##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q



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

For the quarterly period ended January 31, 2002

OR

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

Commission File Number 0-16448

HOLIDAY RV SUPERSTORES, INC.



I.R.S. # 59-1834763

State of Incorporation: Delaware

200 E. Broward Blvd., Suite 920
Fort Lauderdale, Florida 33301

(954) 522-9903

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 and 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 [XBOX]  NO [BOX}

As of March 8, 2002, Holiday RV Superstores, Inc. had outstanding 9,530,682
shares of Common Stock, par value $.01 per share.

1



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TABLE OF CONTENTS



|                                                  |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Part I                      Financial Information
|                                                  | CONSOLIDATED CONDENSED BALANCE SHEETS                                                        
|                                                  | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                                              
|                                                  | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS                                              
|                                                  | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                         
|                                                  | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                  | ITEM 3: Quantitative And Qualitative Disclosures About Market Risk                           
|PART II                      OTHER INFORMATION   
|                                                  | Item 2. Changes in Securities and Use of Proceeds                                            
|                                                  | Item 6. Reports on Form 8-K                                                                  
|EXHIBIT 3.1                                      
|EXHIBIT 4.1                                      
|EXHIBIT 4.2                                      
|EXHIBIT 10.1                                     
|EXHIBIT 10.2                                     
|EXHIBIT 10.3                                     
|EXHIBIT 10.4                                     
|EXHIBIT 10.5                                     
|EXHIBIT 10.6                                     
|EXHIBIT 10.7                                     
|EXHIBIT 10.8                                     
|EXHIBIT 10.9                                     
|EXHIBIT 10.10                                    
|EXHIBIT 10.11                                    
|EXHIBIT 10.12                                    
|EXHIBIT 10.13                                    
|EXHIBIT 10.14                                    
|EXHIBIT 10.15                                    
|EXHIBIT 10.16                                    



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##### Table of Contents






TABLE OF CONTENTS

|     |  |                                                                                       |  |     
|---- |  | ------------------------------------------------------------------------------------- |  | ----
|Item |  |                                                                                       |  | Page
|     |  |                                                                                       |  |     
|     |  | Part I                                                                                |  |     
|    
|    
|    
|    
|     |  | Financial Information                                                                 |  |     
|    
|    
|    
|    
|1.   |  | Consolidated Condensed Balance Sheets                                                 |  | 3   
|    
|    
|    
|    
|     |  | Consolidated Condensed Statements of Operations                                       |  | 4   
|    
|    
|    
|    
|     |  | Consolidated Condensed Statements of Cash Flows                                       |  | 5   
|    
|    
|    
|    
|     |  | Notes to Consolidated Condensed Financial Statements                                  |  | 7   
|    
|    
|    
|    
|2.   |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 12  
|    
|    
|    
|    
|3.   |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 19  
|    
|    
|    
|    
|     |  | Part II                                                                               |  |     
|    
|    
|    
|    
|     |  | Other Information                                                                     |  |     
|    
|    
|    
|    
|2.   |  | Changes in Securities and Use of Proceeds                                             |  | 20  
|    
|    
|    
|    
|6.   |  | Reports on Form 8-K                                                                   |  | 21  

2



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##### Table of Contents






HOLIDAY RV SUPERSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS

|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |            |            |             |            | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------- | ---------- | ----------- | ---------- | ---------- | ---------- | ----------- | ---------- | 
|                                                                                                                                                                                              |                                                                                                |                           |            | 1/31/2002   |            | 10/31/2001
|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |           
|                                                                                                                                                                                              |                                                                                                |                           |            | (Unaudited) |            |           
|Assets                                                                                                                                                                                        |                                                                                                |                           |            |             |            |            |            |            
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|Current assets:                                                                                                                                                                               |                                                                                                |                           |            |             |            |            |            |            
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Cash and cash equivalents                                                                      |                           | $          | 584,040     |            |            | $          | 93,484      |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Restricted cash and investments                                                                |                           |            | 1,086,055   |            |            |            | 1,131,662   |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Trade accounts receivable                                                                      |                           |            | 660,454     |            |            |            | 1,631,871   |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Other receivables                                                                              |                           |            | 1,209,788   |            |            |            | 989,492     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Inventories, net                                                                               |                           |            | 26,766,637  |            |            |            | 34,363,637  |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Prepaid expenses                                                                               |                           |            | 103,146     |            |            |            | 161,709     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Refundable income taxes                                                                        |                           |            | 529,888     |            |            |            | 529,888     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Property held for sale                                                                         |                           |            | 633,468     |            |            |            | 633,468     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Other                                                                                          |                           |            | 107,200     |            |            |            | 124,958     |           
|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |            |            |            
|                                                                                                                                                                                              | Total current assets                                                                           |                           |            | 31,680,676  |            |            |            | 39,660,169  |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|Property and equipment, net                                                                                                                                                                   |                                                                                                |                           | 11,154,929 |             |            |            | 11,339,229 |            
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|Other assets
Goodwill, net of accumulated amortization of $733,835 and $654,273                                                                                                               |                                                                                                |                           | 5,586,094  |             |            |            | 5,665,656  |            
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Other                                                                                          |                           |            | 201,748     |            |            |            | 229,399     |           
|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |            |            |            
|                                                                                                                                                                                              |                                                                                                | Total
assets              |            | $           | 48,623,447 |            |            | $           | 56,894,453 | 
|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |            |            |            
|Liabilities,
Mandatorily Redeemable Convertible Preferred Stock and Shareholders Equity                                                                                                      |                                                                                                |                           |            |             |            |            |            |            
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|Current liabilities:                                                                                                                                                                          |                                                                                                |                           |            |             |            |            |            |            
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Floor plan notes payable                                                                       |                           | $          | 24,156,875  |            |            | $          | 31,034,172  |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Accounts payable                                                                               |                           |            | 2,201,888   |            |            |            | 2,131,754   |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Customer deposits                                                                              |                           |            | 76,723      |            |            |            | 142,962     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Accrued expenses and other current liabilities                                                 |                           |            | 2,433,499   |            |            |            | 3,875,897   |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Current portion deferred finance and insurance income                                          |                           |            | 1,479,332   |            |            |            | 1,501,519   |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Current portion of capital lease obligation                                                    |                           |            | 103,581     |            |            |            | 126,015     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Current portion of LIFO tax liability                                                          |                           |            | 333,935     |            |            |            | 333,935     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Current portion of mortgages payable                                                           |                           |            | 142,605     |            |            |            | 198,412     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Current portion of notes payable                                                               |                           |            | 1,383,910   |            |            |            | 1,662,923   |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Current portion of deferred gain on leaseback transaction                                      |                           |            | 36,471      |            |            |            | 48,624      |           
|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |            |            |            
|                                                                                                                                                                                              |                                                                                                | Total current liabilities |            |             | 32,348,819 |            |            |             | 41,056,213 | 
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Long-term capital lease obligation, less current portion                                       |                           |            | 123,177     |            |            |            | 123,177     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | LIFO tax liability, less current portion                                                       |                           |            | 333,935     |            |            |            | 333,935     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Long-term mortgages payable, less current portion                                              |                           |            | 6,787,776   |            |            |            | 6,787,776   |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Long-term notes payable, less current portion                                                  |                           |            | 500,000     |            |            |            | 500,000     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Deferred gain on leaseback transaction, less current portion                                   |                           |            | 376,858     |            |            |            | 376,858     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Long-term deferred finance and insurance income                                                |                           |            | 767,255     |            |            |            | 855,355     |           
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Series
A common stock warrant                                                                  |                           |            | 500,000     |            |            |            |            |           
|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |            |            |            
|                                                                                                                                                                                              | Total liabilities                                                                              |                           |            | 41,737,820  |            |            |            | 50,033,314  |           
|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |            |            |            
|Commitments and Contingencies                                                                                                                                                                 |                                                                                                |                           |            |             |            |            |            |            
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|Mandatorily Redeemable Convertible Series A Preferred Stock $.01 par value; shares
authorized 2,000,000;
issued and outstanding 20,000 shares at January 31, 2002
stated at liquidation value |                                                                                                |                           | 2,512,500  |             |            |            |           |            
|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |            |            |            
|Shareholders
equity                                                                                                                                                                         
|Common stock, $.01 par, shares authorized 23,000,000; issued 9,831,382 and 9,352,000                                                                                                          |                                                                                                |                           | 98,314     |             |            |            | 93,520     |            
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Additional paid-in capital                                                                     |                           |            | 14,918,227  |            |            |            | (10,101,759 | )         
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Accumulated Deficit                                                                            |                           |            | (10,101,759 | )          |            |            | (6,320,834  | )         
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                             
|                                                                                                                                                                                              | Treasury stock, 300,700 shares at cost                                                         |                           |            | (541,655    | )          |            |            | (541,655    | )         
|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |            |            |            
|                                                                                                                                                                                              | Total shareholders equity                                                                     |                           |            | 4,373,127   |            |            |            | 6,861,139   |           
|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |            |            |            
|                                                                                                                                                                                              | Total liabilities, mandatorily redeemable convertible preferred stock and shareholders equity |                           | $          | 48,623,447  |            |            | $          | 56,894,453  |           
|                                                                                                                                                                                              |                                                                                                |                           |            |             |            |            |            |            

See accompanying notes to condensed consolidated financial statements.

3



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##### Table of Contents






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

|                                                                                       |                              |   |            |                    |   |           |            |            |   | 
|-------------------------------------------------------------------------------------- | ---------------------------- | - | ---------- | ------------------ | - | --------- | ---------- | ---------- | - | 
|                                                                                       |                              |   |            | THREE MONTHS ENDED
|                                                                                       |                              |   |            |                   
|                                                                                       |                              |   |            | 01/31/02           |   | 01/31/01 
|                                                                                       |                              |   |            | Unaudited          |   | Unaudited
|                                                                                       |                              |   |            |                    |   |          
|Sales and service revenue                                                              |                              | $ | 18,417,909 |                    |   | $         | 33,342,164 |           
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Cost of sales and service                                                              |                              |   | 14,683,081 |                    |   |           | 28,031,735 |           
|                                                                                       |                              |   |            |                    |   |           |            |           
|                                                                                       | Gross profit                 |   |            | 3,734,828          |   |           |            | 5,310,429  |  
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Selling, general and administrative expenses                                           |                              |   | 4,604,482  |                    |   |           | 7,042,190  |           
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Marketing
expense (see Note 4)                                                         |                              |   | 2,000,000  |                    |   |           |           |           
|                                                                                       |                              |   |            |                    |   |           |            |           
|                                                                                       | Loss from operations         |   |            | (2,869,654         | ) |           |            | (1,731,761 | )
|                                                                                       |                              |   |            |                    |   |           |            |           
|Other income (expense):                                                                |                              |   |            |                    |   |           |            |           
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Interest expense             |   |            | (743,487           | ) |           |            | (1,410,018 | )
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Note conversion expense      |   |            | (167,784           | ) |           |            |           |  
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       |                              |   |            |                    |   |           |            |           
|                                                                                       | Total other income (expense) |   |            | (911,271           | ) |           |            | (1,410,018 | )
|                                                                                       |                              |   |            |                    |   |           |            |           
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Loss before income tax benefit and cumulative effect of change in accounting principle |                              |   | (3,780,925 | )                  |   |           | (3,141,779 | )         
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Income tax benefit                                                                     |                              |   |           |                    |   |           | (380,836   | )         
|                                                                                       |                              |   |            |                    |   |           |            |           
|Net loss before cumulative effect of change in accounting principle                    |                              |   | (3,780,925 | )                  |   |           | (2,760,943 | )         
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Cumulative effect as of November 1, 2000 related to the
implementation of SAB 101      |                              |   |           |                    |   |           | (2,189,271 | )         
|                                                                                       |                              |   |            |                    |   |           |            |           
|Net Loss                                                                               |                              |   | (3,780,925 | )                  |   |           | (4,950,214 | )         
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Deemed dividend on redeemable convertible preferred stock                              |                              |   | (627,500   | )                  |   |           |           |           
|                                                                                       |                              |   |            |                    |   |           |            |           
|Net loss available to common stockholders                                              |                              | $ | (4,408,425 | )                  |   | $         | (4,950,214 | )         
|                                                                                       |                              |   |            |                    |   |           |            |           
|Basic and diluted loss per common share:                                               |                              |   |            |                    |   |           |            |           
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Loss before cumulative effect of a change in accounting principal                      |                              | $ | (.47       | )                  |   | $         | (.36       | )         
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Cumulative effect as of November 2000 related to the
implementation of SAB 101         |                              |   |           |                    |   |           | (.29       | )         
|                                                                                       |                              |   |            |                    |   |           |            |           
|Net Loss                                                                               |                              | $ | (.47       | )                  |   | $         | (0.65      | )         
|                                                                                       |                              |   |            |                    |   |           |            |           
|Weighted average number of shares  Basic and diluted                                  |                              |   | 9,357,211  |                    |   |           | 7,639,300  |           
|                                                                                       |                              |   |            |                    |   |           |            |           

See accompanying notes to condensed consolidated financial statements.

4



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##### Table of Contents






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

|                                               |                                                                               |                                                     |         |                    |            |           |           |             |           |  
|---------------------------------------------- | ----------------------------------------------------------------------------- | --------------------------------------------------- | ------- | ------------------ | ---------- | --------- | --------- | ----------- | --------- | -
|                                               |                                                                               |                                                     |         | THREE MONTHS ENDED
|                                               |                                                                               |                                                     |         |                   
|                                               |                                                                               |                                                     |         | 01/31/02           |            | 01/31/01 
|                                               |                                                                               |                                                     |         | Unaudited          |            | Unaudited
|                                               |                                                                               |                                                     |         |                    |            |          
|Cash Flows from Operating Activities:          |                                                                               |                                                     |         |                    |            |           |           |            
|                                              
|                                              
|                                              
|                                              
|                                               | Cash received from customers                                                  |                                                     | $       | 19,207,447         |            |           | $         | 33,761,916  |          
|                                              
|                                              
|                                              
|                                              
|                                               | Cash paid to suppliers and employees                                          |                                                     |         | (19,856,906        | )          |           |           | (30,463,658 | )        
|                                              
|                                              
|                                              
|                                              
|                                               | Interest received                                                             |                                                     |         | 6,331              |            |           |           |            |          
|                                              
|                                              
|                                              
|                                              
|                                               | Interest paid                                                                 |                                                     |         | (749,818           | )          |           |           | (1,485,488  | )        
|                                               |                                                                               |                                                     |         |                    |            |           |           |            
|                                               |                                                                               | Net cash provided by (used in) operating activities |         |                    | (1,392,946 | )         |           |             | 1,812,770 |  
|                                               |                                                                               |                                                     |         |                    |            |           |           |            
|Cash Flows from Investing Activities:          |                                                                               |                                                     |         |                    |            |           |           |            
|                                              
|                                              
|                                              
|                                              
|                                               | Purchase of property and equipment                                            |                                                     |         | (32,522            | )          |           |           | (73,415     | )        
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from the sale of property and equipment                              |                                                     |         | 117,908            |            |           |           | 305         |          
|                                              
|                                              
|                                              
|                                              
|                                               | Restricted cash                                                               |                                                     |         | 45,607             |            |           |           |            |          
|                                               |                                                                               |                                                     |         |                    |            |           |           |            
|                                               |                                                                               | Net cash provided by (used in) investing activities |         |                    | 130,993    |           |           |             | (73,110   | )
|                                               |                                                                               |                                                     |         |                    |            |           |           |            
|Cash Flows from Financing Activities:          |                                                                               |                                                     |         |                    |            |           |           |            
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from notes payable                                                   |                                                     |         |                   |            |           |           | 1,500,000   |          
|                                              
|                                              
|                                              
|                                              
|                                               | Repayment of capital lease obligations                                        |                                                     |         | (22,434            | )          |           |           | (103,123    | )        
|                                              
|                                              
|                                              
|                                              
|                                               | Repayments of notes and mortgages payable                                     |                                                     |         | (325,057           | )          |           |           | (319,537    | )        
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from the issuance of Series A redeemable convertible preferred stock |                                                     |         | 2,000,000          |            |           |           |            |          
|                                              
|                                              
|                                              
|                                              
|                                               | Payment of Series A issuance cost                                             |                                                     |         | (150,000           | )          |           |           |             |          
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from Series B advance                                                |                                                     |         | 250,000            |            |           |           |            |          
|                                               |                                                                               |                                                     |         |                    |            |           |           |            
|                                               |                                                                               | Net cash provided by financing activities           |         |                    | 1,752,509  |           |           |             | 1,077,340 |  
|                                               |                                                                               |                                                     |         |                    |            |           |           |            
|Net increase in Cash and Cash Equivalents      |                                                                               |                                                     | 490,556 |                    |            |           | 2,817,000 |            
|                                              
|                                              
|                                              
|                                              
|Cash and Cash Equivalents, beginning of period |                                                                               |                                                     | 93,484  |                    |            |           | 2,215,352 |            
|                                               |                                                                               |                                                     |         |                    |            |           |           |            
|                                               |                                                                               | Cash and Cash Equivalents, end of period            |         | $                  | 584,040    |           |           | $           | 5,032,352 |  
|                                               |                                                                               |                                                     |         |                    |            |           |           |            

See accompanying notes to condensed consolidated financial statements.

5



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##### Table of Contents



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

|                                                                                  |                                                                                             |                                                                                    |            |                    |            |           |            |   |            |  
|--------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ---------- | ------------------ | ---------- | --------- | ---------- | - | ---------- | -
|                                                                                  |                                                                                             |                                                                                    |            | THREE MONTHS ENDED
|                                                                                  |                                                                                             |                                                                                    |            |                   
|                                                                                  |                                                                                             |                                                                                    |            | 01/31/02           |            | 01/31/01 
|                                                                                  |                                                                                             |                                                                                    |            |                    |            |          
|                                                                                  |                                                                                             |                                                                                    |            | Unaudited          |            | Unaudited
|                                                                                  |                                                                                             |                                                                                    |            |                    |            |          
|RECONCILIATION OF NET LOSS TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |                                                                                             |                                                                                    |            |                    |            |           |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net loss                                                                          |                                                                                             | $                                                                                  | (3,780,925 | )                  |            | $         | (4,950,214 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Adjustments
to reconcile net loss to net cash                                     |                                                                                             |                                                                                    |            |                    |            |           |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Provided by (used in) operating activities:                                       |                                                                                             |                                                                                    |            |                    |            |           |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Depreciation and amortization                                                      |            |                    | 240,007    |           |            |   | 241,401    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Amortization of deferred gain                                                      |            |                    | (12,153    | )         |            |   |           |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Stock option compensation and warrant issuance                                     |            |                    |           |           |            |   | 110,700    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Gain on disposal of property and equipment                                         |            |                    | (61,532    | )         |            |   |           |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Note
conversion expense                                                            |            |                    | 167,784    |           |            |   |           |  
|                                                                                  |                                                                                             | Marketing expense                                                                  |            |                    | 2,000,000  |           |            |   |           |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Cumulative
effect as of November 30, 2000 related to the implementation of
SAB 101 |            |                    |           |           |            |   | 2,189,271  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | (Increases) decreases in:                                                          |            |                    |            |           |            |   |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Contracts in transit                                                               |            |                    |           |           |            |   | 487,926    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Accounts receivable                                                                |            |                    | 827,844    |           |            |   | 433,445    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Refundable income taxes                                                            |            |                    |           |           |            |   | (380,836   | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Inventories                                                                        |            |                    | 7,597,000  |           |            |   | 3,595,527  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Prepaid expenses                                                                   |            |                    | 58,563     |           |            |   | (451,754   | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Other assets                                                                       |            |                    | 45,410     |           |            |   | 326,206    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Increases (decreases) in:                                                          |            |                    |            |           |            |   |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Floor plan contracts                                                               |            |                    | (6,877,297 | )         |            |   | 225,201    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Accounts payable                                                                   |            |                    | 70,134     |           |            |   | 1,548,076  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Customer deposits                                                                  |            |                    | (142,962   | )         |            |   | (379,182   | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                                                             | Accrued expenses and deferred finance and insurance
income                         |            |                    | (1,524,819 | )         |            |   | (1,182,997 | )
|                                                                                  |                                                                                             |                                                                                    |            |                    |            |           |            |  
|Net cash provided by (used in) operating activities                               |                                                                                             | $                                                                                  | (1,392,946 | )                  |            | $         | 1,812,770  |  
|                                                                                  |                                                                                             |                                                                                    |            |                    |            |           |            |  
|Non cash investing and financing activities:                                      |                                                                                             |                                                                                    |            |                    |            |           |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Notes payable and $27,866 of accrued interest converted into
479,382 shares of common stock |                                                                                    | $          | 287,629            |            |           |            |  |           

See accompanying notes to condensed consolidated financial statements.

6



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##### Table of Contents






NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.

The unaudited consolidated condensed financial statements presented herein
have been prepared in accordance with the instructions to Form 10-Q, and do not
include all of the information and disclosures required by generally accepted
accounting principles. These statements should be read in conjunction with the
financial statements and notes thereto included in the Companys Annual Report
on Form 10-K for the year ended October 31, 2001. In the opinion of management,
the accompanying financial statements include all adjustments, consisting only
of normal recurring adjustments and accruals, and inter-company eliminations
necessary to summarize fairly the Companys financial position and results of
operations.

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

As more fully discussed in Note 3, the Companys primary floor plan
agreement entered into in fiscal year 2001 expired on November 30, 2001.
Through March 15, 2002, the Company financed its new and used marine and
vehicle inventory at eight of its locations under a forbearance agreement that
expired March 15, 2002 at which time the parties agreed to amend the expired
agreement essentially under the same terms through October 31, 2002 lowering
the maximum borrowing to $20,000,000. The reduced borrowing level does not
provide the Company sufficient capacity to meet its business plan requirements.
These circumstances raise substantial doubt about the Companys ability to
continue as a going concern. The Company is currently in active negotiations
with another major floor plan lender to provide all of the Companys floor plan
capacity. A satisfactory outcome of this process will result in a new
alternative floor plan agreement to meet its business plan requirements. While
the Company has retained the ability to floor plan its inventory, failure to
come to terms with their alternative floor plan lenders or obtain
sufficient floor plan financing could have a material adverse effect
on the Company and raises substantial doubt about the Companys
ability to continue as a going concern and to achieve its intended
business objectives.

See
also Note 8 discussion on the Nasdaq staff determination received
February 14, 2002, notifying the Company that its securities are
subject to delisting from the Nasdaq National Market, which also
raises substantial doubt about the Companys ability to continue
as a going concern.

Additionally, the Company incurred a net loss of $18.0 million in fiscal
2001 and incurred net cash outflows from operations of approximately $2.5
million in fiscal 2001. Beginning in the second quarter of fiscal 2001,
management focused on inventory management by reducing inventory levels to
allow the Company to effectively and profitably operate within the stocking
levels available under the April 2001 amended primary floor plan agreement.
As of October 31, 2001 the inventory initiative coupled with restrictions
placed on the Companys ability to order new product by its primary floor plan
lender resulted in a 42.7% reduction in the year over year inventory levels
with an additional 23.2% reduction since October 31, 2001. In addition, the
short-term performance and the long-term potential for each retail location
were reviewed together with each dealerships management team. As a result,
three dealerships that were under performing or competing in the same markets were closed
and the market consolidated into other Company dealerships. A fourth dealership
was closed in December 2001. Management believes that with the restructuring of
its dealerships and the focus on managing its inventory to optimum levels and
turns, the continuation of rigid expense control, the infusion of additional
capital and the continued support of its primary floor plan lender under more
favorable terms, improved revenues, profits and cash flows from operations will
result in fiscal year 2002. While management believes that performance will
improve in the remainder of fiscal year 2002, the Company may be required to
obtain additional outside funding to fund operating deficits. Management
further believes that additional financing will be made available to support
the Companys liquidity requirements and that certain costs and expenditures
could be reduced further should any needed additional funding not be available.
Failure to generate sufficient revenues, raise additional capital or continue
to restrain discretionary spending could have a material adverse effect on the
Company and raises substantial doubt about the Companys ability to continue as a going concern and to achieve its intended
business objectives.

Effective November 1, 2000, the Company changed its revenue recognition
policy related to commissions earned by the Company for placing retail
financing contracts with indirect lending institutions in connection with
customer vehicle and marine purchases and customer purchases of credit life
insurance products to defer these commissions until the chargeback period has
lapsed. Also effective November 1, 2000, the Company changed its revenue
recognition policy related to commissions earned on the sale of administrator
obligor extended warranty and service contracts to defer these commissions
until the 100% charge back period has lapsed and to recognize revenue ratably
over the remaining life of the contracts as commissions are earned and not
subject to chargeback. This

7



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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

change was made in accordance with the implementation of the U.S.
Securities and Exchange Commission Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements (SAB 101). The effect of this change is
reported as the cumulative effect of a change in accounting principle in the
year ended October 31, 2001. The net effect reflects the deferral as of
November 1, 2000 of approximately $2.2 million of revenue net of chargebacks
previously recognized. As required by SAB 101, the Company has
restated its previously reported financial statements for the first
quarter of 2001 to include the effects of this accounting change and
apply the provisions of SAB 101 to the quarter.

NOTE 2. Inventories

Inventories are summarized as follows:

|                      |  |           |            |            |  |   |            | 
|--------------------- |  | --------- | ---------- | ---------- |  | - | ---------- | 
|                      |  | 1/31/2002 |            | 10/31/2001
|                      |  |           |            |           
|New Vehicle           |  | $         | 22,577,039 |            |  | $ | 27,279,230 | 
|                     
|                     
|                     
|                     
|New Marine            |  |           | 468,402    |            |  |   | 516,340    | 
|                     
|                     
|                     
|                     
|Used Vehicle & Marine |  |           | 2,297,230  |            |  |   | 5,208,373  | 
|                     
|                     
|                     
|                     
|Parts and accessories |  |           | 1,423,966  |            |  |   | 1,359,694  | 
|                      |  |           |            |            |  |   |            | 
|                      |  | $         | 26,766,637 |            |  | $ | 34,363,637 | 
|                      |  |           |            |            |  |   |            | 

NOTE 3. Floor Plan Contracts

The primary floor plan lender continued the forbearance agreement to amend
and extend the floor plan financing agreement to March 15, 2002 at which time
the parties agreed to amend the expired forbearance agreement essentially under
the same terms through October 31, 2002 lowering the maximum borrowing to
$20,000,000 and adjusting the financial covenants based on the Companys fiscal
2002 business plan. The Company has been charged a loan origination
fee of $200,000 with $50,000 paid at closing, $50,000 paid thirty
days from closing with the remaining $100,000 paid at maturity. Of
the total fees, $100,000 will be waived if the loan is paid in full
before maturity. The adjusted financial covenants are effective March 15,
2002, and the Company expects to meet the covenant requirements through the
term of the agreement. As of January 31, 2002, the Company was not in
compliance with the financial covenants of the floor plan financing agreement
that expired on October 31, 2001 and waivers were not received for the
non-compliance.

The Company has negotiated an arrangement with one of its floor plan
providers that requested to be paid down in February 2001 because of the
Companys less than acceptable performance under its floor plan agreement and
because the provider subsequently exited the business of providing floor plan
financing to RV dealers. The Company is currently paying off the outstanding
balance at January 31, 2002 of $1,833,823, as units are sold and repaying past
due amounts on a mutually agreed schedule. The Company anticipates concluding
the pay down by June 2002.

The
Company continues to negotiate with another major floor
plan lender to provide all of the Companys floor plan capacity or to increase
the amount of floor plan financing available to allow for additional
dealerships to be included under the other major floor plan agreement. There
can be no assurance that the Company will come to terms with its other major
lender under either scenario to obtain sufficient alternative floor plan
financing to meet its business plan requirements.

NOTE 4. Series A Preferred

On January 3, 2002, the Companys Board of Directors authorized the
issuance of up to 35,000 shares of Series A Preferred Stock, of
which 8,807 have been designated Sub-Series A-1 Convertible
Preferred Stock (the Series A-1 Shares) and 26,193
have been designated Sub-Series A-2 Stock (the
Series A-2 Shares, collectively the
Series A Shares). The Series A stockholders are
entitled to dividends at a rate of 10% of the purchase price per
annum, which accrue on a daily basis and are payable in cash each
quarter. If certain specified events of default occur, that dividend
rate increases to 15%. As more fully described below, an event of
default appeared probable based on events occurring in
February 2002. The Series A Shares have identical rights
and preferences, except that the Series A-2 Shares are not
convertible and are nonvoting until stockholder approval is obtained. The Series A Shares
are also entitled to a redemption payment equal to 125% of the
original issuance price plus accrued and unpaid dividends (the
Liquidation Price) upon the
sale or liquidation of the Company or upon an event of default, as
defined.

The Company is required to redeem the Series A
Shares, including any accrued and unpaid dividends, on
December 31, 2007. They have therefore been classified in the
mezzanine in the accompanying balance sheet. Redemption may occur
sooner at the Liquidation Price in the event of a change in control,
as defined in the Certificate of Designation, Rights and Preferences,
a delisting of the Companys common stock, or a failure to honor
a conversion request. On February 14, 2002, the Company was
notified by the Nasdaq National Market that it had failed to comply
with certain listing requirements and was therefore subject to
delisting. Accordingly, the Company has reflected the Series A
Shares at their Liquidation Price as of January 31, 2002.

The Series A
Shares were sold as units consisting of 100 shares of
Series A Preferred Stock and warrants to purchase
5,000 shares of common stock at an exercise price of $.50 per
share. The Company will realize gross proceeds of $3,500,000 if all
of the units are sold. The voting and conversion rights of the
Series A-2 shares are subject to stockholder approval. At the time
of the offering the Company had received written approvals from the
beneficial holders of approximately 72% of its outstanding common
stock. The Company will seek formal approval at its 2002 Annual Meeting of
Stockholders.

The warrants contain certain provisions that may preclude the Company
from settling them in shares at the time they are exercised.
Accordingly, in accordance with EITF Issue No. 00-19, Accounting
for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Companys Own Stock, the Company has classified
those warrants as a liability in the accompanying balance sheet.
Furthermore, those warrants will be remeasured each period with
changes in their fair value reflected in the Companys statement
of operations.

The Series A-1 and Series A-2 Shares are being sold on a pro-rata
basis to investors, up to the maximum of 35,000 Series A Shares
authorized. If the Company does not issue all of the Series A-1
Shares, investors will be entitled to exchange each Series A-2 Share
for Series A-1 Shares on a pro-rata basis until all Series A-1 Shares
have been issued. As of January 31, 2002, the Company had sold 5,033
and 14,967 shares of Series A-1 and Series A-2 Shares, respectively,
for net proceeds of $1,850,000.

In January 2002, the Company issued shares of its Series A Preferred
Stock for $1,500,000 to an investor in connection with a strategic
business relationship. That relationship is described in Note 8. These shares were
also sold as units. The units had a fair value of $3,500,000
at the date of the transaction. In accordance with the consensus in EITF
Issue No. 01-1, Accounting for a Convertible Instrument Granted or
Issued to a Nonemployee for Goods or Services or a Combination of
Goods or Services and Cash, the Company has recorded a charge
equal to the excess of the fair value of the units over the amount
received in cash; that amount has been classified as marketing
expense in the accompanying statement of operations.

In addition, the Company sold 5,000 units to another investor for
gross proceeds of $500,000. Because the Series A-1 Shares that
comprise a part of those units convert to common stock at a
conversion price that was less than the quoted market price of its
common stock on the date of the transaction, the Company has
recorded a beneficial conversion feature equal to the entire proceeds
of that sale. That beneficial conversion feature has been
recognized as a deemed dividend to the Series A shareholders in the
accompanying statement of operations given the probability of default
from the February 2002 Nasdaq delisting notification. A default may require the Company to redeem the Series A-1 Shares.

The Certificate of Designation, Rights and Preferences also provides
for adjustment in the conversion price of the Series A Shares in the event of certain future
events. However, because the Company recorded the maximum beneficial
conversion feature at issuance, no further beneficial conversion will
be recognized if and when those events occur.

8



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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. Series B Preferred

In December 2001 and February 2002 the Company received $250,000,
respectively, as the first and second tranche payments on a proposed investment
of $1,250,000 in Series B Preferred Stock of the Company. The terms are
expected to be essentially identical to the Series A Preferred Stock, except
Series B will be junior in status to

9



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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Series A. Final placement of the Series B
is also subject to final negotiation and completion of definitive
documentation and all authorizations required under applicable law. The
proceeds are expected to be used to repay the Company's 15%
$1,000,000 bridge financing obtained in December 2000. At
January 31, 2002, the $250,000 payment is classified as a
current liability in the current portion of notes payable.

NOTE 6. Bridge Financing

As of January 31, 2002 the Company agreed to convert into 479,382 shares
of common stock, at a per share conversion price of $0.60, $287,629 of the unpaid
balance including accrued interest of $27,866 on certain bridge financing and a
demand loan from an affiliate of a former director and a former
officer/director of the Company. The market price of the Companys common stock
at the conversion date was $0.95. Had the conversion been made at market
price, the Company would have issued 302,767 shares. The incremental shares
issued (176,615) valued at market price is $167,784 and has been recorded as
note conversion expense. The remaining balance of the bridge financing and
demand loan of $128,000 has been assigned by the former
officer/director of the Company to the Companys CEO
in settlement of non-Company obligations between these two related parties. The CEO agreed to
eliminate the interest charge prospectively and to structure a repayment schedule to fit
within the cash flow parameters of the Company. As of
January 31, 2002, the $128,000 is classified as a current
liability.

In January 2002 the Company agreed to restructure the $500,000 6.75%
bridge financing received in August 2001 by converting $250,000 into common
stock, at a future date and per share conversion price to be determined.
Payment of the remaining $250,000 balance plus accrued interest will be due no
later than December 31, 2003. In addition the holder agreed to release the
junior security interest in the Tampa, Florida and Las Cruces, New Mexico
properties.

NOTE 7. Sale of Tampa Property

In January 2002, the Company entered into a contract to sell its Tampa
Florida facility for $1,026,000 subject to buyer due diligence and satisfactory
financing to complete the purchase. The closing is anticipated for early April
2002. The facility is reported on the balance sheet as a property
held for sale at a carrying value of $633,468 at January 31,
2002.

NOTE 8. Subsequent Events

Nasdaq

The Company received a Nasdaq Staff Determination
on February 14, 2002, indicating that the Company failed to
comply with the $15,000,000 minimum market value of publicly held
shares and the $3.00 minimum bid price per share requirements of
Nasdaq Marketplace Rules 4450(b)(3) and 4450(b)(4) and that its
securities are therefore subject to delisting from the Nasdaq
National Market. The Company has 90 days in which to regain
compliance. During that time, the Companys common stock will
continue to trade on the Nasdaq National Market. The Company may
request a hearing before the Nasdaq Listings Qualifications Panel to
review the staff determination or it may apply to transfer its
securities to the Nasdaq SmallCap Market. The Company has not decided
which options to pursue. However, if the Company chooses to appeal
the staff determination, it cannot be assured that the appeal will be
successful, nor can it assure that its securities will be approved
for listing on the Nasdaq SmallCap Market if it applies to transfer.
Since there are no assurances that this request to transfer to Nasdaq
Small Cap Market will be granted, the Series A Preferred Stock has
been reported at the Liquidation Price as of January 31, 2002
(See Note 4).

Endorsement Agreement

In March 2002, the Company entered into an agreement with Affinity Group Inc.,
a company wholly owned by the majority holder of the Series A Preferred Stock. That agreement
grants the Company a non-exclusive right to use their Good Sam name and logo,
including trade names of all of Affinitys service marks in connection with
the sales and service of the Companys products. Under the agreement, Affinity
and the Company agreed to develop a marketing program for certain products and
services offered by Affinity through their Good Sam program. The Company paid
Affinity a one-time fee of $1,500,000 for the license in March 2002. Affinity
has also agreed to lend the Company $1,600,000 for a term of one year at an
interest rate of 20%, payable quarterly, one half of which may be paid in stock
at the discretion of the Company's board of directors. The Company must also pay a
$50,000 origination fee, which is included in the note. Subject to
stockholder
approval, the Company expects to issue a warrant to purchase 1,800,000 shares
of its common stock exercisable at $0.50 per share with a term of five years.

10



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Series AA-2 Preferred Stock

In March 2002, the Companys board of
directors designated a new series of Preferred Stock as
Series AA-2 Preferred Stock and authorized the issuance of
15,000 shares of that series to raise a total of $3,500,000. The
Company entered into a Securities Purchase Agreement under which it
issued and sold shares of Series AA-2 Preferred Stock to an
accredited investor in a private placement in reliance on
Section 4(2) of the Securities Act of 1933 and Rule 506 of
Regulation D. The shares of Series AA-2 Preferred Stock were sold
in units, each of which consisted of 100 shares of
Series AA-2 Preferred Stock and warrants to purchase
5,000 shares of common stock at an exercise price of $.50 per share.

In March
2002, the Company sold 150 units for a purchase price of
$1.5 million to the majority holder of the Series A
Preferred Stock issued in January 2002. The Series AA-2
Preferred Stock that is included in the units has the same preferences, rights, qualifications,
limitations and restrictions as the Series A-2 Shares issued in
January 2002. The shares of Series AA-2 Preferred Stock are
initially convertible at a conversion price of $.50 per share. The
Series AA-2 Preferred Stock will be classified as redeemable
preferred stock in the mezzanine section of the Companys balance
sheet. These units were sold
to an investor in combination with establishing a strategic
relationship between an affiliate of that investor and the
Company. That relationship is described above. Those units had a fair
value of approximately $1,670,000 at the date of the transaction. In
accordance with the consensus in EITF Issue No. 01-1, Accounting
for a Convertible Instrument Granted or Issued to a Nonemployee for
Goods or Services or a Combination of Goods or Services and Cash,
the Company will record a charge equal to the excess of the fair
value of the units over the amount received in cash as marketing expense in their
statement of operations for the period ended March 31, 2002. The
accompanying warrants contain certain provisions that may preclude the Company
from settling them in shares at the time they are exercised.
Accordingly, in accordance with EITF Issue No. 00-19, Accounting
for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Companys Own Stock, the Company will classify
those warrants as a liability in the balance sheet at March 31,
2002. Furthermore, those warrants will be remeasured each period with
changes in their fair value reflected in the Companys statement
of operations.

Job Creation and Workers Assistances Act

On March 9, 2002, the Job Creation and
Worker Assistances Act (H.R. 3090) became effective. The new law makes
numerous changes to the U.S. corporate tax laws. The temporary
extension of the general net operating loss carryback period to five years (from two
years under prior law) for net operating losses arising in taxable years ending
in 2001 and 2002 will have a positive impact on the Company.
Currently, the Company is assessing the valuation allowance recorded
against deferred tax assets to determine the amount of additional NOL
refunds the Company will be eligible to receive under the new law.
As of October 31, 2001, the Company had federal net operating
loss carryforwards of approximately
$7,044,000.

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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements.
These forward-looking statements may generally be identified by introductions
such as outlook for an upcoming period of time, or words and phrases such as
should, expects, hopes, plans, anticipates, projected, believes,
forward-looking (or variants of those words and phrases) or similar language
indicating the expression of an opinion or view concerning the future. Any
forward-looking statements made by or on behalf of the Company are subject to
uncertainties and other factors that could cause actual results to differ
materially from such statements. The uncertainties and other factors include,
but are not limited to, the factors listed in the Companys Annual Report on
Form 10-K for the year ended October 31, 2001 (many of which have been
discussed in prior SEC filings by the Company). Although the Company has
attempted to list the factors it believes to be important to its business, the
Company cautions investors that other factors might prove to be important in
affecting the Companys results of operations. New factors emerge from time to
time and it is not possible for management to predict all such factors, nor can
it assess the impact of each factor on the business or the extent to which any
factor, or combination of factors, may cause actual results to differ
materially from forward-looking statements.

Investors are further cautioned not to place undue reliance on any
forward-looking statements as they speak only of the Companys view as of the
date the statement was made.

General

Holiday RV Superstores, Inc. is a multi-store chain that retails,
finances, and services recreation vehicles, or RVs, and other recreation
vehicles. The Company currently operates 11 retail centers, three in central
and north central Florida, one in Spartanburg, South Carolina, two in
Californias central valley cities of Roseville and Bakersfield, one in Las
Cruces, New Mexico, two in West Virginia, one in Wytheville, Virginia, and one
in Lexington, Kentucky. The Company operates on a fiscal year beginning on the
first day of November and ending on the last day of October. References herein
to Holiday, Recreation USA, we, us or our refer to Holiday RV
Superstores, Inc. and its consolidated subsidiaries unless the context
specifically requires otherwise.

See
discussion in Note 1, Basis of Presentation, and in the
Liquidity and Capital Resources section concerning substantial doubts
about our ability to continue as a going concern.

Our growth depends primarily on our ability to obtain the necessary
capital to support our operations and allow us to successfully execute our
business plan. Key elements of our business plan include opening new stores,
increasing the performance of our existing locations, and, growing through
selective acquisitions in limited circumstances. Our inability to meet our
projected growth potential will adversely impact our business.

Our primary focus in fiscal 2000 was on acquiring well-established RV and
marine dealerships with strong leadership roles in key geographic markets with
strong demographics. We then worked to improve their performance and
profitability by implementing our operating strategies. In fiscal 2001, our
primary strategy focused on integrating the acquired dealerships into our
corporate structure, reducing our inventory turnover rates to comply with
dollar limits imposed by our primary floor plan lender, reducing expenditures
and closing unprofitable locations. Our performance in fiscal 2001 reflected a
reevaluation of our business from all aspects. We believe that structuring our
business to fit within the limitations of our capital resources will position
us to perform at higher levels if the demand for recreational products
increases at the anticipated rate. We intend to add new dealerships by leasing
suitable property in key geographic markets and through co-location
opportunities with strategic partners, but only if we have sufficient working
capital to sustain expansion. We will also consider acquisition opportunities
within our existing markets if we believe they will result in operating and
marketing efficiencies and that the acquisition will immediately add profits to
operations. While we do not anticipate closing any of our current dealerships,
we intend to closely monitor the performance of all locations and close any
that are unprofitable or whose performance does not justify continued
operations.

Our growth also depends on same store growth and maintaining sufficient
working capital to operate each store efficiently. We have experienced a
downturn in sales for the last nineteen months. Beginning in the fourth quarter
of fiscal 2000, there was a downturn in our sales. We believe that the industry
and our markets are poised for recovery and increased sales. We expect our same
store sales growth to follow these industry trends based on the number of

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baby boomers, our target demographic group, reaching their peak earnings
and vacation years during that period. We also believe there is a renewed sense
of national pride and an increased desire to experience the geographic
diversity of the United States. The U.S. Census Bureau confirms the projected
growth of the baby boomers population segment. We believe this group of buyers
and other demographic groups will increasingly use recreational products as a
travel alternative and to enhance the quality of their lives. However, these
trends may not produce the increased sales that we expect.

We launched a national branding strategy in December 1999 to consolidate
and rebrand the various operating names of our subsidiaries under the trade
name Recreation USA. We believe the new trade name better reflects our
corporate identity and solidifies our acquisitions under a single, recognizable
brand that will be memorable with customers. However, we believe there is a
greater potential to capitalize on the brand identity. We intend to evaluate
strategies aimed at achieving a greater value with our geographic market
diversity. Implementing these strategies depends on the continued availability
of cash to advertise and promote our brand.

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

Results of Operations

Results of operations for the three months ended January 31, 2002, compared to
the three months ended January 31, 2001.

Sales
and service revenue decreased 44.7% to $18.4 million for the three
months ended January 31, 2002 from $33.3 million for the three months ended
January 31, 2001. Of this decrease, $3.7 million was attributable to a 17.7%
decrease in same store sales. Net store closures during fiscal 2001 represented
a decrease in revenues of $6.0 million for the three months ended January 31,
2002. In addition, $5.1 million of the decrease is attributable to the store
closure of our Clermont location. This location, which was damaged by fire in
April 2001, is currently under reconstruction and is scheduled to re-open on or
before May 1, 2002. Used vehicle sales as a percentage of total vehicle sales
increased to 34.2% for the three months ended January 31, 2002, compared to
31.1% for the three months ended in January 31, 2001. New RV and marine product
sales decreased for the three months ended January 31, 2002 to $8.4 million, or
45.7% of total RV and marine product sales, from $18.1 million, or 54.7% of
total RV and marine product sales for three months ended January 31, 2001.
Even though management believes that its prior inventory levels were
principally overstocked, new vehicle sales have been adversely affected by the
reduction in available inventory due to our limited floor plan financing.

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



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

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| |   |  | multiple locations. We expect to offset most of the loss of revenue
from the closed locations with increased revenue and profits from
stores remaining in the same general market of each closed dealership
once our financial position is stabilized through additional capital
and increased floor plan availability.                                                                                                                                                                                                                        
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Financial constraints.Our ability to maintain what we believe
is a desirable mix between new and used products has been hampered by
reductions in our available floor plan credit line and the time
required to sell aged inventory, which is not eligible for floor plan
funding, and overstocked inventory. In addition, we have had
insufficient capital to satisfy all of our working capital
requirements. This dramatically limits our ability to meet our
business objectives and fully exploit our markets in any economic
environment.

Parts and services revenue decreased $1.0 million, or 27.8%, to
approximately $2.6 million for the three months ended January 31, 2002 from
$3.6 million for the three months ended January 31, 2001. While same store
sales increased $0.1 million, or 3.4%, this was affected by a decrease of $1.4
million due to net store closures made in fiscal 2001 and our Clermont store
not being operational while under reconstruction from fire damage sustained in
April 2001.

Net revenue from finance and insurance products and other sources remained
unchanged from the prior year comparable quarter at $1.1 million for the three
months ended January 31, 2002. However, for same stores sales for the three
months ended January 31, 2001, we experienced a decrease of 30.4% or $0.2
million, which is directly related to our decrease in new and used RV and
marine product sales. Effective November 1, 2000, we changed our revenue
recognition policy by adopting SAB 101, which defers recognizing revenue on
commissions received from placing indirect retail installment contracts with
indirect lenders and fees generated from the sale of credit life insurance.
For the three months ended January 31, 2002, we recognized earned revenue from
this change in the amount of $0.4 million, which was partially offset by the
decrease in revenue from our net store closures of $0.1 million.

Total
gross profit decreased $1.6 million, or 29.7%, for the three months
ended January 31, 2002 from $5.2 million for the three months ended January 31,
2001, primarily due to a 18.8% decrease in same store gross profit with the
remainder attributable to lost volume from store closures made in fiscal 2001
and our out of service Clermont location under reconstruction from fire damage
sustained April 2001. However, gross margin as a percent of sales increased to
20.3% from 15.9% with RV and marine sales generated from existing inventory as
our ability to purchase new units has been restricted as we renegotiate our
floor plan arrangement with our primary floor plan lender.

Parts and services gross profit decreased $.5 million, or 26.3%, to $1.4
million from $1.9 million in the three months ended January 31, 2001. Same
store gross profit increased $0.2 million, or 6.4%, with the remainder offset
by $0.3 million from net store closures made in fiscal 2001 and $0.3 million
attributable to our Clermont location, which was damaged by fire in April 2001.

Net revenue from finance and insurance and other products contributed 20%
of total gross profit in fiscal 2002 compared to 17.3% in fiscal 2001.

Selling, general and administrative expenses decreased 34.3%, or
approximately $2.4 million for the three months ended January 31, 2002, to $4.6
million from $7.0 million for the three months ended January 31, 2001. On a
same store basis, selling, general and administrative expenses decreased $1.2
million, or 26.5%, to $3.3 million in the three months ended January 31, 2002
compared to $4.5 million in the three months ended January 31, 2001.

Store closures represent expense of $0.4 million in the three months ended
January 31, 2002 compared to $1.1 million for the three months ended January
31, 2001. Personnel expenses decreased 35.0% or approximately $1.4 million,
for the three months ended January 31, 2002 and represented 56.5% of expenses
for the three months ended January 31, 2002, compared to 57.1% for the three
months ended January 31, 2001 the result of head count reduction. Total
selling, general and administrative expenses as a percent of revenue increased
to 25.0% from 21.2% due to decreased revenue for the three months ended January
31, 2002.

The
marketing expense of $2,000,000 represents
the difference between the fair value of the units sold to a
potential business partner (see Note 4 to the condensed consolidated
financial statements). The charge reflects the fact that on the
date of the issuances of these shares, a company
controlled by the majority holder of the Series A Preferred
Stock was in discussions with the Company to develop a business
relationship. Subsequently, the Company and Affinity Group signed the
Endorsement Agreement.

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Loss
from operations for the three months ended January 31, 2002 was $2.9
million, approximately $1.2 million more than the three months ended January
31, 2001 loss from operations. This was primarily the result of the activities
described above.

Interest expense decreased 50% to $0.7 million for the three months ended
January 31, 2002 from $1.4 million for the three months ended January 31, 2001.
The decrease was primarily due to reductions in floor plan financing as a
result of decreased inventory levels, despite an increase in our floor plan
interest rates.

Note conversion expense of $167,784 for the three months ended January 31,
2002, is the result of converting $287,629 of a certain bridge financing and a
demand loan including accrued interest from an affiliate of a former director
and a former officer/director of the Company at a per share conversion price of
$0.60. The market price of the Companys common stock at the conversion date
was $0.95. The Company issued 479,382 shares under the terms of the
conversion. Only 302,767 shares would have been issued at the market price.
The market value of the additional 176,615 shares issued are recorded as a
non-cash note conversion expense

An income tax benefit of $0.4 million was recorded for the three months
ended January 31, 2001. No tax benefits were recorded for the three months
ended January 31, 2002 due to the uncertainty of future
utilization. However, in the second quarter of fiscal 2002, we expect
to adjust the valuation allowance recorded against deferred tax
assets reflecting the amount of additional net operating loss carryback refunds
generated from our net operating loss for the year ended
October 31, 2001 that we will be eligible to receive under the
new Job Creation and Worker Assistance Act.

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

Liquidity And Capital Resources

Our cash needs are primarily to support operations, including non-floored
inventory for resale. Historically, we have met our cash needs with cash on
hand or occasional borrowings from former affiliates of our directors or
officers, and other non-affiliated third parties, in the form of bridge
financing. We intend to limit our use of this source of funding in the future
because the terms and expense of this type of short term lending do not fit
within our financing strategy. Our new and used inventories are financed by
floor plan credit facilities, which were significantly reduced in fiscal 2001
and are currently being renegotiated.

Cash flows from operations.During the three months ended January 31,
2002, we had deficit cash flows from operations of approximately $1.4 million,
compared to positive cash flows from operations of $1.8 million in the same period in the prior year. This
reversal in cash flows from operations is due primarily to the lack
of new inventory to generate sufficient sales to meet our business plan
and fund operations.

Cash flows from investing.Investing activities for the three months
ended January 31, 2002 provided net cash of $0.1 million as compared to a $0.07
million net use of cash for the same period in the prior year. In the three
months ended January 31, 2002, we generated cash from investing activities from
fixed asset sales and the return of a portion of our restricted cash.

Cash flows from financing.Financing activities for the three months
ended January 31, 2002 provided net cash of $1.8 million as compared to $1.1
million for the same period in the prior year. The increase in the three
months ended January 31, 2002 was primarily due to the sale of Series A
Convertible Preferred Stock for net proceeds of approximately $1.8 million.

Net cash provided from all activities was $0.5 million, which increased
our cash and cash equivalents to $0.6 million from $0.1 million at October 31,
2001.

Working capital.Working capital decreased to a deficiency of $(0.7)
million at January 31, 2002 from $8.0 million as of January 31, 2001, primarily
due to the net operating losses realized throughout fiscal 2001, a decrease in
accounts payable, an increase in the deferral of revenue recognition and a
reduction in inventory at reduced margins.

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Capital expenditures.Generally, all major capital projects are
discretionary in nature and no material commitments currently exist. Any
capital expenditures will be funded from additional debt or equity sources.

Principal long-term commitments.As of January 31, 2002, our principal
long-term commitments consist of operating leases and notes payable.

Our recovery and growth strategies depend upon obtaining adequate
financing to cover operational needs and ultimately establish additional RV and
marine dealerships.

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

Our floor plan agreement with our primary lender expired on October 31,
2002. Subsequently, we continued to negotiate a new agreement, executing a
forbearance and amendment to the expired agreement through January 23, 2002
while negotiations continued. The primary floor plan lender continued the
forbearance to March 15, 2002 at which time the parties executed an amendment
to the expired agreement essentially under the same terms, lowering the maximum
borrowing to $20,000,000 and adjusting the financial covenants based on the
Companys fiscal 2002 business plan. As of January 31,
2002, we were not in compliance with the financial covenants of the
floor plan financing agreement that expired on October 31, 2001
and waivers were not received for the non-compliance.

We also negotiated an arrangement with another floor plan provider that
requested payment of the unpaid balance under its floor plan agreement in late
fiscal 2000 because of our poor performance and because it was no longer
providing floor plan financing to RV dealers. We are currently paying off the
outstanding balance, which was $1,833,823 at January 31, 2002, through the sale
of units included in the floor plan. We anticipate repaying past due amounts on
a mutually agreed schedule concluding in June 2002.

We are currently in discussions with another floor plan lender to
consolidate all of our floor plan lending into one source and to increase the
amount of floor plan financing available to us. This will allow for both
continued support of our existing operations and future expansion to meet our
business plan objectives. However, we may not be able to obtain sufficient
alternative floor plan financing to meet our business plan requirements.

Going Concern.There is continued uncertainty regarding the status of our
arrangement with our primary floor plan lender and our ability to obtain
sufficient alternative floor plan financing to meet our business needs in the
remainder of fiscal year 2002. We also incurred net losses of $18 million and
$3.2 million in fiscal 2001 and 2000, respectively, and incurred net cash
outflows from operations of approximately $2.5 million and $0.6 million,
respectively. These circumstances raise substantial doubt about our ability to
continue as a going concern. While management believes that operating
performance will improve in the remainder of fiscal year 2002, we may require
additional funding to cover operating deficits. Management further believes
that additional financing will be made available to support our liquidity
requirements and that certain costs and expenditures could be reduced further
should any needed additional funding not be available. Failure to generate
sufficient revenues, raise additional capital or continue to restrain
discretionary spending could have a material adverse effect on our ability to
continue as a going concern and to achieve its intended business objectives.

Inflation.If inflation occurs in the general economy, the cost of our
inventory could increase and interest rates paid by our customers or us could
increase. We believe that increases in the cost of new RVs and marine products
purchased from our manufacturers can generally be passed on to consumers,
although there may be a lag in our ability to pass such increases on to our
customers.

Historically, increases in operating costs are passed on to the consumer
when the market allows. We believe that our business has not been significantly
affected by past inflation, despite increased chassis and manufacturer
conversion costs. However, significant increases in interest rates may make RVs
less affordable to many potential purchasers. This could materially and
adversely affect purchases of RVs generally and our results of operations.

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Critical Accounting Policies

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

Revenue Recognition

We recognize revenue in accordance U.S. Securities and Exchange Commission
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial
Statements (SAB 101). SAB 101 requires that the following four basic
criteria must be met before revenue can be recognized: (1) persuasive evidence
of an arrangement must exist; (2) delivery must have occurred or services
rendered; (3) the fee must be fixed and determinable; and (4) collectibility
must be reasonably assured. Determinations of criteria are based on
managements judgments regarding the fixed nature of the fee charged for
services rendered and products delivered and the collectibility of those fees.
Should changes in conditions cause management to determine these criteria are
not met for certain future transactions, revenue recognized for any reporting
period could be adversely affected.

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

Impairment of Goodwill

We periodically evaluate the potential impairment of our long-lived
assets, including property and equipment and intangible assets, whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Judgments regarding the existence of impairment indicators
are based on legal factors, market conditions and operational performance of a
location. In fiscal year 2001, we closed two acquired locations and concluded
that the goodwill associated with the closed locations was impaired and charged
approximately $1,500,000 to income. While additional closures of other acquired
locations are not anticipated, future events could cause us to conclude that
impairment indicators exist and that goodwill associated with our acquired
businesses is impaired. Any resulting impairment loss could have a material
adverse impact on our financial condition and results of operations.

SFAS No. 142 requires the use of a non-amortization approach to account
for purchased goodwill and certain intangibles. Under a non-amortization
approach, goodwill and certain intangibles will not be amortized into results
of operations, but instead would be reviewed for impairment and written down
and charged to results of operations only in the periods in which the recorded
value of goodwill and certain intangibles is more than its fair value. SFAS 142
is required to be applied starting with fiscal years beginning after December
15, 2001, with early application permitted in certain circumstances. Currently
management is analyzing the potential impact of this pronouncement and has not
determined the effect, if any, on the financial statements.

Inventory Valuation

We record the purchase of used RV and marine products based on the cost to
acquire the units. Trade-ins are recorded at their actual market value at the
time the trade-in is received on a unit sold. Periodically, used inventory
units are reviewed and compared to the N.A.D.A. Recreation Vehicle Appraisal
Guide or other wholesale auction values to determine whether market declines
have occurred since the unit was placed into inventory. For any unit whose
book value is greater than the indicative market value, the carrying cost is
adjusted as required to properly value it at the lower of cost or market. If used units are not properly
valued at trade-in, overpaid for when purchased outright or not sold in a
reasonable time period, the used inventory may devalue and, accordingly,
write-downs will be required. Overstocked conditions attributable to a number
of factors and general economic conditions could also cause inventory
write-downs. Failure to properly manage both new and used RV and marine
products could result in inventory write-down adjustments that could, in turn,
have a material adverse impact on our financial condition and results of
operations.

Equity-Based Compensation

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

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The
Company's obligations and commitments to make future payments under
contracts consist principally of the Company's floor plan financing
(discussed in Note 3 to this Form 10Q), long-term mortgages
payable (discussed in Note 5 to the 2001 financial statements in
the Company's Annual Report on Form 10-K) and capital and
operating lease commitments (discussed in Note 13 to the 2001
financial statements in the Company's Annual Report on
Form 10-K). The Company's contingent commitments are discussed
in Note 15 to the 2001 financial statements in the Company's
Annual Report on Form 10-K. Any material changes to the
Company's obligations and commitments through January 31, 2002
have been disclosed elsewhere in this Form 10-Q.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, Business Combinations (SFAS 141) and
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS 142). SFAS No. 141 requires business combinations
initiated after June 30, 2001 to be accounted for using the purchase method of
accounting, and broadens the criteria for recording intangible assets separate
from goodwill. Recorded goodwill and intangibles will be evaluated against that
new criteria and may result in certain intangibles being subsumed into
goodwill, or alternatively, amounts initially recorded as goodwill may be
separately identified and recognized apart from goodwill. SFAS No. 142 requires
the use of a non-amortization approach to account for purchased goodwill and
certain intangibles. Under a non-amortization approach, goodwill and certain
intangibles will not be amortized into results of operations, but instead would
be reviewed for impairment and written down and charged to results of
operations only in the periods in which the recorded value of goodwill and
certain intangibles is more than its fair value. SFAS 142 is required to be
applied starting with fiscal years beginning after December 15, 2001, with
early application permitted in certain circumstances. Currently management is
analyzing the potential impact of this pronouncement and has not determined the
effect, if any, on the financial statements.

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

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

18



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##### Table of Contents






ITEM 3: Quantitative And Qualitative Disclosures About Market Risk

Foreign Exchange.To date, our revenue from operations have exclusively
been denominated in United States dollars. The recreational vehicle and boat
products that we have sold to date have been priced in United States dollars
and all our sales in fiscal years 2000, 2001 and 2002 have been denominated in
United States dollars. In the future, we may acquire recreational vehicle or
boat products that are priced in currencies other than the United States dollar
and we may expand sales operations outside the United States. If either of
these events occurs, fluctuations in the values of the respective currencies in
which we purchase or sell our products could adversely affect us. Due to the
constantly changing currency exposures and the volatility of currency exchange
rates, there can be no assurance that we would not experience currency losses
in the future, nor can we predict the effect of exchange rate fluctuations upon
future operating results. If we conduct transactions in currencies other than
the United States dollar, management intends to carefully evaluate its currency
management policies. If management deems it appropriate, we may consider
hedging a portion of a currency exposure in the future.

Interest Rates: We invest our surplus cash in financial instruments
consisting principally of overnight bank repurchase agreements with fixed rates
of interest. Investments in both fixed rate and floating rate interest earning
instruments carry a degree of interest rate risk. Fixed rate securities may
have their fair market value adversely impacted due to a rise in interest
rates, while floating rate securities may produce less income than expected if
interest rates fall. Our overnight repurchase investments have some of the
characteristics of floating rate securities, since the rates are subject to
change each business day. Due in part to these factors, our future investment
income may fall short of expectations due to changes in interest rates. If in
the future we invest in longer-term fixed rate investments we may suffer losses
in principal if forced to sell securities that have seen a decline in market
value due to changes in interest rates. We may also face interest rate risk
exposure in connection with debt issued in connection with our acquisition
strategy.

We have variable floor plan notes payable that subjects us to market risk
exposure. At January 31, 2002, the Company had a maximum of $35.2 million
available under floor plan contracts with $24.0 million outstanding. During
the three months ended January 31, 2002, the maximum floor plan amount
outstanding at any month end was $31.8 million and the average floor plan
outstanding for the three months ended January 31, 2002 was $26.1 million. The
weighted average interest during the three months ended January 31, 2002 was
7.9%. A hypothetical increase or decrease in the floor plan interest of 10%
would impact operations annually by approximately $206,000. This is based on
the assumption that our inventory and debt levels remain the same for the year.

19



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##### Table of Contents






PART II

OTHER INFORMATION

There is no information to report under Items 1, 3, 4 or 5 of Part II of this report.




Item 2. Changes in Securities and Use of Proceeds

Recent Sales of Unregistered Securities

In January 2002, we sold 200 units of our securities for a total of $2
million. Each unit consisted of 100 shares of Series A Preferred Stock and a
warrant to purchase 5,000 shares of common stock. The units were sold to
accredited investors in a private placement in reliance on Section 4(2) and
Rule 506 of the Securities Exchange Act of 1934, as amended (the Exchange
Act).

In March 2002, we sold 150 units of our securities for a total of $1.5
million. Each unit consisted of 100 shares of Series AA-2 Preferred Stock and a
warrant to purchase 5,000 shares of common stock. The units were sold to an
accredited investor in a private placement in reliance on Section 4(2) and Rule
506 of the Exchange Act.

20



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##### Table of Contents






Item 6. Reports on Form 8-K



|1. |  | Current Report on Form 8-K dated January 7, 2002 filed with the
Securities and Exchange Commission on January 11, 2002.   
|-- |  | --------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Current Report on Form 8-K dated February 14, 2002 filed with the
Securities and Exchange Commission on February 26, 2002.

Exhibits

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                        
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                        
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                        
|3.1     |  | Certificate of Designation, Rights and Preferences of the
Series AA-2 Preferred Stock of Holiday RV Superstores, Inc.                                                                                                                                                                                                                                                                                  
|       
|       
|       
|       
|4.1     |  | Form of Warrant dated as of March 12, 2002 issued to AGHI
Finance Co, LLC                                                                                                                                                                                                                                                                                                                              
|       
|       
|       
|       
|4.2     |  | Form of Warrant dated March 18, 2002 issued to The Stephen
Adams Living Trust UTA dated September 15, 1997.                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|10.1    |  | Securities Purchase Agreement dated March 18, 2002 between the
Purchasers set forth on Schedule I thereto and Holiday RV
Superstores, Inc.                                                                                                                                                                                                                                                             
|       
|       
|       
|       
|10.2    |  | Registration Rights Agreement dated March 18, 2002 between the
investors identified on the signature pages thereto and
Holiday RV Superstores, Inc.                                                                                                                                                                                                                                                    
|       
|       
|       
|       
|10.3    |  | Registration Rights Agreement dated as of March 12, 2002 by
and between AGHI Finance Co, LLC and Holiday RV Superstores,
Inc.                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.4    |  | Loan and Security Agreement dated March 12, 2002 among AGHI
Finance Co, LLC and Holiday RV Superstores, Inc.                                                                                                                                                                                                                                                                                           
|       
|       
|       
|       
|10.5    |  | Secured Promissory Note dated March 20, 2002 from Holiday RV
Superstores, Inc., as borrower to AGHI Finance Co, LLC, as
payee in the original principal amount of $1,600,000.                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.6    |  | Form of Guaranty dated March 12, 2002 from each of Holiday RV
Superstores of South Carolina, Inc., Holiday RV Superstores
West, Inc., Holiday RV Superstores of New Mexico, Inc.,
Holiday RV Assurance Service, Inc., County Line Select Cars,
Inc., Little Valley Auto and RV Sales, Inc., Hall Enterprises,
Inc. and Recreation USA Insurance Corporation in favor of AGHI
Finance Co, LLC.          
|       
|       
|       
|       
|10.7    |  | Form of Security Agreement dated March 12, 2002 from each of
Holiday RV Superstores of South Carolina, Inc., Holiday RV
Superstores West, Inc., Holiday RV Superstores of New Mexico,
Inc., Holiday RV Assurance Service, Inc., County Line Select
Cars, Inc., Little Valley Auto and RV Sales, Inc., Hall
Enterprises, Inc. and Recreation USA Insurance Corporation in
favor of AGHI Finance Co, LLC.
|       
|       
|       
|       
|10.9    |  | Form of Mortgage and Security Agreement dated March 12, 2002
made between Holiday RV Superstores, Inc. and AGHI Finance Co,
LLC for the owned real property located in Clermont, Florida,
Inverness, Florida, Ocala North, Florida, Ocala South, Florida
and Spartanburg, South Carolina.                                                                                                              

21



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##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.8    |  | Form of Leasehold Mortgage and Security Agreement to Secure Guaranty dated March
12, 2002 made between Holiday RV Superstores, Inc. and AGHI
Finance Co, LLC for the lease property in Bakersfield,
California, Roseville, California, Wintergarden, Florida,
Lexington, Kentucky, Prosperity, West Virginia, Ripley West
Virginia, Sanford, Florida, Fort Lauderdale, Florida and Las
Vegas, Nevada.                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|10.10   |  | Trademark Security Agreement dated March 12, 2002 between
Holiday RV Superstores, Inc. and AGHI Finance Co, LLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       
|       
|       
|       
|10.11   |  | Third Amendment to Amended and Restated Loan and Security
Agreement and Forbearance Agreement Extension dated March 15,
2002 among Holiday RV Superstores, Inc. Holiday RV Superstores
of South Carolina, Inc., Holiday RV Superstores West, Inc.,
Holiday RV Superstores of New Mexico, Inc., Holiday RV
Assurance Service, Inc., County Line Select Cars, Inc., Little
Valley Auto and RV Sales, Inc., Hall Enterprises, Inc. and
Recreation USA Insurance Corporation, Holiday RV
Rental/Leasing, Inc. and Holiday RV Assurance Service, Inc.,
F/K/A Holiday RV Assurance Corporation and Banc of America
Specialty Finance, Inc. and Bank of America, N.A.
|       
|       
|       
|       
|10.12   |  | Intercreditor and Subordination Agreement dated March 15, 2002
among AGHI Finance Co, LLC, Holiday RV Superstores, Inc., Banc
of America Specialty Finance, Inc. and Bank of America, N.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       
|       
|       
|       
|10.13   |  | Endorsement Agreement dated March 20, 2002 between Holiday RV
Superstores, Inc. and Affinity Group, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       
|       
|       
|       
|10.14   |  | Right of First Refusal dated March [ ], 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       
|       
|       
|       
|10.15   |  | Right of First Refusal dated March [ ], 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       
|       
|       
|       
|10.16   |  | Lease agreement dated November 12, 2001 between Century
Partnership, Ltd and Holiday RV Superstores, of Nevada, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

22



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##### Table of Contents



Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|               |  |                                                                     
|-------------- |  | --------------------------------------------------------------------
|Date           |  | HOLIDAY RV SUPERSTORES, INC.                                        
|               |  |                                                                     
|               |  |                                                                     
|
|              
|              
|              
|              
|April 11, 2002 |  | /s/ Marcus A. Lemonis                                               
|               |  |                                                                     
|               |  | Chairman of the Board and Chief Executive Officer                   
|               |  |                                                                     
|               |  |                                                                     
|              
|              
|              
|              
|April 11, 2002 |  | /s/ Casey L. Gunnell                                                
|               |  |                                                                     
|               |  | President and Chief Financial Officer (Principal Accounting
Officer)

23



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##### Table of Contents



EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                        
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                        
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                        
|3.1     |  | Certificate of Designation, Rights and Preferences of the
Series AA-2 Preferred Stock of Holiday RV Superstores, Inc.                                                                                                                                                                                                                                                                                  
|       
|       
|       
|       
|4.1     |  | Form of Warrant dated as of March 12, 2002 issued to AGHI
Finance Co, LLC                                                                                                                                                                                                                                                                                                                              
|       
|       
|       
|       
|4.2     |  | Form of Warrant dated March 18, 2002 issued to The Stephen
Adams Living Trust UTA dated September 15, 1997.                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|10.1    |  | Securities Purchase Agreement dated March 18, 2002 between the
Purchasers set forth on Schedule I thereto and Holiday RV
Superstores, Inc.                                                                                                                                                                                                                                                             
|       
|       
|       
|       
|10.2    |  | Registration Rights Agreement dated March 18, 2002 between the
investors identified on the signature pages thereto and
Holiday RV Superstores, Inc.                                                                                                                                                                                                                                                    
|       
|       
|       
|       
|10.3    |  | Registration Rights Agreement dated as of March 12, 2002 by
and between AGHI Finance Co, LLC and Holiday RV Superstores,
Inc.                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.4    |  | Loan and Security Agreement dated March 12, 2002 among AGHI
Finance Co, LLC and Holiday RV Superstores, Inc.                                                                                                                                                                                                                                                                                           
|       
|       
|       
|       
|10.5    |  | Secured Promissory Note dated March 20, 2002 from Holiday RV
Superstores, Inc., as borrower to AGHI Finance Co, LLC, as
payee in the original principal amount of $1,600,000.                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.6    |  | Form of Guaranty dated March 12, 2002 from each of Holiday RV
Superstores of South Carolina, Inc., Holiday RV Superstores
West, Inc., Holiday RV Superstores of New Mexico, Inc.,
Holiday RV Assurance Service, Inc., County Line Select Cars,
Inc., Little Valley Auto and RV Sales, Inc., Hall Enterprises,
Inc. and Recreation USA Insurance Corporation in favor of AGHI
Finance Co, LLC.          
|       
|       
|       
|       
|10.7    |  | Form of Security Agreement dated March 12, 2002 from each of
Holiday RV Superstores of South Carolina, Inc., Holiday RV
Superstores West, Inc., Holiday RV Superstores of New Mexico,
Inc., Holiday RV Assurance Service, Inc., County Line Select
Cars, Inc., Little Valley Auto and RV Sales, Inc., Hall
Enterprises, Inc. and Recreation USA Insurance Corporation in
favor of AGHI Finance Co, LLC.
|       
|       
|       
|       
|10.8    |  | Form of Leasehold Mortgage and Security Agreement to Secure Guaranty dated March
12, 2002 made between Holiday RV Superstores, Inc. and AGHI
Finance Co, LLC for the lease property in Bakersfield,
California, Roseville, California, Wintergarden, Florida,
Lexington, Kentucky, Prosperity, West Virginia, Ripley West
Virginia, Sanford, Florida, Fort Lauderdale, Florida and Las
Vegas, Nevada.  





---



##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.9    |  | Form of Mortgage and Security Agreement dated March 12, 2002
made between Holiday RV Superstores, Inc. and AGHI Finance Co,
LLC for the owned real property located in Clermont, Florida,
Inverness, Florida, Ocala North, Florida, Ocala South, Florida
and Spartanburg, South Carolina.                                                                                                                                                                                                                                                                                                                                                                     
|       
|       
|       
|       
|10.10   |  | Trademark Security Agreement dated March 12, 2002 between
Holiday RV Superstores, Inc. and AGHI Finance Co, LLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       
|       
|       
|       
|10.11   |  | Third Amendment to Amended and Restated Loan and Security
Agreement and Forbearance Agreement Extension dated March 15,
2002 among Holiday RV Superstores, Inc. Holiday RV Superstores
of South Carolina, Inc., Holiday RV Superstores West, Inc.,
Holiday RV Superstores of New Mexico, Inc., Holiday RV
Assurance Service, Inc., County Line Select Cars, Inc., Little
Valley Auto and RV Sales, Inc., Hall Enterprises, Inc. and
Recreation USA Insurance Corporation, Holiday RV
Rental/Leasing, Inc. and Holiday RV Assurance Service, Inc.,
F/K/A Holiday RV Assurance Corporation and Banc of America
Specialty Finance, Inc. and Bank of America, N.A.
|       
|       
|       
|       
|10.12   |  | Intercreditor and Subordination Agreement dated March 15, 2002
among AGHI Finance Co, LLC, Holiday RV Superstores, Inc., Banc
of America Specialty Finance, Inc. and Bank of America, N.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       
|       
|       
|       
|10.13   |  | Endorsement Agreement dated March 20, 2002 between Holiday RV
Superstores, Inc. and Affinity Group, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       
|       
|       
|       
|10.14   |  | Right of First Refusal dated March [ ], 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       
|       
|       
|       
|10.15   |  | Right of First Refusal dated March [ ], 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       
|       
|       
|       
|10.16   |  | Lease agreement dated November 12, 2001 between Century
Partnership, Ltd and Holiday RV Superstores, of Nevada, Inc.