<PAGE>

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

                                  -----------
                                   FORM 10-Q
                                  -----------


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

                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

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

             FOR THE TRANSITION PERIOD FROM ________ TO ________.

                         Commission File Number 20418

                             KENNEDY-WILSON, INC.
            (Exact name of registrant as specified in its charter)

             Delaware
 (State or other jurisdiction of                       95-4364537
 incorporation or organization)           (I.R.S. Employer Identification No.)

 9601 Wilshire Blvd., Suite 220                           90210
        Beverly Hills, CA                              (Zip Code)
 (Address of principal executive
             offices)

                                 (310) 887-6400
              (Registrant's telephone number, including area code)

                                   -----------

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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common stock, $.01 par value;
8,823,288 shares outstanding at May 13, 2002.

<PAGE>

                             KENNEDY-WILSON, INC.

                    INDEX TO QUARTERLY REPORT ON FORM 10-Q

                                MARCH 31, 2002

                                  -----------


<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                    ----
<S>                                                                                                 <C>
PART I      Financial Information

Item 1.     Financial Statements

            Consolidated Balance Sheets as of March 31, 2002
            (Unaudited) and December 31, 2001                                                          3

            Consolidated Statements of Income for the Three-
            Month Periods ended March 31, 2002 and 2001 (Unaudited)                                    4

            Consolidated Statements of Cash Flow for the Three-
            Month Period ended March 31, 2002 and 2001 (Unaudited)                                     5

            Notes to Consolidated Financial Statements (Unaudited)                                     6

Item 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                                                       10

Item 3.     Quantitative and Qualitative Disclosure about Market Risk                                 13

PART II     Other Information

Item 6.     Exhibits and Reports on Form 8-K                                                          14
</TABLE>

                                       2
<PAGE>

                     Kennedy-Wilson, Inc. and Subsidiaries
                          Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                  March 31,        December 31,
                                                                    2002               2001
                                                                 (Unaudited)
                                                                ------------       ------------
<S>                                                             <C>                <C>
Assets
  Cash and cash equivalents                                     $ 21,972,000       $ 11,121,000
  Cash - restricted                                                  133,000            628,000
  Accounts receivable                                              6,416,000          7,653,000
  Notes receivable                                                14,057,000         15,130,000
  Real estate held for sale                                        5,307,000          4,649,000
  Investments in joint ventures                                   49,327,000         47,124,000
  Contracts and other assets, net                                 20,023,000         19,243,000
  Goodwill, net                                                   23,965,000         23,965,000
                                                                ------------       ------------
Total assets                                                    $141,200,000       $129,513,000
                                                                ============       ============

Liabilities and Stockholders' Equity

Liabilities
  Accounts payable                                              $    674,000       $    484,000
  Accrued expenses and other liabilities                           4,195,000          5,560,000
  Accrued salaries and benefits                                    2,493,000          3,843,000
  Deferred and accrued income taxes                                5,579,000          3,932,000
  Notes payable                                                    8,728,000         10,022,000
  Borrowings under lines of credit                                27,329,000         29,907,000
  Mortgage loans payable                                           1,988,000          1,993,000
  Senior unsecured notes                                          14,342,000         14,286,000
  Subordinated debt                                                7,500,000          7,500,000
                                                                ------------       ------------
    Total liabilities                                             72,828,000         77,527,000
                                                                ------------       ------------

Commitments and contingencies

Minority interest                                                 11,677,000                  -

Stockholders' Equity
Preferred stock, $0.01 par value: 5,000,000
     shares authorized; none issued as of
     March 31, 2002 and December 31, 2001                                  -                  -
Common stock, $0.01 par value: 50,000,000 shares
     authorized; 8,823,288 and 8,789,288 shares
     issued and outstanding as of March 31, 2002
     and December 31, 2001, respectively                              89,000             88,000
Additional paid-in capital                                        47,911,000         47,853,000
Restricted stock - deferred compensation                          (2,603,000)        (2,677,000)
Retained earnings                                                 11,298,000          6,722,000
                                                                ------------       ------------
    Total stockholders' equity                                    56,695,000         51,986,000
                                                                ------------       ------------
Total liabilities and stockholders' equity                      $141,200,000       $129,513,000
                                                                ============       ============
</TABLE>


                See notes to consolidated financial statements.

                                       3
<PAGE>

                     Kennedy-Wilson, Inc. and Subsidiaries
                       Consolidated Statements of Income
                                   UNAUDITED

<TABLE>
<CAPTION>
                                                                 For the three months ended
                                                                         March 31,
                                                             ----------------------------------
                                                                  2002                 2001
                                                             ------------          ------------
<S>                                                          <C>                   <C>
Revenue
  Property management and leasing fees                       $   6,666,000         $  7,947,000
  Commissions                                                    2,807,000            3,684,000
  Sales of residential real estate                                       -            4,533,000
  Equity in income of joint venture investments                    585,000              789,000
  Gain on sale of commercial real estate                                 -              281,000
  Gain on restructured notes receivable                            197,000              246,000
  Interest and other income                                        237,000              201,000
                                                             -------------         ------------
Total revenue                                                   10,492,000           17,681,000
                                                             -------------         ------------


Operating expenses
  Commissions and marketing expenses                             1,127,000            2,017,000
  Cost of residential real estate sold                                   -            4,307,000
  Compensation and related expenses                              5,793,000            6,330,000
  General and administrative                                     3,055,000            2,724,000
  Depreciation and amortization                                    787,000              919,000
  Non-recurring, non-cash Japan IPO expense                      1,100,000                    -
                                                             -------------         ------------
Total operating expenses                                        11,862,000           16,297,000
                                                             -------------         ------------

Total operating income                                          (1,370,000)           1,384,000

Non-operating activity
  Gain on sale of stock of subsidiary                            8,822,000                    -
  Interest expense                                                (547,000)            (763,000)
  Valuation adjustment - warrants                                 (480,000)                   -
                                                             -------------         ------------
Net income before taxes and minority interest                    6,425,000              621,000

Provision for income taxes                                      (1,647,000)            (236,000)
Minority income                                                   (202,000)                   -
                                                             -------------         ------------
Net income                                                   $   4,576,000         $    385,000
                                                             =============         ============

Share data:
Basic net income per share                                   $        0.52         $       0.04
Basic weighted average shares                                    8,794,449            8,694,288

Diluted net income per share                                 $        0.47         $       0.04
Diluted weighted average shares                                  9,804,880            8,920,732
</TABLE>

                See notes to consolidated financial statements.

                                       4
<PAGE>

                     Kennedy-Wilson, Inc. and Subsidiaries
                     Consolidated Statements of Cash Flows
                                   UNAUDITED

<TABLE>
<CAPTION>
                                                                For the three months ended
                                                                          March 31,
                                                              ---------------------------------
                                                                 2002                  2001
                                                              -------------        ------------
<S>                                                          <C>                <C>
Cash flows from operating activities:
Net income                                                    $   4,576,000      $     385,000
Adjustments to reconcile net income to net
  cash used in operating activities:
  Depreciation and amortization                                     787,000            919,000
  Equity in income of joint venture investments                    (585,000)          (789,000)
  Minority interest in income of consolidated subsidiary            202,000                  -
  Compensation expense for restricted stock                          74,000             74,000
  Gain on sale of stock of consolidated subsidiary               (8,822,000)                 -
  Non-recurring Japan IPO expense--non-cash                       1,100,000                  -
  Valuation adjustment-warrants--non-cash                           480,000                  -

Change in assets and liabilities:
  Accounts receivable                                             1,237,000          1,214,000
  Contracts and other assets                                        209,000         (1,446,000)
  Accounts payable                                                  190,000           (922,000)
  Accrued expenses                                               (1,068,000)        (5,938,000)
                                                              -------------      -------------
Net cash used in operating activities                            (1,620,000)        (6,503,000)
                                                              -------------      -------------

Cash flows from investing activities:
Purchase of contracts and other assets                           (1,776,000)          (246,000)
Purchase and additions to real estate held for sale                (658,000)        (1,616,000)
Proceeds from sales of real estate held for sale                          -         11,992,000
Additions to notes receivable                                      (655,000)        (2,455,000)
Settlements of notes receivable                                   1,728,000          3,469,000
Distributions from joint ventures                                 2,812,000          1,920,000
Contributions to joint ventures                                  (4,430,000)        (8,200,000)
Proceeds from sale of minority interest of subsidiary, net       18,718,000                  -
Cash - restricted decrease                                          495,000            440,000
                                                              -------------      -------------
Net cash provided by investing activities                        16,234,000          5,304,000
                                                              -------------      -------------

Cash flows from financing activities:
Issuance of mortgage loans payable                                        -          1,731,000
Repayment of mortgage loans payable                                  (5,000)        (3,356,000)
Borrowings under lines of credit                                    985,000         10,035,000
Repayment of lines of credit                                     (3,563,000)        (9,436,000)
Borrowings under notes payable                                    1,043,000          1,100,000
Repayment of notes payable                                       (2,337,000)        (1,897,000)
Senior unsecured notes                                               56,000             20,000
Issuance of common stock                                             58,000             93,000
Repurchase of common stock                                                -           (193,000)
Loan repayments from stockholders                                         -             36,000
                                                              -------------      -------------
Net cash used in financing activities                            (3,763,000)        (1,867,000)
                                                              -------------      -------------
Net decrease in cash and cash equivalents                        10,851,000         (3,066,000)
Cash and cash equivalents, beginning of period                   11,121,000          5,228,000
                                                              -------------      -------------
Cash and cash equivalents, end of period                      $  21,972,000      $   2,162,000
                                                              =============      =============

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest                                                      $     502,000      $     893,000
Interest capitalized                                          $     565,000      $     577,000
Income taxes                                                  $      93,000      $      38,000
</TABLE>

                See notes to consolidated financial statements.

                                       5
<PAGE>

                     Kennedy-Wilson, Inc. and Subsidiaries
                  Notes to Consolidated Financial Statements
                                   UNAUDITED

NOTE 1 - FINANCIAL STATEMENT PRESENTATION

The above financial statements have been prepared by Kennedy-Wilson, Inc. a
Delaware corporation, and subsidiaries (the "Company") without audit by
independent public accountants, pursuant to the Rules and Regulations
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934. The statements, in the opinion of the Company, present
fairly the financial position and results of operations for the dates and
periods indicated. The information presented as of and for the three-month
period ended March 31, 2002 and 2001 has not been audited by independent
accountants, but includes all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the results for such periods. The results of operations for the
three months ended March 31, 2002 are not necessarily indicative of results that
might be expected for the full fiscal year. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the Rules and Regulations of the Securities and Exchange Commission.
The Company believes that the disclosures contained in the financial statements
are adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the financial statements and the
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001. Certain reclassifications have been made to prior
period balances to conform to the current period presentation.

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142, Goodwill and Other Intangible Assets ("SFAS 142").  SFAS 142, which is
effective January 1, 2002, includes requirements to test goodwill and indefinite
lived intangible assets for impairment rather than amortize them.  The Company
is currently evaluating the impact that these standards will have on its
financial statements.


NOTE 2 - NOTES RECEIVABLE

Notes receivable consists primarily of non-performing notes and related assets
acquired from financial institutions. A majority of these notes are typically
collateralized by real estate, personal property or guarantees.

NOTE 3 - INVESTMENTS IN JOINT VENTURES

The Company has a number of partnerships and joint venture interests ranging
from 2% to 50% that were formed to acquire, manage, develop and/or sell real
estate. These investments are accounted for under the equity method. Investments
in joint ventures also include mezzanine loans to real estate developers for new
single-family residential developments. These investments are accounted for
under the cost method.

NOTE 4 - REAL ESTATE HELD FOR SALE

Real estate held for sale is comprised of commercial and residential properties
and land, and is accounted for at the lower of carrying amount or fair value
less cost to sell. Real estate is classified as held for sale

                                       6
<PAGE>

since the Company's intent is to acquire and dispose of properties as part of
its normal course of business.

NOTE 5 - SENIOR UNSECURED NOTES

In connection with the issuance of the senior unsecured notes, the Company
issued 597.888 warrants to the purchasers of the notes at an exercise price of
$6.25 expiring June 2006. The warrants contain a put provision that requires the
Company, at the option of the note holders, to repurchase the common shares
issued upon exercise of the warrants, at the prevailing market price, during
years four through six of the warrant term.

The fair value of the warrants was estimated using a combination of the Black-
Scholes Option Pricing Model and Monte Carlo Simulation.  The estimated fair
value of the warrants at issuance was recorded as deferred loan costs and
deducted from the note balance.  The deferred loan costs are being amortized on
a straight-line basis over the life of the notes.  A liability was also recorded
for the fair value of the warrants, which is adjusted quarterly to record the
warrants at their estimated fair value while they are outstanding.  The
estimated fair value of the warrants was $1,194,000 and $714,000 at March 31,
2002 and December 31, 2001, respectively, and is included in accrued expenses
and other liabilities.  For the three months ended March 31, 2002, the change in
value, which amounted to an increase of $480,000, was recorded as valuation
adjustment - warrants expense.

NOTE 6 - MINORITY INTEREST

In February 2002, the Company completed an initial public offering of the shares
of its consolidated subsidiary, Kennedy-Wilson Japan, on NASDAQ-Japan (stock
symbol 4321). The initial public offering consisted of 4,500 newly issued shares
and 2,500 shares sold by the Company. The Company retained ownership of 50.5% of
the subsidiary's shares after the public offering. Subsequent to the initial
public offering, Kennedy-Wilson Japan remains a consolidated subsidiary in the
Company's financial statements. The minority interest in the equity of the
subsidiary as of March 31, 2002 was $11,677,000, which represents the 49.5% of
Kennedy-Wilson Japan that is owned by minority shareholders. As a result of the
sale of the shares and the sale of the minority interest, the Company recorded a
net gain of $8,822,000 for the three months ended March 31, 2002. In accordance
with Securities and Exchange Commission Staff Accounting Bulletin No. 51, the
company records gains as a result of equity transactions by its subsidiaries in
the consolidated statements of operations, unless any such transactions are
required to be credited to equity. Non-recurring, non-cash Japan IPO expense
includes $1.1 million related to incentive stock issued to employees of the
Company in connection with the IPO.

NOTE 7 - INCOME TAXES

The provision for income taxes was $1,647,000 for the first quarter of 2002.
This equates to an overall tax rate of 26 percent of income before income taxes
and minority interest resulting from tax credit planning.

NOTE 8 - EARNINGS PER SHARE

The following table sets forth the calculation of basic and diluted earnings per
share:

                                            For the three months ended
                                                    March 31,
                                           ---------------------------
                                               2002            2001
                                           ------------    -----------
BASIC CALCULATION

Net income                                 $  4,576,000    $    385,000
                                           ============    ============

Weighted average shares                       8,794,449       8,694,288
                                           ============    ============

Earnings per share - basic                 $       0.52    $       0.04
                                           ============    ============
DILUTED CALCULATION

Net income                                 $  4,576,000    $    385,000
Income effect of dilutive securities,
  tax effected                                   79,000
                                           ------------    ------------
Diluted net income                         $  4,655,000    $    385,000
                                           ============    ============

Weighted average shares                       8,794,449       8,694,288
Convertible debentures                          750,000               -
Common stock equivalents                        260,431         226,444
                                           ------------    ------------
Total diluted shares                          9,804,880       8,920,732
                                           ============    ============

Earnings per share - diluted               $       0.47    $       0.04
                                           ============    ============

At March 31, 2001, potentially dilutive convertible debentures are excluded from
the diluted earnings per share calculation as their effect is anti-dilutive.

NOTE 9 - SEGMENT INFORMATION

The Company's business activities currently consist of property management,
commercial and residential brokerage, and various types of real estate and note
investments. The Company's segment disclosure with respect to the determination
of segment profit or loss and segment assets is based on these services and its
various investments:

                                       7
<PAGE>

     Property Management - As a result of recent acquisitions, the Company has
     become a nationwide commercial and residential property management and
     leasing company, providing a full range of services relating to property
     management, including tenant representation. The Company also provides
     asset management services for some of our joint ventures.

     Brokerage - Through its various offices, the Company provides specialized
     brokerage services for both commercial and residential real estate and
     provides other real estate services such as property valuations,
     development and implementation of marketing plans, arranging financing,
     sealed bid auctions and open bid auctions.

     Investments - With joint venture partners and on its own, the Company
     invests in commercial and residential real estate and purchases and manages
     pools of distressed notes. The Company's current real estate portfolio
     focuses on commercial buildings and multiple and single-family residences.
     The Company has entered into joint ventures with large international
     investors, to invest in both U.S. and Japanese real estate and note pools.
     The Company also makes mezzanine loans to real estate developers for new
     single-family, residential developments.

     The following table reconciles the Company's income and expense activity
     for the three months ended March 31, 2001 and balance sheet data as of
     March 31, 2002.

             2002 Reconciliation of Reportable Segment Information

<TABLE>
<CAPTION>
                                Property
                              Management         Brokerage       Investments       Corporate       Consolidated
                             -----------       -----------       -----------      -----------      ------------
<S>                          <C>               <C>               <C>              <C>              <C>
Property management
  and leasing fees           $ 5,366,000       $   928,000       $   372,000                       $  6,666,000
Commissions                      267,000         2,333,000           207,000                          2,807,000
Other                             (2,000)          131,000           809,000      $    81,000         1,019,000
                             -----------       -----------       -----------      -----------      ------------
Total revenue                  5,631,000         3,392,000         1,388,000           81,000        10,492,000

Operating expenses            (4,902,000)       (2,112,000)         (915,000)      (3,933,000)      (11,862,000)

Non-operating items                                (52,000)                         7,847,000         7,795,000
                             -----------       -----------       -----------      -----------      ------------

Income before tax and
 minority interest           $   729,000       $ 1,228,000       $   473,000      $ 3,995,000      $  6,425,000
                             ===========       ===========       ===========      ===========      ============

Total assets                 $14,349,000       $39,864,000       $45,320,000      $41,667,000      $141,200,000
                             ============      ===========       ===========      ===========      ============
</TABLE>

                                       8
<PAGE>

     The following table reconciles the Company's income and expense activity
     for the three months ended March 31, 2001, and balance sheet data as of
     March 31, 2001.

             2001 Reconciliation of Reportable Segment Information

<TABLE>
<CAPTION>
                                Property
                              Management         Brokerage      Investments        Corporate       Consolidated
                             -----------       -----------      -----------       -----------      ------------
<S>                          <C>               <C>              <C>               <C>              <C>
Property management
   and leasing fees          $ 7,560,000       $   599,000      $   188,000                        $  8,347,000
Commissions                      701,000         2,523,000          339,000                           3,563,000
Sales of residential
   real estate                                                    4,533,000                           4,533,000
Other                                              751,000          423,000       $    64,000         1,238,000
                             -----------       -----------      -----------       -----------      ------------
Total revenue                  8,261,000         3,873,000        5,483,000            64,000        17,681,000

Operating expenses             7,238,000         1,617,000        5,050,000         2,392,000        16,297,000
                             -----------       -----------      -----------       -----------      ------------
Income before provision
   for income taxes          $ 1,023,000       $ 2,256,000      $   433,000       $(2,328,000)     $  1,384,000
                             ===========       ===========      ===========       ===========      ============

Total assets                 $16,592,000       $21,325,000      $69,228,000       $22,368,000      $129,513,000
                             ===========       ===========      ===========       ===========      ============
</TABLE>

                                       9
<PAGE>

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

OVERVIEW

We are an international real estate services and investment company. We provide
property management and leasing services, asset management, commercial and
residential brokerage, and auction services to clients primarily in the U.S. and
Japan. Our clients include financial institutions, major corporations, real
estate developers, insurance companies and governmental agencies. We also invest
in commercial and residential real estate, as well as individual and pools of
distressed notes both in the U.S. and Japan.

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001

TOTAL REVENUE

Total revenue for the three months ended March 31, 2002 was approximately $10.5
million, as compared to $17.7 million during the same period in 2001.  Earnings
before taxes and minority interest for the three months ended March 31, 2002
were approximately $6.4 million compared to $621,000 for the same period in
2001.  Net income for the three months ended March 31, 2002 was approximately
$4.6 million, compared to $385,000 for the same period in 2001.

Property management and leasing operations generated approximately $6.7 million
of revenue in the first quarter of 2002, representing 63.5% of our total revenue
as compared to approximately $7.9 million for the same period in 2001.  The
change resulted primarily from a decline in leasing commissions, offset
by an increase in the properties managed in which the company has an equity
interest.  As of March 31, 2002, we had under management a portfolio of
approximately 55 million square feet of commercial, industrial and apartment
properties located in 24 states and Japan.

Brokerage commission revenue for the first quarter of 2002 was approximately
$2.8 million, representing 26.8% of total revenue, compared to brokerage
commission revenue for the first quarter of 2001 of approximately $3.7 million.
The change was primarily due to a reduction in the amount of tenant
representation commissions earned in the first quarter of 2002 compared to the
same period last year.

There were no sales of residential real estate for the three months ended March
31, 2002, compared to approximately $4.5 million for the same three months in
2001.  Revenue for the first quarter of 2001 represents the sale of 19 units in
a 109-unit, single family residential development near Palm Springs, California.
The project is now complete.

Equity in income of joint venture investments totaled $585,000 for the first
quarter in 2002, or 5.6% of total revenue compared to $789,000 realized in the
first quarter of 2001.  The decrease in equity income is due, in part, to a
decrease in revenue associated with the mezzanine lending projects, most of
which have matured.

                                       10
<PAGE>

Gains on restructured notes totaled approximately $197,000 for the period ended
March 31, 2002, compared to $246,000 gain for the same period in 2001. The
revenue reflects the settlement and restructuring of notes in the note pool
acquired in 2001. Our strategy to collect the note balances consists of either
restructuring the note to performing status, negotiating a payoff, or
foreclosing and selling the related collateral.

TOTAL OPERATING EXPENSES

Operating expenses for the first quarter of 2002 were approximately $11.9
million, representing a 27.2% decrease from approximately $16.3 million for the
same period in 2001.  The decrease was due to the reduced costs related to the
sales of a residential real estate development that was completed in 2001.

Brokerage commissions and marketing expenses decreased to approximately $1.1
million for the period ended March 31, 2002 from $2 million during the same
period of 2001, primarily as a result of the decreased broker commission expense
associated with brokerage and leasing commissions.

The was no cost of residential real estate for the period ended March 31, 2002,
as compared to approximately $4.3 million for the same period in 2001.  The
decrease correlates with the decreased revenues from the sales of residential
real estate discussed above.

Compensation and related expenses were approximately $5.8 million for the first
quarter of 2002, compared to approximately $6.3 million for the first quarter of
2001, reflecting the personnel reductions that have been implemented.

General and administrative expenses were approximately $3.1 million for the
first quarter of 2002, compared to $2.7 million during the same period in 2001.
The increase primarily related to non-recurring expenses related to the
consolidation of our Texas operations.

Depreciation and amortization expense decreased to $787,000 for the period ended
March 31, 2002, a 14.4% decrease from the $919,000 during the same period of
2001.  The change results from the elimination of goodwill amortization per FASB
142.

NON-OPERATING ITEMS

Gain on sale of stock of subsidiary was approximately $8.8 million for the
quarter ended March 31, 2002, compared to no gain in the same period of 2001.
The gain resulted from the sale of shares owned in our Japan subsidiary as part
of the successful initial public offering of that subsidiary's shares in Japan.
The non-recurring, non-cash Japan IPO expense of $1.1 million is directly
related to the gain. See note 6.

Interest expense was $547,000 for the first quarter of 2002, compared to
$763,000 during the same period in 2001, representing a 28.3% decrease.  The
decline is due, in part, to the reduced average interest rates on variable rate
loans.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources requirements include expenditures for joint
venture fund investments distressed note pools, the acquisition of property
management portfolios, real estate held for sale, and working capital needs.
Historically, we have not required significant capital resources to support our
brokerage operations. We finance our operations with internally generated funds
and borrowings under our revolving lines of credit as described below. Our
investments in real estate are typically financed by mortgage loans secured
primarily by that real estate. These mortgage loans are generally nonrecourse in
that, in the event of default, recourse will be limited to the mortgaged
property serving as collateral, subject to certain exceptions that are standard
in the real estate industry.

                                       11
<PAGE>

Cash used in operating activities during the three months ended March 31, 2002
was approximately $1.6 million, compared to approximately $6.5 million in cash
used in operating activities for the same period in 2001. The change included a
decrease in accounts receivables offset by the decrease in accrued expenses.

Cash provided by investing activities during the three months ended March 31,
2002 was approximately $16.2 million, compared to approximately $5.3 million in
cash provided by investing activities during the same period in 2000. The change
resulted primarily from the sale of a minority interest in our Japan subsidiary
discussed above.

Cash used in financing activities was approximately $3.8 million for the first
quarter of 2002, compared to cash used in financing activities for the same
period of 2001 of about $1.9 million. The change resulted from the paydown of
notes payable and borrowings under lines of credit.

To the extent that we engage in additional strategic investments, we may need to
obtain third party financing which could include bank financing or the public
sale or private placement of debt or equity securities. We believe that existing
cash, plus capital generated from property management and leasing, brokerage,
sales of real estate owned, collections from notes receivable, as well as our
current unsecured lines of credit, will provide us with sufficient capital
requirements for the foreseeable future.

Our need, if any, to raise additional funds to meet our working capital and
capital requirements will depend on numerous factors, including the success and
pace of the implementation of our strategy for growth. We regularly monitor
capital raising alternatives to be able to take advantage of other available
avenues to support our working capital and investment needs, including strategic
partnerships and other alliances, bank borrowings, and the sale of equity or
debt securities. We intend to retain earnings to finance our growth and,
therefore, do not anticipate paying any dividends.

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<PAGE>

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company's exposure to market risk has not materially changed from what was
reported on the Company's Form 10-K for the year ended December 31, 2001.

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements as well as historical
information. Forward looking statements, which are included in accordance with
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, may involve known and unknown risks, uncertainties and other factors that
may cause the company's actual results and performance to be materially
different from any results or performance suggested by the statements in this
report. When used in our documents or oral presentations, the words "plan",
"believe", "anticipate", "estimate", "expect", "objective", "projection", "
forecast", "goal", or similar words are intended to identify forward-looking
statements.


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<PAGE>

                          PART II - OTHER INFORMATION

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

                None

         (b) Reports on Form 8-K

                None

SIGNATURE

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.


                                                         KENNEDY-WILSON, INC.
                                                     ---------------------------
                                                             Registrant

Date: May 15, 2002

     /s/ Freeman A. Lyle
------------------------
Freeman A. Lyle
Executive Vice President & Chief Financial Officer
(Principal Financial and Accounting Officer)

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