<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

                                   FORM 10-Q

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

For the quarterly period ended                 SEPTEMBER 30, 2001
                               -------------------------------------------------


Commission file number                       001-14067
                       ---------------------------------------------------------


                           FOREVER ENTERPRISES, INC.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


                   TEXAS                                   36-3427454
------------------------------------------  ------------------------------------
       (State or other jurisdiction         (I.R.S. Employer Identification No.)
            of incorporation or
               organization)


                                10 S. BRENTWOOD
                            CLAYTON, MISSOURI 63105
--------------------------------------------------------------------------------
                   (Address of principal executive offices)
                                  (Zip Code)

                                (314) 726-3371
--------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)


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


                                                     Number of shares
             Title of class                 outstanding as of November 14, 2001
---------------------------------------    -------------------------------------
    Common stock, $0.01 par value                       6,934,934




<PAGE>
<PAGE>


                           FOREVER ENTERPRISES, INC.
                                   FORM 10-Q

                                     INDEX
                                                                           Page
                                                                           ----


PART I.           FINANCIAL INFORMATION.......................................3

     Item 1.      Financial Statements:.......................................3

                  Condensed Consolidated Balance Sheets (Unaudited) -
                  September 30, 2001 and December 31, 2000....................3

                  Condensed Consolidated Statements of Operations
                  (Unaudited) - Three Months and Nine Months Ended
                  September 30, 2001 and 2000.................................5

                  Condensed Consolidated Statements of Cash Flow
                  (Unaudited) - Nine Months Ended September 30, 2001
                   and 2000...................................................6

                  Notes to Condensed Consolidated Financial Statements
                  (Unaudited).................................................7

     Item 2.      Management's Discussion and Analysis of Financial
                  Condition and Results of Operations........................13

                  Cautionary Statement Regarding Forward-Looking Statements..13

                  Overview...................................................13

                  Results of Operations......................................15

                  Liquidity and Capital Resources............................19

                  Accounting Standards.......................................20

     Item 3.      Quantitative and Qualitative Disclosure About Market Risk..22


PART II.          OTHER INFORMATION..........................................23

     Item 6.      Exhibits and Reports on Form 8-K...........................23

SIGNATURES...................................................................24


                                    - 2 -



<PAGE>
<PAGE>


PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
FOREVER ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


<CAPTION>
                                                    ASSETS

                                                                          SEPTEMBER 30,           DECEMBER 31,
                                                                              2001                    2000
                                                                              ----                    ----

<S>                                                                       <C>                   <C>
Cash and cash equivalents                                                 $   9,742,976         $  12,034,307
Fixed maturity securities                                                    91,484,803            74,585,516
Equity securities                                                               658,070             2,218,227
Policyholder loans                                                            1,691,397             1,662,108
                                                                          -------------         -------------
         Total cash and investments                                         103,577,246            90,500,158
                                                                          -------------         -------------


Trade accounts receivable, net                                                4,867,568             4,224,968
Cemetery property, net                                                        3,063,996             3,357,341
Fixed assets, net                                                             6,174,724             6,135,482
Reinsurance receivables                                                      88,943,473            80,390,373
Inventories                                                                     274,516               304,114
Deferred charges, net                                                         1,369,884             1,363,737
Goodwill                                                                      2,190,752             2,258,028
Deferred tax assets, net                                                      3,676,505             5,164,040
Other assets                                                                 20,595,264            17,421,541
                                                                          -------------         -------------
         Total assets                                                     $ 234,733,928         $ 211,119,782
                                                                          =============         =============


(continued on next page)

                                    - 3 -


<PAGE>
<PAGE>

<CAPTION>
FOREVER ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(CONTINUED)


                                      LIABILITIES AND SHAREHOLDERS' EQUITY

                                                                         SEPTEMBER 30,             DECEMBER 31,
                                                                             2001                      2000
                                                                             ----                      ----
<S>                                                                      <C>                      <C>
LIABILITIES:

Policy liabilities:
     Future policy benefits                                              $ 146,072,101            $ 139,311,397
     Policyholder deposits                                                  49,572,257               52,461,853
Deferred preneed revenues                                                    4,947,132                4,696,391
Notes payable                                                               17,270,287                4,247,949
Other liabilities                                                           13,101,245                9,889,048
                                                                         -------------            -------------
         Total liabilities                                                 230,963,022              210,606,638
                                                                         -------------            -------------


SHAREHOLDERS' EQUITY:

Preferred stock ($.01 par value; 1,000,000 shares authorized;
     none issued)                                                                  --                       --
Common stock ($.01 par value; 30,000,000 shares authorized;
     6,934,934 and 6,933,924 shares issued and outstanding,
     respectively)                                                              69,349                   69,339
Additional paid-in capital                                                  10,446,415               10,043,775
Accumulated deficit                                                         (6,087,928)              (5,840,802)
Accumulated other comprehensive loss                                          (656,930)              (3,759,168)
                                                                         -------------            -------------
     Total shareholders' equity                                              3,770,906                  513,144
                                                                         -------------            -------------

     Total liabilities and shareholders' equity                          $ 234,733,928            $ 211,119,782
                                                                         =============            =============

                                    The accompanying notes are an integral
                                       part of the unaudited condensed
                                      consolidated financial statements.
</TABLE>

                                 - 4 -


<PAGE>
<PAGE>

<TABLE>
FOREVER ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


<CAPTION>
                                              THREE MONTHS ENDED                      NINE MONTHS ENDED
                                                 SEPTEMBER 30,                          SEPTEMBER 30,
                                                 -------------                          -------------
                                           2001               2000                 2001               2000
                                           ----               ----                 ----               ----

<S>                                   <C>                 <C>                <C>                 <C>
Premium income                        $     1,747,896     $    11,781,196    $      5,251,910    $    35,821,502
Net investment income
  and realized gains                          635,639           2,447,137           2,154,037          9,279,025
Cemetery revenue                            1,867,884           1,835,597           5,759,669          4,828,915
Commission and expense allowances           3,706,727                  --          10,693,461                 --
Other revenue                                      --             113,310               1,195            352,048
                                      ---------------     ---------------    ----------------    ---------------
   Total revenues                           7,958,146          16,177,240          23,860,272         50,281,490
                                      ---------------     ---------------    ----------------    ---------------
Benefits incurred                           2,143,891           6,064,918           6,731,199         18,616,129
Cost of cemetery revenue                      547,676             450,435           1,564,460          1,296,220
Selling, general and administrative         6,088,882          12,213,744          16,588,929         34,852,459
Other income                                 (349,373)           (485,839)           (973,847)          (956,258)
Interest expense                              243,463             107,929             430,707            316,673
                                      ---------------     ---------------    ----------------    ---------------
   Loss before income taxes                  (716,393)         (2,173,947)           (481,176)        (3,843,733)
Income tax expense (benefit)                  (51,282)           (508,669)             24,609           (935,832)
                                      ---------------     ---------------    ----------------    ---------------
   Loss before extraordinary item
     and cumulative effect of
     accounting change                       (665,111)         (1,665,278)           (505,785)        (2,907,901)
Extraordinary item, net of tax                     --                  --             258,659                 --
Cumulative effect of accounting
     change, net of tax                            --                  --                  --           (315,801)
                                      ---------------     ---------------    ----------------    ---------------
   Net loss                           $      (665,111)    $    (1,665,278)   $       (247,126)   $    (3,223,702)
                                      ===============     ===============    ================    ===============


Loss per share before extraordinary
   item and cumulative effect of
   accounting change:
         Basic and diluted            $         (0.10)    $         (0.24)   $          (0.07)   $         (0.42)

Loss per share:
         Basic and diluted            $         (0.10)    $         (0.24)   $          (0.04)   $         (0.46)

Weighted average shares outstanding:
         Basic and diluted                  6,934,607           6,933,359           6,934,168          6,933,329



                                     The accompanying notes are an integral
                                        part of the unaudited condensed
                                       consolidated financial statements.
</TABLE>

                                   - 5 -


<PAGE>
<PAGE>

<TABLE>
FOREVER ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

<CAPTION>
                                                                                      NINE MONTHS ENDED
                                                                                        SEPTEMBER 30,
                                                                           -------------------------------------
                                                                                2001                     2000
                                                                                ----                     ----
<S>                                                                        <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
                  Net cash provided by (used in) operating activities      $ (6,148,930)           $   4,502,950
                                                                           ------------            -------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from sales and maturities of available-for-sale investments    34,452,309               43,073,032
     Cost of investments purchased                                          (46,295,077)             (41,162,689)
     Purchase of fixed assets                                                  (643,098)                (689,200)
     Acquisition of subsidiaries                                                     --               (1,855,497)
     Increase in investment in unconsolidated subsidiaries                           --                 (261,361)
     Increase in policyholder loans                                             (29,289)              (2,998,702)
     Other, net                                                               1,458,064                 (139,073)
                                                                           ------------            -------------
                  Net cash used in investing activities                     (11,057,091)              (4,033,490)
                                                                           ------------            -------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Issuance of shares for stock options                                         2,037                      375
     Proceeds from long-term debt                                            15,253,988                       --
     Repayment of long-term debt                                             (1,972,991)              (1,802,422)
     Credit line proceeds                                                     1,631,656                       --
     Capital contributions                                                           --                  108,000
                                                                           ------------            -------------
                  Net cash provided by (used in) financing activities        14,914,690               (1,694,047)
                                                                           ------------            -------------

NET DECREASE IN CASH AND
     CASH EQUIVALENTS                                                        (2,291,331)              (1,224,587)

CASH AND CASH EQUIVALENTS,
     BEGINNING OF PERIOD                                                     12,034,307               23,712,005
                                                                           ------------            -------------

CASH AND CASH EQUIVALENTS,
     END OF PERIOD                                                         $  9,742,976            $  22,487,418
                                                                           ============            =============

SUPPLEMENTAL CASH FLOW INFORMATION
     Income Taxes Paid                                                     $    112,000            $     681,485
                                                                           ============            =============

     Interest Paid                                                         $    288,087            $     409,179
                                                                           ============            =============

                                     The accompanying notes are an integral
                                        part of the unaudited condensed
                                       consolidated financial statements.
</TABLE>

                                   - 6 -


<PAGE>
<PAGE>

                          FOREVER ENTERPRISES, INC.
            NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)
                                 -----------

NOTE 1 -- BASIS OF PRESENTATION

         The accompanying condensed consolidated financial statements
include the accounts of Forever Enterprises, Inc. and its direct and
indirect wholly-owned subsidiaries. Our fifty-percent investment in Mount
Washington Forever, L.L.C. is accounted for under the equity method. These
condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by accounting principles generally accepted
in the United States of America for complete financial statements. All
intercompany accounts and transactions have been eliminated in
consolidation. Certain prior period amounts have been reclassified to
conform with the current period presentation.

         The accompanying condensed consolidated financial statements and
notes thereto are unaudited and should be read in conjunction with our
audited financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2000 filed with the Securities and Exchange
Commission. The unaudited interim condensed consolidated financial
statements have been prepared on the same basis as the annual consolidated
financial statements and, in the opinion of management, reflect all
adjustments, which include only normal recurring adjustments, necessary to
present fairly our financial position as of September 30, 2001 and the
results of operations and cash flows for the three and nine months ended
September 30, 2001. The results for the three and nine months ended
September 30, 2001 are not necessarily indicative of the results to be
expected for the year ending December 31, 2001.

         In March 2000, we completed the acquisition of Forever Network,
Inc. (formerly known as Forever Enterprises, Inc.). Forever Network,
directly and through its subsidiaries, Mason Securities Association, Inc.,
Forever Memorial, Inc., Hollywood Forever, Inc., Dartmont Investment, Inc.
and Mount Washington Forever, Inc., owns and operates funeral homes
and cemetery properties and sells, archives and displays digital
interactive life stories viewed at grave sites and on the Internet at
WWW.FOREVERNETWORK.COM. In addition, the Internet site provides valuable
information to consumers on memorial products and services and markets
related merchandise and services to the growing population of people who
visit the site. In connection with the acquisition, we issued 2.4 million
shares of our common stock in exchange for all of the outstanding capital
stock of Forever Network. The acquisition was accounted for in a manner
similar to the pooling-of-interests method of accounting. Upon completion of
the transaction, we changed our corporate name from Lincoln Heritage
Corporation to Forever Enterprises, Inc.

         Effective January 1, 2000, we adopted Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial Statements, and changed our
revenue recognition policy, as follows: cemetery interment right sales are
recognized as revenue at the time the contract is signed, the cemetery
property is developed and a minimum percentage of the purchase price has
been collected. Sales of merchandise are recognized at the time the
merchandise is delivered or been customized for the customer. Service fee
revenues are recognized in the period the services are performed. We defer
prearranged funeral and pre-need cemetery acquisition costs until the time
revenue is recognized. The change in our accounting policies resulting from
implementation of SAB No. 101 has been treated as a change in accounting
principle effective as of January 1, 2000. The cumulative effect of the
accounting change through December 31, 1999 resulted in a charge to net
income of $315,801 (net of a $-0- tax benefit), or $.04 per diluted share.

                                   - 7 -


<PAGE>
<PAGE>

NOTE 2 -- NOTES PAYABLE

         As of September 30, 2001 and December 31, 2000, we had a note
payable to Allegiant Bank in the amount of $2,044,361 and $2,086,424,
respectively, which matures on January 1, 2003. Principal payments of $4,674
are due monthly along with interest at the "corporate market" interest rate
(6.5% per annum at September 30, 2001). The "corporate market" interest rate
is based upon an index developed by Allegiant Bank.

         We also have a $250,000 revolving line of credit from Allegiant
Bank at rates similar to the primary credit agreement discussed above. The
balance outstanding was $220,000 at September 30, 2001 and December 31,
2000. This line of credit is renewable on a yearly basis subject to
Allegiant Bank's discretion.

         We have a $2,000,000 revolving line of credit from Merrill Lynch
Business Financial Services, Inc., which matures on March 31, 2002. Interest
is due monthly on the unpaid balance equal to the sum of 2.40% and the
Dealer Commercial Paper rate for 30-day high-grade unsecured notes (5.07%
per annum at September 30, 2001) as published in The Wall Street Journal.
The balance outstanding was $1,631,656 at September 30, 2001. No amounts
were outstanding under this agreement at December 31, 2001.

         Notes payable in the amount of $1,912,647 were settled in full for
$1,653,988 on June 5, 2001, resulting in an extraordinary gain of $258,659
($.04 per basic and diluted share). Concurrent with the retirement of this
debt, we entered into a note payable with National Prearranged Services,
Inc. ("NPS"), an affiliated entity. The balance of this note was $1,625,926
as of September 30, 2001. Payments of $19,633 are due monthly until the
principal balance is paid in full. The interest rate on this note is 7.5%
per annum.

         We have a loan agreement with a reinsurer whereby we may borrow
varying amounts, which decline each year until the agreement expires in
2009. On July 18, 2001, we borrowed $13.6 million from Employers Reassurance
Corporation ("ERC") pursuant to the terms of the reinsurance agreement with
ERC. Principal payments of varying amounts are due annually on each
anniversary date. Interest on this note is payable annually in arrears on
each anniversary date at a rate equal to the five-year Treasury note plus
150 basis points (3.93% at September 30, 2001). No amounts were outstanding
under this agreement at December 31, 2000. We have pledged all of the
capital stock of Memorial Service Life Insurance Company as security for
any advances under this agreement.

NOTE 3 -- INVESTMENTS

         The cost or amortized cost, gross unrealized gains and losses, and
estimated fair value of fixed maturity and equity securities available-for-
sale as of September 30, 2001 were as follows:

<TABLE>
<CAPTION>
                                                COST OR            GROSS            GROSS            ESTIMATED
                                               AMORTIZED        UNREALIZED        UNREALIZED           FAIR
                                                 COST              GAINS            LOSSES             VALUE
                                            --------------      -----------     --------------     -------------
<S>                                          <C>                <C>             <C>                <C>
Fixed maturity securities:
    Corporate bonds                          $  31,930,674      $   334,362     $  (1,802,115)     $  30,462,921
    Mortgage backed securities                  47,452,737        1,482,224          (297,395)        48,637,566
    U.S. government                             12,743,731          204,729          (564,144)        12,384,316
                                             -------------      -----------     -------------      -------------
      Total fixed maturity securities           92,127,142        2,021,315        (2,663,654)        91,484,803

Equity securities                                1,011,078           10,571          (363,579)           658,070
                                             -------------      -----------     -------------      -------------
    Total                                    $  93,138,220      $ 2,031,886     $  (3,027,233)     $  92,142,873
                                             =============      ===========     =============      =============
</TABLE>

                                   - 8 -


<PAGE>

NOTE 4 -- SEGMENT INFORMATION

         We conduct and manage our business through two segments,
cemetery/funeral operations and life insurance operations. The following
tables summarize the results of our operations by our business segments.
Costs and revenues that are not related to operating segments are included
in the column "Corporate."

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 2001

                                          CEMETERY        INSURANCE      CORPORATE     INTERSEGMENT      TOTAL
                                          --------        ---------      ---------     ------------      -----

<S>                                     <C>             <C>             <C>            <C>           <C>
Revenues                                $  5,759,669    $ 18,657,124    $    66,249    $  (622,770)  $  23,860,272

Net income (loss) before income taxes        176,414       1,217,095     (1,874,685)            --        (481,176)

Total assets at period-end                13,513,449     207,920,315     18,053,850     (4,753,686)    234,733,928

<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 2001

                                          CEMETERY        INSURANCE      CORPORATE     INTERSEGMENT      TOTAL
                                          --------        ---------      ---------     ------------      -----

<S>                                     <C>             <C>             <C>            <C>           <C>
Revenues                                $  1,867,884    $  6,252,238    $    59,349    $  (221,325)  $   7,958,146

Net income (loss) before income taxes       (275,369)         32,052       (473,076)            --        (716,393)


<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 2000

                                          CEMETERY        INSURANCE      CORPORATE     INTERSEGMENT      TOTAL
                                          --------        ---------      ---------     ------------      -----

<S>                                     <C>             <C>             <C>            <C>           <C>
Revenues                                $  4,828,915    $ 46,050,342    $    21,060    $  (618,827)  $  50,281,490

Net loss before income taxes              (1,017,972)       (227,265)    (2,447,144)      (151,352)     (3,843,733)

Total assets at period-end                18,458,333     200,100,891      1,589,689     (4,724,672)    215,424,241


<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 2000

                                          CEMETERY        INSURANCE      CORPORATE     INTERSEGMENT      TOTAL
                                          --------        ---------      ---------     ------------      -----

<S>                                     <C>             <C>             <C>            <C>           <C>
Revenues                                $  1,835,597    $ 14,516,637    $     6,075    $  (181,069)  $  16,177,240

Net loss before income taxes                (349,437)       (815,120)      (939,977)       (69,413)     (2,173,947)
</TABLE>

NOTE 5 -- RELATED PARTY TRANSACTIONS

         We provide administrative and other services to related parties.
Management fees charged to related parties, which have been recorded as
"Other income" on our consolidated statements of operations, were $272,000
and $732,000 for the three and nine months ended September 30, 2001,
respectively. These fees reflect an allocation based on actual costs
incurred.

                                   - 9 -


<PAGE>
<PAGE>

         Net amounts receivable from National Heritage Enterprises and its
affiliates, which are included in "Other assets" on our consolidated balance
sheets, were $5,914,991 and $2,735,580 as of September 30, 2001 and December
31, 2000, respectively. Amounts payable to National Heritage Enterprises and
its affiliates, which are included in "Other liabilities" on our
consolidated balance sheets, were $2,649,928 and $2,579,170 as of September
30, 2001 and December 31, 2000, respectively. Notes payable to National
Prearranged Services, Inc., which is included in "Notes payable" on our
consolidated balance sheets, were $1,625,926 and $0 as of September 30, 2001
and December 31, 2000 (see Note 2 above).

NOTE 6 -- NEW ACCOUNTING STANDARDS

         In July 2001, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 141 ("SFAS 141"),
Business Combinations. SFAS 141 requires the purchase method of accounting
for business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method. We do not believe that the adoption of SFAS 141
will have a significant impact on our financial statements.

         In July 2001, the FASB issued Statement of Financial Accounting
Standards No. 142 ("SFAS 142"), Goodwill and Other Intangible Assets, which
is effective January 1, 2002. SFAS 142 requires, among other things, the
discontinuance of goodwill amortization. In addition, the standard includes
provisions for the reclassification of certain existing recognized
intangibles as goodwill, reassessment of the useful lives of existing
recognized intangibles, reclassification of certain intangibles out of
previously reported goodwill and the identification of reporting units for
purposes of assessing potential future impairments of goodwill. SFAS 142
also requires a company to complete a transitional goodwill impairment test
six months from the date of adoption. We are currently assessing but have
not determined the impact of SFAS 142 on our financial position and results
of operations.

         In September 2000, the FASB issued SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities. This statement replaces SFAS No. 125, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, and
rescinds SFAS No. 127, Deferral of Effective Date of Certain Provisions of
FASB Statement No. 125. It revises the standards for accounting for
securitizations and other transfers of financial assets and extinguishments
of liabilities. Those standards are based on consistent application of a
financial-components approach that focuses on control. This statement is
effective for transfers and servicing of financial assets and extinguishments
of liabilities occurring after March 31, 2001. The implementation of SFAS
No. 140 has had no effect on our financial position, results of operations
or cash flows.

         In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designed as part
of a hedge transaction, and if it is, the type of hedge transaction. SFAS
No. 133 is effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. We adopted SFAS No. 133 on January 1, 2001, which resulted in
no effect on our financial position, results of operations or cash flows.

                                   - 10 -


<PAGE>
<PAGE>

         In March 1998, the National Association of Insurance Commissioners
("NAIC") adopted the Codification of Statutory Accounting Principles
("Codification"). The Codification, which is intended to standardize
regulatory accounting and reporting for the insurance industry, was
effective January 1, 2001. However, statutory accounting principles will
continue to be established by individual state laws and permitted practices.
The State of Texas required adoption of the Codification with certain
modifications for the preparation of statutory basis financial statements
effective January 1, 2001. The adoption of the Codification by our insurance
company subsidiaries, Lincoln Memorial Life Insurance Company ("LMLIC") and
Memorial Service Life Insurance Company ("MSLIC"), as modified by Texas,
increased LMLIC's statutory capital and surplus as of January 1, 2001, by
approximately $870,000, primarily related to accounting for income taxes.
There was no effect on MSLIC's capital and surplus.

NOTE 7 -- LOSS PER SHARE OF STOCK

         Loss per share of stock is computed using the weighted average
number of common shares outstanding during the applicable period. Diluted
loss per share of stock is computed using the weighted average number of
common shares outstanding and dilutive potential common shares (primarily
outstanding stock options). Weighted average shares of common stock and
dilutive potential common shares used in the calculation of basic and
diluted loss per share are summarized as follows:

<TABLE>
<CAPTION>
                                                                              NINE MONTHS ENDED
                                                                              -----------------
                                                               SEPTEMBER 30, 2001          SEPTEMBER 30, 2000
                                                               ------------------          ------------------

<S>                                                                <C>                         <C>
Weighted average shares outstanding (basic EPS)                    6,934,168                   6,933,329

Dilutive potential common shares                                     528,752                           -

Weighted average shares outstanding and
   dilutive potential common shares (diluted EPS)                  7,462,920                   6,933,329
</TABLE>

         Dilutive potential common shares included in the diluted loss per
share calculation were determined using the treasury stock method. Under the
treasury stock method, outstanding stock options are dilutive when the
average market price of a company's common stock exceeds the option price
during a period. In addition, proceeds from the assumed exercise of dilutive
options along with the related tax benefit are assumed to be used to
repurchase common shares at the average market price of such stock during
the period. For the nine months ended September 30, 2000, potential common
shares of 321,862 were considered to be anti-dilutive and were excluded from
the calculation of diluted loss per share.

NOTE 8 -- SUBSEQUENT EVENTS

         On October 4, 2001 we entered into a letter of intent to purchase a
group of four cemetery properties in a large southeastern metropolitan area.
The purchase price and working capital, if agreeable terms are secured, are
expected to be funded through cash and a convertible debenture issued by the
purchaser (seller has the option at any time to convert the unpaid purchase
price balance into Forever Enterprises common stock). We are in the process
of completing our due diligence. If due diligence proves favorable, the
parties expect moving to a definitive agreement and closing the transaction
during the fourth quarter of 2001.

                                   - 11 -


<PAGE>
<PAGE>

         On October 23, 2001 we entered into a letter of intent to purchase
a single-location cemetery property in the Midwest. The purchase price and
working capital, if agreeable terms are secured, are expected to be funded
largely through owner financing with the balance to be funded through
additional debt arrangements with an outside lender and/or additional equity
financing (seller has the option at any time to convert the unpaid balance
into Forever Enterprises preferred stock). We are in the process of
completing our due diligence. If due diligence proves favorable, the parties
expect moving to a definitive agreement and closing the transaction during
the fourth quarter of 2001.

                                   - 12 -


<PAGE>
<PAGE>

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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

         This report contains forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements are based on the beliefs of our
management as well as on assumptions made by and information currently
available to us at the time such statements were made. We can give no
assurance that the expectations indicated by such forward-looking statements
will be realized. If any of management's assumptions should prove incorrect,
or if any of the risks and uncertainties underlying such expectations should
materialize, our actual results may differ materially from those indicated
by the forward-looking statements.

         The following factors that are not within our control and that may
have a direct bearing on operating results include, but are not limited to:
(1) general economic conditions and other factors, including prevailing
interest rate levels and stock market performance, which may affect our
ability to sell our products, the market value of our investments and the
lapse rate and profitability of our policies; (2) our ability to achieve
anticipated levels of operational efficiencies for acquired companies or
properties, as well as through other cost-saving initiatives; (3) mortality,
morbidity, and other factors which may affect the profitability of our
insurance products; (4) changes in the federal income tax laws and
regulations which may affect the cost of or demand for our products; (5)
increasing competition in the sale of our products; (6) regulatory changes
or actions, including those relating to regulation of financial services
affecting (among other things) sales and underwriting of insurance products,
regulation of the sale, underwriting and pricing of insurance products and
regulation of the sale and pricing of funeral home operations and products;
(7) the availability and terms of future acquisitions, if any; and (8) the
risk factors or uncertainties listed in our other filings with the
Securities and Exchange Commission.

         Additionally, we may not be successful in identifying, acquiring,
and integrating other companies or their business, implementing improved
management and accounting information systems and controls and may be
dependent upon additional capital and equipment purchases for future growth.
There may be other risks and uncertainties that management is not able to
predict.

         When used in this report, the words "anticipate," "believe,"
"estimate," "expect," "intends," and similar expressions, as they relate to
us are intended to identify forward-looking statements, although there may
be certain forward-looking statements not accompanied by such expressions.

OVERVIEW

         We, through our subsidiaries, own and operate combination funeral
home and cemetery properties, produce and market multimedia biographies,
operate an Internet marketing site, and operate life insurance companies
that principally issue insurance contracts to fund pre-need funeral
contracts. Our life insurance operations are conducted through our
wholly-owned life insurance subsidiaries.

         In March 2000, we completed the acquisition of Forever Network, Inc.
(formerly known as Forever Enterprises, Inc.). Forever Network, Inc.
directly and through its subsidiaries, Mason Securities Association, Inc.,
Forever Memorial, Inc., Hollywood Forever, Inc., Dartmont Investment, Inc.
and Mount Washington Forever, Inc., owns and operates funeral homes and
cemetery properties and sells, archives and displays digital interactive
life stories viewed at grave sites and on the Internet at
www.forevernetwork.com. In addition, the Internet site provides valuable
information to consumers on memorial products and services and markets
related merchandise and services to the growing population

                                   - 13 -



<PAGE>
<PAGE>

of people who visit the site. In connection with the acquisition, we issued
2.4 million shares of our common stock in exchange for all of the
outstanding capital stock of Forever Network, Inc. The acquisition was
accounted for in a manner similar to the pooling-of-interests method of
accounting. Upon completion of the transaction, we changed our corporate
name from Lincoln Heritage Corporation to Forever Enterprises, Inc.

         Substantially all of our life insurance policies are issued to fund
prearranged funeral contracts sold by National Prearranged Services, Inc.
and National Prearranged Services Agency, Inc. National Prearranged
Services, Inc. is an affiliated company that collects all payments for
prearranged funeral contracts and remits such amounts to us either directly
or through assumed reinsurance.

         In August 2000, we entered into a coinsurance agreement with
Employers Reassurance Corporation ("ERC") whereby we ceded a significant
portion of our in-force policies. This coinsurance agreement includes
experience refund provisions whereby we may earn additional ceding
commissions in varying amounts each year through 2010, subject to the
mortality experience of the policies not exceeding certain levels. This
coinsurance agreement does not relieve us from our obligations to our
policyholders and, accordingly, the net cost of the coinsurance agreement of
approximately $80,000 was deferred and is being amortized over the remaining
life of the underlying insurance policies. Approximately $78.1 million of
the reinsurance receivable as of September 30, 2001 was related to the
agreement with Employers Reassurance Corporation.

         In November 2000, we entered into various coinsurance agreements
with North America Life Insurance Company of Texas ("NAL") whereby we ceded
blocks of certain direct written life insurance policies and all of our
assumed life insurance and annuity policies. We have segregated funds of
approximately $53.2 million in a trust account for the benefit of the
reinsurer. The funds withheld are presented net of amounts due from the
reinsurer in our consolidated financial statements. We also entered into a
100% coinsurance agreement with NAL in September 2000, whereby substantially
all of the policies issued by us that are sold by NPS and NPS Agency are
ceded to NAL. This agreement was modified in August 2001, at which time we
also entered into a coinsurance agreement with Hannover Life Reassurance
Company of America ("Hannover"), whereby all of the policies issued by us
that are sold by NPS are ceded to Hannover. These coinsurance agreements do
not relieve us from our obligations to our policyholders and, accordingly,
the cost of the coinsurance agreements was deferred and is being amortized
over the remaining life of the underlying insurance policies. The
unamortized deferred cost as of September 30, 2001 was approximately $1.9
million. Approximately $10.5 million of the reinsurance receivable as of
September 30, 2001 was related to the agreements with NAL and Hannover.

         We believe that these arrangements with Employers Reassurance
Corporation, North America Life Insurance Company of Texas and Hannover
Reassurance Life Company of America will allow us to shift our focus from
the insurance operations to the cemetery operations of our company.

         Our business strategy is to grow our business by acquiring
cemetery/funeral home combination properties in targeted metropolitan areas,
aggressively grow the multimedia biography business through all company
properties and the Internet, and further develop our Internet marketing
business. Through this strategy, we expect to develop the Forever brand to
enhance consumer recognition and sales. No assurance can be given that we
will be successful in completing any acquisition, or that any acquisition,
once completed, will ultimately enhance our results of operations.

         We will seek to increase the number of quality cemetery/funeral
home combination properties we own and operate and to expand our Forever
network of families with digital biographies. Our plan is to acquire
properties in major metropolitan areas to allow us to advertise and market
the Forever programs

                                   - 14 -



<PAGE>
<PAGE>

to large populations. The properties need to have enough inventory and/or
land to accommodate future sales and/or construction of Forever mausoleums/
chapels to create inventory and service space. The properties could possibly
be distressed in some way. We believe those in need of an aggressive
marketing approach are ideal. Established properties with a large heritage
of families will also allow us to market our biography services to existing
client family members, thus expanding our market potential. Properties also
may be in the form of undeveloped land in a current or developing population
center that can support a funeral home/mausoleum structure, and that provide
a suitable supply of saleable cemetery land. We believe that acquiring and
developing properties in major areas should also allow us to quickly develop
our Internet business strategy, which serves to display family archives,
educate consumers on memorial products, services and providers, and to sell
memorial services and merchandise over the forevernetwork.com website. We
believe that the current environment provides excellent opportunities to
acquire cemetery properties at attractive prices due to the fact that
certain of the major acquisition companies are in financial distress and the
prices for properties are decreasing to what we believe are very reasonable
levels. Execution of this strategy should allow us to develop further the
Forever brand and our company as a leader in providing unique and valuable
memorialization products and services.

         We believe we are well positioned to enhance the profitability of
the businesses and properties we acquire. With respect to our
cemetery/funeral home operations, we believe we can apply tested and proven
marketing techniques to produce significant revenue and market share growth.
Efficient property operations management should allow for greatly enhanced
profitability on newly acquired properties. Demographic trends and the
growing interest in organizing and preserving family memories, use of the
Internet for information gathering, and commerce on the world wide web
should provide the platform for successful results for our Internet
strategy.

RESULTS OF OPERATIONS

         The following presents management's discussion and analysis of our
consolidated financial condition and results of operations as of the dates
and for the periods indicated. This discussion should be read in conjunction
with the other information set forth in this report, including our unaudited
condensed consolidated financial statements and the accompanying notes
thereto.

         Our financial highlights were as follows:
<TABLE>
<CAPTION>
                                                                              NINE MONTHS ENDED
STATEMENTS OF OPERATIONS DATA:                                                  SEPTEMBER 30,
                                                                   ---------------------------------------
                                                                       2001                       2000
                                                                       ----                       ----

<S>                                                               <C>                        <C>
Premium income                                                    $   5,251,910              $  35,821,502
Net investment income and realized gains                              2,154,037                  9,279,025
Cemetery revenue                                                      5,759,669                  4,828,915
Commission and expense allowances                                    10,693,461                         --
Other revenue                                                             1,195                    352,048
                                                                  -------------              -------------
     Total revenues                                                  23,860,272                 50,281,490
Benefits incurred                                                     6,731,199                 18,616,129
Cost of cemetery revenues                                             1,564,460                  1,296,220
Selling, general and administrative expenses                         16,588,929                 34,852,459
Other income                                                           (973,847)                  (956,258)
Interest expense                                                        430,707                    316,673
                                                                  -------------              -------------
     Loss before income taxes                                          (481,176)                (3,843,733)
Income tax expense (benefit)                                             24,609                   (935,832)
                                                                  -------------              -------------
     Loss before extraordinary item
       and cumulative effect of accounting change                      (505,785)                (2,907,901)
Extraordinary item                                                      258,659                         --
Cumulative effect of accounting change                                      --                    (315,801)
                                                                  ------------               -------------
     Net loss                                                     $    (247,126)             $  (3,223,702)
                                                                  =============              =============

                                   - 15 -


<PAGE>
<PAGE>

<CAPTION>
                                                                              NINE MONTHS ENDED
STATEMENTS OF OPERATIONS DATA:                                                  SEPTEMBER 30,
                                                                   ---------------------------------------
                                                                       2001                       2000
                                                                       ----                       ----
<S>                                                               <C>                        <C>
Loss per share before extraordinary item and cumulative effect
     Basic and diluted                                            $       (0.07)             $       (0.42)

Loss per share after cumulative effect
     Basic and diluted                                            $       (0.04)             $       (0.46)


<CAPTION>
BALANCE SHEET DATA:                                             SEPTEMBER 30, 2001         DECEMBER 31, 2000
                                                                ------------------         -----------------

<S>                                                               <C>                        <C>
Trade accounts receivable, net                                    $   4,867,568              $   4,224,968
Cemetery property, net                                                3,063,996                  3,357,341
Total assets                                                        234,733,928                211,119,782
Total policy liabilities                                            195,644,358                191,773,250
Shareholders' equity                                                  3,770,906                    513,144
</TABLE>

         We conduct and manage our business through two segments,
cemetery/funeral operations and life insurance operations. The following
tables and narratives summarize the results of our operations by our
business segments. Costs and revenues that are not related to operating
segments are included in the column "Corporate."

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 2001

                                          CEMETERY        INSURANCE      CORPORATE     INTERSEGMENT      TOTAL
                                          --------        ---------      ---------     ------------      -----

<S>                                     <C>             <C>             <C>            <C>           <C>
Revenues                                $  5,759,669    $ 18,657,124    $    66,249    $  (622,770)  $  23,860,272

Net income (loss) before income taxes        176,414       1,217,095     (1,874,685)            --        (481,176)

Total assets at period-end                13,513,449     207,920,315     18,053,850     (4,753,686)    234,733,928

<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 2001

                                          CEMETERY        INSURANCE      CORPORATE     INTERSEGMENT      TOTAL
                                          --------        ---------      ---------     ------------      -----

<S>                                     <C>             <C>             <C>            <C>           <C>
Revenues                                $  1,867,884    $  6,252,238    $    59,349    $  (221,325)  $   7,958,146

Net income (loss) before income taxes       (275,369)         32,052       (473,076)            --        (716,393)

<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 2000

                                          CEMETERY        INSURANCE      CORPORATE     INTERSEGMENT      TOTAL
                                          --------        ---------      ---------     ------------      -----

<S>                                     <C>             <C>             <C>            <C>           <C>
Revenues                                $  4,828,915    $ 46,050,342    $    21,060    $  (618,827)  $  50,281,490

Net loss before income taxes              (1,017,972)       (227,265)    (2,447,144)      (151,352)     (3,843,733)

Total assets at period-end                18,458,333     200,100,891      1,589,689     (4,724,672)    215,424,241

<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 2000

                                          CEMETERY        INSURANCE      CORPORATE     INTERSEGMENT      TOTAL
                                          --------        ---------      ---------     ------------      -----

<S>                                     <C>             <C>             <C>            <C>           <C>
Revenues                                $  1,835,597    $ 14,516,637    $     6,075    $  (181,069)  $  16,177,240

Net loss before income taxes                (349,437)       (815,120)      (939,977)       (69,413)     (2,173,947)
</TABLE>

                                   - 16 -


<PAGE>
<PAGE>

         Cemetery Operations. Cemetery revenues increased approximately
$32,000 and $931,000, or 1.8% and 19.3%, in the three and nine months ended
September 30, 2001, respectively, compared to the corresponding periods of
2000. Sales for the three and nine months ended September 30, 2001 at each
location increased compared to the corresponding periods of 2000 due to more
effective marketing and increased sales of certain cemetery and
memorialization products and services. The increase also was due to the
positive effect of deferred revenue being recognized on installment
contracts as they were paid in full and merchandise was delivered.

         Cost of sales increased $98,000 and $268,000, or 21.6% and 20.7%,
from $450,000 and $1.3 million in the three and nine months ended September
30, 2000, respectively, to $548,000 and $1.6 million in the corresponding
periods of 2001 due to increased cemetery sales. Cost of sales as a
percentage of revenues increased to 29.3% and 27.2% for the three and nine
months ended September 30, 2001, respectively, compared to 24.5% and 26.8%
for the three and nine months ended September 30, 2000, respectively due to
higher percentages of costs of cemetery merchandise and services relative to
interment rights.

         Selling, general and administrative expenses decreased $515,000 and
$1.1 million, or 27.1% and 21.9%, from $1.9 million and $5.0 million in the
three and nine months ended September 30, 2000, respectively, to $1.4
million and $3.9 million, respectively, in the corresponding periods of 2001
due to cost reduction efforts and improved operating efficiencies which
required fewer resources. As a percentage of revenues, selling, general and
administrative costs decreased to 74.0% and 67.4% in the three and nine
months ended September 30, 2001, respectively, from 103.3% and 102.9% in the
three and nine months ended September 30, 2000, respectively, due to the
higher revenues generated, improved operating efficiencies and cost
reductions in overhead expenses.

         Income (loss) before income taxes increased from losses of $349,000
and $1.0 million in the three and nine months ended September 30, 2000,
respectively, to a loss of $275,000 and income of $176,000, respectively, in
the corresponding periods of 2001. Operating income as a percentage of
revenues improved to (14.7%) and 3.1% in the three and nine months ended
September 30, 2001, respectively, from (19.0%) and (21.1%) in the
corresponding periods of 2000 due primarily to the absence of expenses now
charged to other entities through corporate.

         Investment in Mount Washington Forever, LLC. We currently have a
50% interest in Mount Washington Forever, LLC, and are responsible for all
aspects of the cemetery's marketing and operations. The results of Mount
Washington Forever, LLC are summarized in the table below.

<TABLE>
<CAPTION>
                                                                    NINE MONTHS ENDED
                                                     ---------------------------------------------
                                                     SEPTEMBER 30, 2001         SEPTEMBER 30, 2000
                                                     ------------------         ------------------
<S>                                                      <C>                        <C>
Revenues                                                 $2,310,688                 $1,187,879
Cost of goods sold                                          672,964                    200,092
Selling, general and administrative expenses              1,739,361                  1,347,471
Loss from operations                                       (101,637)                  (359,684)
</TABLE>

         Insurance Operations. Insurance revenues decreased approximately
$8.3 million and $27.4 million, or 56.9% and 59.5%, in the three-month and
nine-month periods ended September 30, 2001, respectively, compared to the
corresponding periods in 2000. The decreases were primarily attributable to
the reinsurance of significant blocks of our life insurance policies in
December 2000.

         Our premium income decreased approximately $10.0 million and $30.6
million, or 84.3% and 84.8%, in the three-month and nine-month periods ended
September 30, 2001, respectively, compared to

                                   - 17 -



<PAGE>
<PAGE>

the corresponding periods of 2000. These decreases were attributable to the
reinsurance of significant blocks of our life insurance policies. Experience
ratings refunds were approximately $600,000 and $1.8 million for the three-
and nine-month periods ended September 30, 2001, respectively. Insurance
premiums may continue to contribute significantly to future revenues due to
potential future experience ratings refunds expected from the reinsurer.

         Commission and expense allowances on reinsurance ceded increased
approximately $3.7 million and $10.7 million, or 100.0% and 100.0%, in the
three-month and nine-month periods ended September 30, 2001, respectively,
compared to the corresponding periods of 2000 due to the reinsurance
transactions in December 2000.

         Our net investment income and realized gains decreased
approximately $1.8 million and $7.1 million, or 73.0% and 74.4%, in the
three-month and nine-month periods ended September 31, 2001, respectively,
compared to the corresponding periods of 2000. The decreases in investment
income were due primarily to the absence of investment income associated
with securities sold in the reinsurance transactions in the fourth quarter
of 2000. In addition, a significant portion of the investment income earned
on securities held at September 30, 2001 was payable to North America Life
as provided for in the reinsurance agreement.

         Our benefit expenses decreased approximately $3.9 million and $11.9
million, or 64.4% and 63.5%, in the three and nine months ended September
30, 2001, respectively, compared to the corresponding periods of 2000. These
decreases were due primarily to the reinsurance agreements entered into
during 2000.

         Income (loss) before income taxes increased $847,000 and $1.4
million, from a loss of $815,000 and $227,000, respectively, for the three
and nine months ended September 30, 2000, to income of $32,000 and $1.2
million for the three and nine months ended September 30, 2001. Income
(loss) before income taxes as a percentage of revenues improved to 0.5% and
6.5% in the three and nine months ended September 30, 2001, respectively,
from (5.6%) and (0.5%) in the corresponding periods of 2000 due primarily to
the reinsurance agreements.

         Total assets increased $7.8 million from $200.1 million at
September 30, 2000 to $207.9 million at September 30, 2001 due primarily to
an increase in our in-force business.

         Corporate. Loss before income taxes decreased $467,000 and
$572,000, or 49.7% and 23.4%, in the three and nine months ended September
30, 2001, respectively, compared to the corresponding periods of 2000, due
to a reduction in deferred compensation expense partially offset by
increased overhead expenses.

         Consolidated. Loss before income taxes for the three and nine
months ended September 30, 2001 decreased $1.5 million and $3.4 million, or
67.0% and 87.5%, respectively, compared to the corresponding periods of
2000. Net loss per basic share for the three and nine months ended September
30, 2001, decreased to $0.10 and $0.07, respectively, from $0.24 and $0.42
per share for the corresponding periods of 2000. The decrease in operating
loss for the three and nine months ended September 30, 2001, compared to the
same periods of 2000, was due to increased revenues from our cemetery
operations and cost reductions in overhead expenses.

         The effective tax rate of 5.1% in the current year was due to our
cemetery operations being in a net operating loss position combined with a
lower tax rate used by our insurance operations.

                                   - 18 -


<PAGE>
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         We expect to secure capital required for additional new cemetery
properties and technology developments related to the digital biographies
and the Internet through debt and/or equity financing. With new cemetery
properties, the initial capital required for the purchase and working
capital is anticipated to be sufficient to allow the property to achieve
positive cash flow within 12-18 months. Our cemetery property in St. Louis,
Missouri currently generates significant positive cash flow from operations
and represents the type of relative financial performance we typically would
expect on our other current and future properties. Our cemetery properties
in Kansas City, Missouri and Los Angeles have produced several months of
positive cash performance in 2001 as expected and we anticipate both
properties being able to sustain positive cash flow and contribute to
earnings for the remainder of 2001. We believe that any operating cash
requirements for our cemetery properties will be funded through working
capital on hand or lines of credit. Capital projects at new cemetery
properties for mausoleum/funeral home combination buildings and other
saleable inventory features are expected to be funded through use of cash
generated from pre-construct sales and/or debt financing and should require
little or no additional capital investment. Certain other improvements would
be accomplished and funded through use of existing personnel and working
capital resources and lines of credit.

         We have been investing capital to fund the development and
enhancement of our Internet/technology business plan and our website
www.forevernetwork.com. The Internet/technology operations are currently
running a cash shortfall and may require additional investment capital for a
period of time until revenues can be built to levels necessary to produce
positive cash flow. Margins are expected to be high and overhead relatively
low once Internet and other program sales volumes achieve targeted levels.

         On October 12, 2000 we entered into a letter of intent to purchase
a group of ten cemetery properties in two large mid-western metropolitan
areas. The purchase price and working capital, if agreeable terms are
secured, are expected to be funded largely through owner financing with the
balance to be funded through additional debt arrangements with an outside
lender and/or additional equity financing. As of September 30, 2001, the
parties have been unable to reach agreement on terms of the proposed
purchase and negotiations have been suspended.

         In addition to the properties mentioned earlier (see Note 8 -
Subsequent Events), on September 27, 2001, we entered into a letter of
intent to purchase for cash a single-location cemetery property in the
Midwest. We are in the process of completing our due diligence. If due
diligence proves favorable, the parties expect moving to a definitive
agreement and closing the transaction during the fourth quarter of 2001.

         Our insurance subsidiaries are restricted by state insurance laws
as to the amount of dividends that they may pay to us without prior notice
to, or in some cases prior approval from, their respective state insurance
departments. These restrictions on dividend distributions are based on
statutory capital and surplus and operating earnings. Statutory surplus and
statutory operating results are determined according to statutes adopted by
each state in which the subsidiaries do business. Statutory surplus bears no
direct relationship to equity as determined under accounting principles
generally accepted in the United States. Approximately $380,000 is currently
available for transfer to us by our subsidiaries by dividend, loan, or
advance; however, no such dividend, loan or advance has been declared or
otherwise initiated.

         Our cash requirements for the remainder of 2001 and in the future
will depend upon mortality experience, acquisitions, timing of expansion
plans and capital expenditures. Our insurance subsidiaries generally
generate sufficient cash receipts from premium collections and investment
income to satisfy

                                   - 19 -


<PAGE>

their obligations. We believe that the investment portfolio of our insurance
subsidiaries provides sufficient liquidity to meet their operating cash
requirements. We believe that anticipated revenue from operations should be
adequate for the working capital requirements of our existing businesses
over the next twelve months; however, from time to time, we may need to draw
on existing lines of credit to supplement available working capital.

         In the event that our plans or assumptions change, or if the
resources available to meet unanticipated changes in business conditions
prove to be insufficient to fund operations, we could be required to seek
additional financing prior to that time. That financing may not be available
on favorable terms or at all and we could be required to curtail certain
proposed activities.

         Changes in our consolidated balance sheet between December 31, 2000
and September 30, 2001 reflect growth through operations, changes in the
fair value of actively managed fixed maturity and equity securities, changes
in the investment portfolio mix and changes in our insurance business
strategy. Policyholder loans were essentially unchanged at $1.7 million at
December 31, 2000 and September 30, 2001 due to the absence of new loans.

         Total cash and investments increased $13.1 million from $90.5
million at December 31, 2000 to $103.6 million at September 30, 2001 due to
additional investments made. Changes in the separate components of invested
assets were due to the portfolio mix of our invested assets and changes in
the fair market value of balances in actively managed fixed maturity and
equity securities.

         Future policy benefits increased approximately $6.8 million from
$139.3 million at December 31, 2000 to $146.1 million at September 30, 2001.
This increase was due to the growth of our inforce business.

         Policyholder deposits decreased approximately $2.9 million from
$52.5 million at December 31, 2000 to $49.6 million at September 30, 2001.
The decrease was due to withdrawals and surrenders of existing annuity
policies and the absence of the issuance of new annuity policies.

         Policyholder deposits are comprised primarily of annuities acquired
with the block of business from Woodmen Accident & Life, World Insurance
Company, and Funeral Security Life Insurance Company. These blocks of
annuity policies were ceded in our reinsurance transactions in 2000.

ACCOUNTING STANDARDS

         In July 2001, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 141 ("SFAS 141"),
Business Combinations. SFAS 141 requires the purchase method of accounting
for business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method. We do not believe that the adoption of SFAS 141
will have a significant impact on our financial statements.

         In July 2001, the FASB issued Statement of Financial Accounting
Standards No. 142 ("SFAS 142"), Goodwill and Other Intangible Assets, which
is effective January 1, 2002. SFAS 142 requires, among other things, the
discontinuance of goodwill amortization. In addition, the standard includes
provisions for the reclassification of certain existing recognized
intangibles as goodwill, reassessment of the useful lives of existing
recognized intangibles, reclassification of certain intangibles out of
previously reported goodwill and the identification of reporting units for
purposes of assessing potential future impairments of goodwill. SFAS 142
also requires a company to complete a transitional goodwill impairment test
six months from the date of adoption. We are currently assessing but have not

                                   - 20 -


<PAGE>
<PAGE>

determined the impact of SFAS 142 on our financial position and results
of operations.

         In September 2000, the FASB issued SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities. This statement replaces SFAS No. 125, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, and
rescinds SFAS No. 127, Deferral of Effective Date of Certain Provisions of
FASB Statement No. 125. It revises the standards for accounting for
securitizations and other transfers of financial assets and extinguishments
of liabilities. Those standards are based on consistent application of a
financial-components approach that focuses on control. This statement is
effective for transfers and servicing of financial assets and extinguishments
of liabilities occurring after March 31, 2001. The implementation of SFAS
No. 140 has had no effect on our financial position, results of operations or
cash flows.

         In June 1998, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designed as part
of a hedge transaction, and if it is, the type of hedge transaction. SFAS
No. 133 is effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. We adopted SFAS No. 133 on January 1, 2001, which resulted in
no effect on our financial position, results of operations or cash flows.

         In March 1998, the National Association of Insurance Commissioners
("NAIC") adopted the Codification of Statutory Accounting Principles
("Codification"). The Codification, which is intended to standardize
regulatory accounting and reporting for the insurance industry, was
effective January 1, 2001. However, statutory accounting principles will
continue to be established by individual state laws and permitted practices.
The State of Texas required adoption of the Codification with certain
modifications for the preparation of statutory basis financial statements
effective January 1, 2001. The adoption of the Codification by our insurance
company subsidiaries, Lincoln Memorial Life Insurance Company ("LMLIC") and
Memorial Service Life Insurance Company ("MSLIC"), as modified by Texas,
increased LMLIC's statutory capital and surplus as of January 1, 2001, by
approximately $870,000, primarily related to accounting for income taxes.
There was no effect on MSLIC's capital and surplus.

                                   - 21 -


<PAGE>
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         There have been no material changes from the information provided
in our Annual Report on Form 10-K for the year ended December 31, 2000.



                                   - 22 -



<PAGE>
<PAGE>


PART II. OTHER INFORMATION

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits:

                  None

         (b)      Reports on Form 8-K.

                  On September 10, 2001, we filed a Current Report on Form
         8-K, dated September 7, 2001 (the "Form 8-K"), to report pursuant
         to Item 4 thereof, the engagement of Brown Smith Wallace LLC as our
         independent auditors for the year ending December 31, 2001. We
         filed an amendment on Form 8-K/A, on September 21, 2001, to submit
         to the Securities and Exchange Commission the letter of Deloitte &
         Touche LLP, our independent auditors for the year ending December
         31, 2000, regarding the Item 4 disclosure contained in the Form
         8-K.


                                   - 23 -


<PAGE>
<PAGE>


                                 SIGNATURES


         In accordance with Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                     FOREVER ENTERPRISES, INC.
                                     (Registrant)


Dated: November 13, 2001         By: /s/ Brent D. Cassity
                                     --------------------------------------
                                     Brent D. Cassity, Chief Executive Officer



Dated: November 13, 2001         By: /s/ J. Tyler Cassity
                                     --------------------------------------
                                     J. Tyler Cassity, President



Dated: November 13, 2001         By: /s/ Michael R. Butler
                                     --------------------------------------
                                     Michael R. Butler, Chief Financial Officer


                                   - 24 -