.9
         John H. Hooley
           9770 Old Deer Trail
           Stillwater, Minnesota  55082              5,983             1.2
         William R. Sieben
           1201 Southview Drive
           Hastings, Minnesota  55033                5,983             1.2
         W. John Driscoll
           2090 First National Bank Building
           St. Paul, Minnesota  55101                  243(5)           *
         All executive officers and directors
           as a group (6 persons)                  409,013            84.1

         -----------------------
         (1) Unless otherwise indicated, each person has sole voting and
             dispositive power with respect to all outstanding shares reported
             in the foregoing table.

         (2) Based on 486,317 shares of common stock outstanding at December 31,
             2002.

         (3) Includes 132,573 shares owned by Mr. Taylor's wife, 120,000 shares
             held in trust for his children. The 120,000 shares held in trust
             for Mr. Taylor's children have also been included in the number of
             shares shown for Mr. Charles J. McElroy, the trustee.

         (4) Includes 120,000 shares held by Mr. McElroy as trustee under trusts
             for the benefit of Philip C. Taylor's children that have also been
             included in the number of shares shown for Mr. Taylor.

         (5) Does not include 35,700 shares held in a trust for which Mr.
             Driscoll was the trustee or 7,140 shares held by Mr. Driscoll as
             trustee as to which Mr. Driscoll disclaims beneficial ownership.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Employees of the Company have from time to time purchased from the
         Company vacation property for their personal use. In connection with
         such purchases, the Company has provided, to such employees, mortgage
         financing on the same or similar terms it makes available to
         unaffiliated customers in the ordinary course of its business. In the
         opinion of management, the terms of such sales and financing are no
         more favorable to the employee(s) than those generally made available
         to its customers.


                                       32
<PAGE>


         Under the terms of the Subordinated Debt, the Company may not, and may
         not permit any subsidiary to, conduct any business or enter into any
         transaction or series of transactions with or for the benefit of any
         affiliate or any subsidiary of the Company, or any holder of 5% or more
         of any class of capital stock of the Company, except in good faith and
         on terms that are, in the aggregate, no less favorable to the Company
         or any subsidiary, as the case may be, than those that could have been
         obtained in a comparable transaction on an arm's length basis from a
         person not an affiliate of the Company or such subsidiary.

ITEM 14. CONTROLS AND PROCEDURES

         The Company's President and Chief Executive Officer and the Company's
         Controller have concluded, based on an evaluation within 90 days of the
         filing date of this report, that the Company's disclosure controls and
         procedure are effective for gathering, analyzing and disclosing
         information required to be disclosed in the Company's reports filed
         under the Securities Exchange Act of 1934. There have been no
         significant changes in the Company's internal controls or in other
         factors that could significantly affect these controls subsequent to
         the date of the foregoing evaluation.


                                     PART IV

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

         (a) List of documents filed as part of this report:

               1. FINANCIAL STATEMENTS

                  Consolidated Balance Sheets as of December 31, 2002 and 2001

                  Consolidated Statements of Income for the Years Ended
                  December 31, 2002, 2001 and 2000

                  Consolidated Statements of Stockholders' Equity for the Years
                  Ended December 31, 2002, 2001 and 2000

                  Consolidated Statements of Cash Flows for the Years Ended
                  December 31, 2002, 2001 and 2000

                  Notes to Consolidated Financial Statements for the Years Ended
                  December 31, 2002, 2001, and 2000

               2. FINANCIAL STATEMENT SCHEDULE

                  Schedule II - Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                            BEGINNING     CHARGED TO                      ENDING
                     DESCRIPTION             BALANCE        COSTS        DEDUCTIONS      BALANCE

<S>                                       <C>             <C>            <C>            <C>
               2002
               ----
               Allowance for doubtful
                  accounts                $ 119,161       $  11,768      $       --      $ 130,929

               2001
               ----
               Allowance for doubtful
                  accounts                  116,083          16,031          12,953        119,161

               2000
               ----
               Allowance for doubtful
                  accounts                   96,709          23,573           4,199        116,083
</TABLE>


               All other schedules have been omitted because they are not
               applicable.


                                       33
<PAGE>


               3. EXHIBITS.

                  3.1    Articles of Incorporation of the Company, as amended *
                  3.2    Bylaws of the Company, as amended *
                  4.1    Form of Debenture (included as Article Two of
                         Indenture filed as Exhibit 4.2)
                * 4.2    Forms of Indenture by and between the Company and
                         American Bank National Association, as Trustee *
                  10.3   Redevelopment Agreement between the City of Hillsboro,
                         Illinois and the Company dated April 26, 1994 *
                  10.5   Contract for Private Development between The Joint East
                         Range Economic Development Authority and Laurentian
                         Development Authority *
                  10.6   Second Contract for Private Development between The
                         Joint East Range Economic Development Authority and
                         Laurentian Corporate Authority *
                  10.8   Credit Agreement between Diversified Business Credit,
                         Inc. and the Company dated November 18, 1986, as
                         amended by Amendment to Credit Agreement dated
                         June 2, 1993
                  10.9   Security Agreement between Diversified Business Credit,
                         Inc. and the Company dated November 18, 1986 *
                  10.10  Agreement between the City of Coleraine, Minnesota and
                         the Company dated September 26, 1994 *
                  21     Subsidiaries of the Company
                  99.1   Certification Pursuant to 18 U.S.C. Section 1350, as
                         Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                         Act of 2002
                  99.2   Certification Pursuant to 18 U.S.C. Section 1350, as
                         Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                         Act of 2002

         --------------------
         *   Incorporated by reference to the Company's registration statement
             on Form SB-2 (No. 33-87024C), effective January 12, 1995.

         (b) REPORTS ON FORM 8-K.  No reports on Form 8-K were filed during the
             last quarter of the period covered by this report.







                                       34
<PAGE>


                                   SIGNATURES
                                   ----------

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

                                           TAYLOR INVESTMENT CORPORATION
                                           (Registrant)

Dated:   March 26, 2003                    By  /S/ Philip C. Taylor
      ---------------------                    --------------------
                                           Philip C. Taylor
                                           President and Chief Executive Officer

     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE                                        TITLE                         DATE
---------                                        -----                         -----

<S>                               <C>
/S/ Philip C. Taylor              Chairman of the Board, President,       March 26, 2003
-----------------------------     Secretary and Treasurer (Chief        ------------------
Philip C. Taylor                  Executive Officer)


/S/ W. John Driscoll              Director                                March 26, 2003
-----------------------------                                           ------------------
W. John Driscoll


/S/ John H. Hooley                Director                                March 26, 2003
-----------------------------                                           ------------------
John H. Hooley


/S/ Charles J. McElroy            Director                                March 26, 2003
-----------------------------                                           ------------------
Charles J. McElroy


/S/ William R. Sieben             Director                                March 26, 2003
-----------------------------                                           ------------------
William R. Sieben


/S/ Steven C. VanHandel           Assistant Vice President                March 26, 2003
-----------------------------     and Controller (Principal             ------------------
                                  Accounting Officer)
</TABLE>


                                       35
<PAGE>


                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                 SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Philip C. Taylor, Chief Executive Officer of Taylor Investment Corporation,
certify that:

     1.   I have reviewed this annual report on Form 10-K of Taylor Investment
          Corporation;
     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 we 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 this period in which the
               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 function):
          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors and 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 or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

/s/ Philip C. Taylor


Philip C. Taylor
Chief Executive Officer
March 26, 2003


                                       36
<PAGE>


                           CERTIFICATION OF CONTROLLER
                 SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven C. VanHandel, Controller of Taylor Investment Corporation, certify
that:

     1.   I have reviewed this annual report on Form 10-K of Taylor Investment
          Corporation;
     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 we 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 this period in which the
               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 function):
          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors and 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 or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

/s/ Steven C. VanHandel


Steven C. VanHandel
Controller
March 26, 2003


                                       37