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UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10  Q

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|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 
|- |  | ----------------------------------------------------------------------------------------
|  |  |                                                                                         
|  |  | FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002                                            
|  |  |                                                                                         
|o |  | 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                                                        |  | 95-4364537                          
|(State or other jurisdiction of  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)           

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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.    Yesx    No   o

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; 9,802,726 shares outstanding at August 12, 2002.

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KENNEDY-WILSON, INC.

FORM 10-Q

TABLE OF
CONTENTS

|        |                                                                                                         |    | Page
|------- | ------------------------------------------------------------------------------------------------------- | -- | ----
|        |                                                                                                         |    |     
|PART I  | Financial Information                                                                                   |   
|        |                                                                                                         |    |     
|Item 1. | Financial Statements                                                                                    |   
|        |                                                                                                         |    |     
|        | Consolidated Balance Sheets as of June 30, 2002 (Unaudited) and December 31, 2001                       | 3 
|        |                                                                                                         |    |     
|        | Consolidated Statements of Income for the three and six months ended June 30, 2002 and 2001 (Unaudited) | 4 
|        |                                                                                                         |    |     
|        | Consolidated Statements of Cash Flows for the six months ended June 30, 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                   | 12
|        |                                                                                                         |    |     
|Item 3. | Quantitative and Qualitative Disclosure about Market Risk                                               | 16
|        |                                                                                                         |    |     
|PART II | Other Information                                                                                       |   
|        |                                                                                                         |    |     
|Item 6. | Exhibits and Reports on Form 8-K                                                                        | 17

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KENNEDY-WILSON, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                 |   |             |   |                            | June 30, 2002 (unaudited) |            | December 31, 2001 | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | -------------------------- | ------------------------- | ---------- | ----------------- | 
|                                                                                                                                                                                 |   |             |   |                            |                           |            |                   | 
|Assets                                                                                                                                                                           |   |             |   |                            |                           |           
|Cash and cash equivalents                                                                                                                                                        | $ | 22,492,000  |   | $                          | 11,121,000                |           
|Cash  restricted                                                                                                                                                                |   | 133,000     |   |                            | 628,000                   |           
|Accounts receivable                                                                                                                                                              |   | 7,695,000   |   |                            | 7,653,000                 |           
|Notes receivable                                                                                                                                                                 |   | 17,766,000  |   |                            | 15,130,000                |           
|Real estate                                                                                                                                                                      |   | 10,636,000  |   |                            | 4,649,000                 |           
|Investments in joint ventures                                                                                                                                                    |   | 56,743,000  |   |                            | 47,124,000                |           
|Contracts and other assets, net                                                                                                                                                  |   | 17,306,000  |   |                            | 19,243,000                |           
|Goodwill                                                                                                                                                                         |   | 23,965,000  |   |                            | 23,965,000                |           
|                                                                                                                                                                                 |   |             |   |                            |                           |            |                   | 
|Total assets                                                                                                                                                                     | $ | 156,736,000 |   | $                          | 129,513,000               |           
|                                                                                                                                                                                 |   |             |   |                            |                           |            |                   | 
|Liabilities and Stockholders Equity                                                                                                                                             |   |             |   |                            |                           |           
|Liabilities                                                                                                                                                                      |   |             |   |                            |                           |           
|Accounts payable                                                                                                                                                                 | $ | 934,000     |   | $                          | 484,000                   |           
|Accrued expenses and other liabilities                                                                                                                                           |   | 3,335,000   |   |                            | 5,560,000                 |           
|Accrued salaries and benefits                                                                                                                                                    |   | 2,064,000   |   |                            | 3,843,000                 |           
|Deferred and accrued income taxes                                                                                                                                                |   | 5,946,000   |   |                            | 3,932,000                 |           
|Notes payable                                                                                                                                                                    |   | 9,307,000   |   |                            | 10,022,000                |           
|Borrowings under lines of credit                                                                                                                                                 |   | 32,119,000  |   |                            | 29,907,000                |           
|Mortgage loans payable                                                                                                                                                           |   | 8,528,000   |   |                            | 1,993,000                 |           
|Senior unsecured notes                                                                                                                                                           |   | 14,388,000  |   |                            | 14,286,000                |           
|Convertible Subordinated debt                                                                                                                                                    |   |            |   |                            | 7,500,000                 |           
|Subordinated debt                                                                                                                                                                |   | 2,773,000   |   |                            |                          |           
|                                                                                                                                                                                 |   |             |   |                            |                           |            |                   | 
|                                                                                                                                                                                 |   |             |   | Total liabilities          |                           | 79,394,000 |                   | 
|                                                                                                                                                                                 |   |             |   |                            |                           |            |                   | 
|Commitments and contingencies                                                                                                                                                    |   |             |   |                            |                           |           
|Minority interest                                                                                                                                                                |   | 14,932,000  |   |                            |                          |           
|Stockholders equity                                                                                                                                                             |   |             |   |                            |                           |           
|Preferred stock, $0.01 par value: 5,000,000 shares authorized;       none issued as of June 30, 2002 and December 31,
2001                                                       |   |            |   |                            |                          |           
|Common stock, $0.01 par value: 50,000,000 shares  authorized;       9,802,726 and 8,789,288 shares issued and outstanding as ofJune 30, 2002 and December 31, 2001, respectively |   | 99,000      |   |                            | 88,000                    |           
|Additional paid-in capital                                                                                                                                                       |   | 58,030,000  |   |                            | 47,853,000                |           
|Restricted stock  deferred compensation                                                                                                                                         |   | (8,141,000  | ) |                            | (2,677,000                | )         
|Retained earnings                                                                                                                                                                |   | 12,088,000  |   |                            | 6,722,000                 |           
|Accumulated other comprehensive income                                                                                                                                           |   | 334,000     |   |                            |                          |           
|                                                                                                                                                                                 |   |             |   |                            |                           |            |                   | 
|                                                                                                                                                                                 |   |             |   | Total stockholders equity |                           | 62,410,000 |                   | 
|                                                                                                                                                                                 |   |             |   |                            |                           |            |                   | 
|Total liabilities and stockholders equity                                                                                                                                       | $ | 156,736,000 |   | $                          | 129,513,000               |           
|                                                                                                                                                                                 |   |             |   |                            |                           |            |                   | 

See notes to consolidated financial statements.

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KENNEDY-WILSON, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

|                                                               |                                     |   | For the three months ended June 30, |          | For the six months ended  June 30, |           
|-------------------------------------------------------------- | ----------------------------------- | - | ----------------------------------- | -------- | ---------------------------------- | ----------
|                                                               |                                     |   |                                     |          |                                    |           
|                                                               |                                     |   | 2002                                |          | 2001                               |           
|                                                               |                                     |   |                                     |          |                                    |           
|Revenue                                                        |                                     |   |                                     |          |                                    |           
|Property management and leasing fees                           |                                     | $ | 6,588,000                           |          | $                                  | 7,883,000 
|Commissions                                                    |                                     |   | 3,297,000                           |          |                                    | 3,259,000 
|Sales of residential real estate                               |                                     |   | 38,000                              |          |                                    | 4,027,000 
|Equity in joint venture income                                 |                                     |   | 1,841,000                           |          |                                    | 1,832,000 
|Gain on sale of commercial real estate                         |                                     |   |                                    |          |                                    |          
|Gain on restructured notes receivable                          |                                     |   | 1,634,000                           |          |                                    | 80,000    
|Interest and other income                                      |                                     |   | 294,000                             |          |                                    | 392,000   
|                                                               |                                     |   |                                     |          |                                    |           
|Total revenue                                                  |                                     |   | 13,692,000                          |          |                                    | 17,473,000
|                                                               |                                     |   |                                     |          |                                    |           
|Operating expenses                                             |                                     |   |                                     |          |                                    |           
|Commissions and marketing expenses                             |                                     |   | 1,371,000                           |          |                                    | 1,731,000 
|Cost of residential real estate sold                           |                                     |   | 223,000                             |          |                                    | 3,977,000 
|Compensation and related expenses                              |                                     |   | 6,536,000                           |          |                                    | 5,827,000 
|General and administrative                                     |                                     |   | 2,293,000                           |          |                                    | 2,890,000 
|Depreciation and amortization                                  |                                     |   | 695,000                             |          |                                    | 1,007,000 
|Non-recurring, non-cash Japan IPO expense                      |                                     |   |                                    |          |                                    |          
|                                                               |                                     |   |                                     |          |                                    |           
|Total operating expenses                                       |                                     |   | 11,118,000                          |          |                                    | 15,432,000
|                                                               |                                     |   |                                     |          |                                    |           
|Total operating income                                         |                                     |   | 2,574,000                           |          |                                    | 2,041,000 
|Non-operating income (expense)                                 |                                     |   |                                     |          |                                    |           
|                                                               | Gain on sale of stock of subsidiary |   |                                     |         |                                    |           
|                                                               | Interest expense                    |   |                                     | (709,000 | )                                  |           
|                                                               | Valuation adjustment  warrants     |   |                                     | 195,000  |                                    |           
|                                                               | Gain on extinguishment of debt      |   |                                     | 750,000  |                                    |           
|                                                               |                                     |   |                                     |          |                                    |           
|Income before minority interest and provision for income taxes |                                     |   | 2,810,000                           |          |                                    | 1,021,000 
|Minority interest                                              |                                     |   | (1,680,000                          | )        |                                    |          
|                                                               |                                     |   |                                     |          |                                    |           
|Income before provision for income taxes                       |                                     |   | 1,130,000                           |          |                                    | 1,021,000 
|Provision for income taxes                                     |                                     |   | (340,000                            | )        |                                    | (388,000  
|                                                               |                                     |   |                                     |          |                                    |           
|Net income                                                     |                                     | $ | 790,000                             |          | $                                  | 633,000   
|                                                               |                                     |   |                                     |          |                                    |           
|Share data:                                                    |                                     |   |                                     |          |                                    |           
|Basic net income per share                                     |                                     | $ | 0.09                                |          | $                                  | 0.07      
|Basic weighted average shares                                  |                                     |   | 8,935,703                           |          |                                    | 8,682,645 
|Diluted net income per share                                   |                                     | $ | 0.09                                |          | $                                  | 0.07      
|Diluted weighted average shares                                |                                     |   | 9,165,069                           |          |                                    | 8,854,177 

See notes to consolidated financial statements.

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KENNEDY-WILSON, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                             |                                                        |                                                     |             | For the six months ended June 30, |            
|------------------------------------------------------------ | ------------------------------------------------------ | --------------------------------------------------- | ----------- | --------------------------------- | -----------
|                                                             |                                                        |                                                     |             |                                   |            
|                                                             |                                                        |                                                     |             | 2002                              |            
|                                                             |                                                        |                                                     |             |                                   |            
|CASH FLOWS FROM OPERATING ACTIVITIES:                        |                                                        |                                                     |             |                                   |            
|Net income                                                   |                                                        | $                                                   | 5,366,000   |                                   | $          
|Adjustments to reconcile net income to net                   |                                                        |                                                     |             |                                   |            
|                                                             | cash used in operating activities:                     |                                                     |             |                                   |            
|                                                             | Depreciation and amortization                          |                                                     |             | 1,482,000                         |            
|                                                             | Equity in joint venture income                         |                                                     |             | (2,426,000                        | )          
|                                                             | Minority interest in income of consolidated subsidiary |                                                     |             | 1,882,000                         |            
|                                                             | Compensation expense for restricted stock              |                                                     |             | 286,000                           |            
|                                                             | 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             |                                                     |             | 285,000                           |            
|                                                             | Gain on extinguishment of debt  non-cash              |                                                     |             | (750,000                          | )          
|Change in assets and liabilities:                            |                                                        |                                                     |             |                                   |            
|                                                             | Accounts receivable                                    |                                                     |             | (42,000                           | )          
|                                                             | Other assets                                           |                                                     |             | 455,000                           |            
|                                                             | Accounts payable                                       |                                                     |             | 450,000                           |            
|                                                             | Accrued expenses and other liabilities                 |                                                     |             | (2,275,000                        | )          
|                                                             |                                                        |                                                     |             |                                   |            
|                                                             |                                                        | Net cash used in operating activities               |             |                                   | (3,009,000 
|                                                             |                                                        |                                                     |             |                                   |            
|CASH FLOWS FROM INVESTING ACTIVITIES:                        |                                                        |                                                     |             |                                   |            
|Purchase of contracts and other assets                       |                                                        |                                                     |            |                                   |            
|Additions to goodwill                                        |                                                        |                                                     |            |                                   |            
|Settlements of notes receivable                              |                                                        |                                                     | 4,239,000   |                                   |            
|Additions to notes receivable                                |                                                        |                                                     | (5,974,000  | )                                 |            
|Reduction of real estate                                     |                                                        |                                                     | 2,128,000   |                                   |            
|Purchase and additions to real estate                        |                                                        |                                                     | (11,065,000 | )                                 |            
|Distributions from joint ventures                            |                                                        |                                                     | 4,443,000   |                                   |            
|Contributions to joint ventures                              |                                                        |                                                     | (9,591,000  | )                                 |            
|Cash - restricted decrease                                   |                                                        |                                                     | 495,000     |                                   |            
|                                                             |                                                        |                                                     |             |                                   |            
|                                                             |                                                        | Net cash (used in) provided by investing activities |             |                                   | (15,325,000
|                                                             |                                                        |                                                     |             |                                   |            
|CASH FLOWS FROM FINANCING ACTIVITIES:                        |                                                        |                                                     |             |                                   |            
|Borrowings under notes payable                               |                                                        |                                                     | 2,660,000   |                                   |            
|Repayment of notes payable                                   |                                                        |                                                     | (3,375,000  | )                                 |            
|Borrowings under lines of credit                             |                                                        |                                                     | 33,420,000  |                                   |            
|Repayment of lines of credit                                 |                                                        |                                                     | (31,208,000 | )                                 |            
|Issuance of mortgage loans payable                           |                                                        |                                                     | 8,528,000   |                                   |            
|Repayment of mortgage loans payable                          |                                                        |                                                     | (1,993,000  | )                                 |            
|Senior unsecured notes                                       |                                                        |                                                     | 102,000     |                                   |            
|Proceeds from sale of minority interest of subsidiary, net   |                                                        |                                                     | 18,718,000  |                                   |            
|Issuance of common stock                                     |                                                        |                                                     | 461,000     |                                   |            
|Repurchase of common stock                                   |                                                        |                                                     |            |                                   |            
|Loan repayments from stockholders                            |                                                        |                                                     |            |                                   |            
|                                                             |                                                        |                                                     |             |                                   |            
|                                                             |                                                        | Net cash provided by (used in) financing activities |             |                                   | 27,313,000 
|                                                             |                                                        |                                                     |             |                                   |            
|Effect of exchange rate changes on cash and cash equivalents |                                                        |                                                     | 2,392,000   |                                   |            
|                                                             |                                                        |                                                     |             |                                   |            
|Net increase in cash and cash equivalents                    |                                                        |                                                     | 11,371,000  |                                   |            
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD               |                                                        |                                                     | 11,121,000  |                                   |            
|                                                             |                                                        |                                                     |             |                                   |            
|CASH AND CASH EQUIVALENTS, END OF PERIOD                     |                                                        | $                                                   | 22,492,000  |                                   | $          
|                                                             |                                                        |                                                     |             |                                   |            

Supplemental disclosures of non-cash investing and financing activities:

In May 2002, the Company contributed real estate to a joint venture investment with the following consideration, reduction of real estate of $2,948,000, addition to investments in joint ventures of
$2,045,000 and addition to notes receivable of $903,000.

In June 2002, the holder of the convertible subordinated debentures converted the debentures into 749,000 shares
of the Companys common stock at a conversion price of $5.31 per share with the following consideration, extinguishment of $7.5 million of convertible subordinated debt, issuance of $3,977,000 of common stock, issuance of $2,773,000 of
subordinated debt and a non-cash gain on extinguishment of debt of $750,000.

See notes to consolidated financial statements.

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KENNEDY-WILSON, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (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 and six month periods ended June 30, 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 and six month periods ended June 30, 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 Financial Accounting Standards Board ("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 has
performed an evaluation of its goodwill and has determined that there was no goodwill impairment as of January 1, 2002.

Goodwill amortization expense for the three and six month periods ended June
30, 2001, after tax, was $139,000 and $275,000, respectively.

The effects on earnings and earnings per share of excluding such goodwill amortization from the second quarter and first six months of
2001 are as follows:

|                                                         |  | For the three months ended  June 30, |         | For the six months ended  June 30, |  
|-------------------------------------------------------- |  | ------------------------------------ | ------- | ---------------------------------- | -
|                                                         |  |                                      |         |                                    |  
|                                                         |  | 2002                                 |         | 2001                               |  
|                                                         |  |                                      |         |                                    |  
|Net income, as reported                                  |  | $                                    | 790,000 |                                    | $
|Net income, excluding 2001 goodwill amortization         |  | $                                    | 790,000 |                                    | $
|Basic earnings per share                                 |  |                                      |         |                                    |  
|Earnings per share as reported                           |  | $                                    | 0.09    |                                    | $
|Earnings per share, excluding 2001 goodwill amortization |  | $                                    | 0.09    |                                    | $
|Diluted earnings per share                               |  |                                      |         |                                    |  
|Earnings per share as reported                           |  | $                                    | 0.09    |                                    | $
|Earnings per share, excluding 2001 goodwill amortization |  | $                                    | 0.09    |                                    | $

Property management contracts of $9,448,000 were acquired and estimated to have a useful life of seven years at the time of
acquisition. At June 30, 2002, the contracts having remaining useful lives ranging from three to four years and a net book value of $4,512,000.

In October 2001, the FASB issued
Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS 144"). SFAS 144 supercedes SFAS 121, Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to
be Disposed Of, and applies to all long-lived assets, including discontinued operations. SFAS 144 establishes a single accounting model for the impairment of disposal of long-lived assets, including discontinued operations. Additionally, SFAS 144
expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal
transaction. SFAS 144 is effective for fiscal years beginning after December 15, 2001. The adoption of SFAS 144 did not have a material impact on the Company's financial position or results of operations.

In April 2002, the FASB issued Statement of Financial Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections
("SFAS 145"). The provisions of SFAS 145 relating to the early extinguishment of debt are effective for fiscal years beginning after May 15, 2002. The Company has chosen early adoption of these provisions.

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.

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NOTE 4 - LINES OF CREDIT

In June 2002, the Company entered into a loan
agreement that provides the Company with a revolving credit facility in the amount of $30 million.  The loan bears interest at a range of rates from prime to prime plus 0.50%, or, at borrowers option, LIBOR plus 2.50% to LIBOR plus
3.00%.  The principal repayments under these facilities for the years 2002, 2003, 2004 and 2005 are $15 million, $10 million, $0 and $5 million, respectively.

The Company's ability to borrow
under these facilities is subject to compliance with certain financial covenants. As of June 30, 2002, the Company was in compliance with the covenants.

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 $999,000 and $714,000 at June 30, 2002 and December 31, 2001, respectively, and is included in accrued
expenses and other liabilities.  For the six months ended June 30, 2002, the change in value, which amounted to an increase of $285,000, was recorded as valuation adjustment - warrants expense.

NOTE 6 - CONVERTIBLE SUBORDINATED DEBT

In June 2002, the convertible subordinated debentures were converted into 749,000 of the Company's common shares at the then-prevailing
market price of $5.31 per share, for a total conversion value of $3,977,000.  Subordinated debt was issued for the balance of the convertible subordinated debt in the amount of $2,773,000. See note 7.  The Company recognized a gain of
$750,000 on the extinguishment of the debt.

NOTE 7- SUBORDINATED DEBT

In June 2002, the Company issued $2,773,000 of subordinated debentures. The
debentures have a term of 46 months and an interest rate of 6%, payable monthly.

NOTE 8 - 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

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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 June 30, 2002 was $14,932,000, 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 in the first quarter of 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 9 - RESTRICTED
STOCK

In April 2002, the Company's Chairman and Chief Executive Officer was awarded a grant of 1,000,000 shares of restricted stock with dilution protection that vests over the remaining term of
his employment agreement, which expires in December 2009.

NOTE 10 - COMPREHENSIVE INCOME

Comprehensive income consists of net income and other
comprehensive income. Accumulated other comprehensive income consists of foreign currency translation adjustments. The tax provision associated with items included in other comprehensive income for the Company was $180,000 for the six months ended
June 30, 2002. The following table provides a summary of the comprehensive income:

|                                                 | Six months ended June 30,
|------------------------------------------------ | -------------------------
|                                                 |                          
|                                                 | 2002                     
|                                                 |                          
|Net income                                       | $5,366,000               
|Foreign currency translations gain, net of taxes | 334,000                  
|                                                 |                          
|Comprehensive income                             | $5,700,000               
|                                                 |                          

NOTE 11- INCOME TAXES

The provision for income taxes was $1,987,000 for the first
six months of 2002.  This equates to an overall tax rate that was lower than the federal statutory rate due to a portion of the gain on the sale of stock of a subsidiary not being subject to taxation.

NOTE 12 - EARNINGS PER SHARE

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

|                             |  | For the three months ended June 30, |           | For the six months ended June 30, |  
|---------------------------- |  | ----------------------------------- | --------- | --------------------------------- | -
|                             |  |                                     |           |                                   |  
|                             |  | 2002                                |           | 2001                              |  
|                             |  |                                     |           |                                   |  
|BASIC CALCULATION            |  |                                     |           |                                   |  
|Net income                   |  | $                                   | 790,000   |                                   | $
|                             |  |                                     |           |                                   |  
|Weighted average shares      |  |                                     | 8,935,703 |                                   |  
|                             |  |                                     |           |                                   |  
|Basic net income per share   |  | $                                   | 0.09      |                                   | $
|                             |  |                                     |           |                                   |  
|DILUTED CALCULATION          |  |                                     |           |                                   |  
|Net income                   |  | $                                   | 790,000   |                                   | $
|                             |  |                                     |           |                                   |  
|Weighted average shares      |  |                                     | 8,935,703 |                                   |  
|Common stock equivalents     |  |                                     | 229,366   |                                   |  
|                             |  |                                     |           |                                   |  
|Total diluted shares         |  |                                     | 9,165,069 |                                   |  
|                             |  |                                     |           |                                   |  
|                             |  |                                     |           |                                   |  
|Diluted net income per share |  | $                                   | 0.09      |                                   | $
|                             |  |                                     |           |                                   |  

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##### Table of Contents

At June 30, 2001, potentially dilutive convertible debentures are excluded from the diluted earnings per share calculation
as their effect is anti-dilutive.

NOTE 13 - 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:

Property Management - The Company is a national 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 - 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.

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##### Table of Contents

The following tables reconcile the Companys income and expense activity for the three and six months ended June 30,
2002 and balance sheet data as of June 30, 2002.

2002 Reconciliation of Reportable Segment Information

|                                                               |  | For the three months ended June 30, 2002 |           
|-------------------------------------------------------------- |  | ---------------------------------------- | ----------
|                                                               |  |                                          |           
|                                                               |  | Property Management                      |           
|                                                               |  |                                          |           
|Property management and leasing fees                           |  | $                                        | 5,214,000 
|Commissions                                                    |  |                                          | 505,000   
|Sales of residential real estate                               |  |                                          |           
|Other                                                          |  |                                          |           
|                                                               |  |                                          |           
|Total revenue                                                  |  |                                          | 5,719,000 
|Operating expenses                                             |  |                                          | (4,740,000
|Non-operating items                                            |  |                                          |           
|                                                               |  |                                          |           
|Income before minority interest and provision for income taxes |  | $                                        | 979,000   
|                                                               |  |                                          |           
|                                                              

|                                                               |  | For the six months ended June 30, 2002 |           
|-------------------------------------------------------------- |  | -------------------------------------- | ----------
|                                                               |  |                                        |           
|                                                               |  | Property Management                    |           
|                                                               |  |                                        |           
|Property management and leasing fees                           |  | $                                      | 10,580,000
|Commissions                                                    |  |                                        | 772,000   
|Sales of residential real estate                               |  |                                        |           
|Other                                                          |  |                                        | (2,000    
|                                                               |  |                                        |           
|Total revenue                                                  |  |                                        | 11,350,000
|Operating expenses                                             |  |                                        | (9,642,000
|Non-operating items                                            |  |                                        |           
|                                                               |  |                                        |           
|Income before minority interest and provision for income taxes |  | $                                      | 1,708,000 
|                                                               |  |                                        |           
|Total assets                                                   |  | $                                      | 14,748,000
|                                                               |  |                                        |           

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##### Table of Contents

The following tables reconcile the Companys income and expense activity for the three and six months ended June 30,
2001.

2001 Reconciliation of Reportable Segment Information

|                                         |  | For the three months ended June 30, 2001 |           
|---------------------------------------- |  | ---------------------------------------- | ----------
|                                         |  |                                          |           
|                                         |  | Property Management                      |           
|                                         |  |                                          |           
|Property management and leasing fees     |  | $                                        | 6,510,000 
|Commissions                              |  |                                          | 330,000   
|Sales of residential real estate         |  |                                          |           
|Other                                    |  |                                          |           
|                                         |  |                                          |           
|Total revenue                            |  |                                          | 6,840,000 
|Operating expenses                       |  |                                          | (5,787,000
|Non-operating items                      |  |                                          |           
|                                         |  |                                          |           
|Income before provision for income taxes |  | $                                        | 1,053,000 
|                                         |  |                                          |           
|                                        

|                                         |  |                     | For the six months ended June 30, 2001 |          
|---------------------------------------- |  | ------------------- | -------------------------------------- | ---------
|                                         |  |                     |                                        |          
|                                         |  | Property Management |                                        | Brokerage
|                                         |  |                     |                                        |          
|Property management and leasing fees     |  | $                   | 14,070,000                             |          
|Commissions                              |  |                     | 1,031,000                              |          
|Sales of residential real estate         |  |                     |                                        |          
|Other                                    |  |                     |                                        |          
|                                         |  |                     |                                        |          
|Total revenue                            |  |                     | 15,101,000                             |          
|Operating expenses                       |  |                     | (13,025,000                            | )        
|Non-operating items                      |  |                     |                                        |          
|                                         |  |                     |                                        |          
|Income before provision for income taxes |  | $                   | 2,076,000                              |          
|                                         |  |                     |                                        |          
|Total assets                             |  | $                   | 16,686,000                             |          
|                                         |  |                     |                                        |          

NOTE 14 - SUBSEQUENT EVENT

In July 2002, the Company entered into an agreement with Cargill
International Trading PTE Ltd. ("Cargill") for the private placement of 2,000 shares of the Companys consolidated subsidiary, Kennedy-Wilson Japan.  The agreement also includes an option for Cargill to acquire an additional
2,000 shares from the Company. After completion of the private placement, the Company will retain a 43.4% ownership interest in Kennedy Wilson Japan. In the event that Cargill elects to exercise its option, the Company will own 36.3% of Kennedy
Wilson Japan.

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##### Table of Contents

|Item 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

OVERVIEW

We are an integrated, 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 US and Japan.

COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001

TOTAL REVENUE

Total revenue for the three months ended June 30, 2002 was approximately $13.7 million, compared to $17.5 million during the same period in 2001.  Earnings
before minority interest and taxes for the three months ended June 30, 2002 were approximately $2.8 million, compared to approximately $1 million for the same period in 2001.  Net income for the three months ended June 30, 2002 was $790,000,
compared to $633,000 for the same period in 2001.

Property management and leasing operations generated approximately $6.6 million of revenue in the second quarter of 2002, representing 48% of our
total revenue as compared to approximately $7.9 million and 45% of total revenue for the same period in 2001.  As of June 30, 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 second quarter of 2002 was approximately $3.3 million, representing 24% of total revenue, compared to
approximately $3.3 million and 19% of total revenue for the second quarter of 2001.

Sales of residential real estate were approximately $38,000 for the three months ended June 30, 2002, compared to
approximately $4.0 million for the same three months in 2001.  Revenue for the three months ended June 30, 2001 represents the sale of 17 units in a 109-unit, single family residential development near Palm Springs, California. The project is
now complete.

Equity in joint venture income totaled approximately $1.8 million for the second quarter in 2002, or 13% of total revenue compared to approximately $1.8 million realized in the second
quarter of 2001.

Gain on restructured notes totaled approximately $1.6 million for the three months ended June 30, 2002, compared to $80,000 for the same period in 2001.  The increase reflects
gains of $400,000 from new note acquisitions in the U.S. and $1.2 million from our Japan subsidiary.

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##### Table of Contents

TOTAL OPERATING EXPENSES

Operating expenses for the second quarter of
2002 were approximately $11.1 million, compared to approximately $15.4 million for the same period in 2001. The decrease was due primarily to the reduced costs related to the sales of a residential real estate development that was completed in
2001.

Brokerage commissions and marketing expenses were approximately $1.4 million for the three months ended June 30, 2002, compared to approximately $1.7 million for the same period in
2001.

Cost of residential real estate sold was $223,000 for the three months ended June 30, 2002, compared to approximately $4.0 million for the same period in 2001.  The decrease correlates
with the decrease in revenues from the sales of residential real estate discussed above.

Compensation and related expenses were approximately $6.5 million for the second quarter of 2002, compared
to approximately $5.8 million for the second quarter of 2001. The increase relates primarily to increased compensation paid by Kennedy Wilson Japan.

General and administrative expenses were
approximately $2.3 million for the second quarter of 2002, representing a 21% decrease from the same period in 2001 expenses of approximately $2.9 million.

Depreciation and amortization
expense was $695,000 for the three months ended June 30, 2002, compared to approximately $1 million for the same period of 2001.

NON-OPERATING ITEMS

Interest expense
was $709,000 for the three months ended June 30, 2002, compared to approximately $1 million during the same period in 2001, representing a 29% decrease. The decline is due, in part, to the reduced average interest rates on variable rate
loans.

Gain on extinguishment of debt was $750,000 for the three months ended June 30, 2002. There was no such gain in 2001. The gain on extinguishment of debt related to the conversion of the convertible subordinated
debentures in the amount of $3,977,000 and the issuance of subordinated debentures in the amount of $2,773,000 to retire the $7,500,000 of convertible subordinated debt.

The provision for income taxes was $340,000 for
the second quarter in 2002, compared to $388,000 for the second quarter of 2001, as a result of the change in income before provision for income taxes.

COMPARISON OF THE SIX MONTHS ENDED JUNE 30,
2002 AND 2001

TOTAL REVENUE

Total revenue for the six months ended June 30, 2002 was approximately $24.2 million, as compared to $35.2 million
during the same period in 2001.  Earnings before minority interest and taxes for the six months ended June 30, 2002 were approximately $9.2 million, compared to approximately $1.6 million for the same period in 2001.  Net income for the
six months ended June 30, 2002 was approximately $5.4 million, compared to approximately $1 million for the same period in 2001.

Property management and leasing operations generated approximately
$13.3 million of revenue in the first six months of 2002, representing 55% of our total revenue as compared to approximately $16.1 million for the same period in 2001.

Brokerage commission revenue
for the first six months of 2002 was $6.1 million, representing 25% of total revenue, compared to brokerage commission revenue for the same period of 2001 of approximately $7 million.

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##### Table of Contents

Sales of residential real estate were approximately $38,000 for the six months ended June 30, 2002 compared to approximately
$8.6 million for the same period in 2001.  Revenue for the first six months of 2001 represents the sale of 36 units in a 109-unit, single family residential development near Palm Springs, California.

Equity in income of joint venture investments totaled approximately $2.4 million for the first six months of 2002, or 10% of total revenue compared to $2.6 million realized in the same period of 2001. The project is now
complete.

There was no gain on sale of commercial real estate for the six months ended June 30, 2002 compared to $281,000 in the same period of 2001.

Gain on restructured notes was approximately $1.8 million for the six months ended June 30, 2002 compared to $47,000 for the same period in 2001.  The increase reflects gains of $500,000 from new note acquisitions in the
U.S. and $1.3 million from our Japan subsidiary.  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 six months of 2002 were approximately $23 million, representing a 28% decrease from approximately
$31.7 million for the same period in 2001.  The decrease was due to the reduced costs related to the sales of residential real estate as discussed above.

Brokerage commissions and marketing
expenses were approximately $2.5 million for the six months ended June 30, 2002 compared to approximately $3.7 million during the same period of 2001.

Cost of residential real estate sold was
$223,000 for the six months ended June 30, 2002, compared to approximately $8.3 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 $12.3 million for the first six months of 2002, compared to approximately $12.2 million for the same period of 2001.

General and administrative expenses were approximately $5.3 million for the first six months of 2002, representing a 5% decrease from the same period in 2001 expenses of approximately $5.6 million.

Depreciation and amortization expense was approximately $1.5 million for the six months ended June 30, 2002 compared to approximately $1.9 million during the same period of 2001. The change results from the
elimination of goodwill amortization in accordance with FAS 142.

NON-OPERATING ITEMS

Gain on sale of stock of subsidiary was approximately $8.8 million for the six months ended June 30, 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 8.

Interest expense was approximately $1.3 million for the first six months of 2002, compared to approximately $1.8 million during the same period in
2001, representing a 30% decrease. The decline is due, in part, to the reduced average interest rates on variable rate loans.

The provision for income taxes was approximately $2 million for the first six months of 2002,
compared to $624,000 for the same period of 2001, as a result of the change in income before provision for income taxes.

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##### Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resource
requirements include expenditures for joint venture fund investments, distressed note pools, 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.

Cash used in operating activities during the six months ended June 30, 2002 was approximately $3 million, compared to approximately $277,000 in cash used in operating activities for the
same period in 2001.  The change included primarily a decrease in accrued expenses.

Cash used in investing activities during the six months ended June 30, 2002 was approximately $15.3 million,
compared to approximately $7.3 million in cash provided by investing activities during the same period in 2001.  The change resulted primarily from additions to real estate in 2002 compared to additions to notes receivable and reductions of
real estate in 2001.

Cash provided by financing activities was approximately $27.3 million for the first six months of 2002, compared to cash used in financing activities for the same period of
2001 of approximately $751,000.  The change resulted from issuance of mortgage loans payable and the sale of a minority interest in our Japan subsidiary discussed above.

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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##### Table of Contents

|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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##### Table of Contents

PART II -
OTHER INFORMATION

Item 6.      
EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

The following exhibits are included herein:

|Item  |  | Description                                                                                                                                                                                
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                            
|10.48 |  | Loan Agreement dated as of June 13, 2002 by and between Kennedy-Wilson, Inc. and U.S. Bank National Association and East-West Bank.                                                        
|10.49 |  | Promissory note due June 13, 2005, dated June 13, 2002 made payable to US Bank National Association and East-West Bank, duly executed by Kennedy-Wilson, Inc. in the amount of
$25,000,000.
|10.50 |  | Promissory note due June 13, 2005, dated June 13, 2002 made payable to US Bank National Association and East-West Bank, duly executed by Kennedy-Wilson, Inc. in the amount of
$5,000,000. 
|99.01 |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                    



(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: August 13, 2002                              |  |                      | 
|                                                   |  |                      | 
|/S/ Freeman A. Lyle                                |  |                      | 
|                                                   |  |                      | 
|Freeman A. Lyle                                    |  |                      | 
|Executive Vice President & Chief Financial Officer |  |                      | 
|(Principal Financial and Accounting Officer)       |  |                      | 

17