**FORM      10-QSB**

**JACOBS      FINANCIAL GROUP, INC.**

| Delaware                                                           | 0-21210                                 | 84-0922335                                       |
|--------------------------------------------------------------------|-----------------------------------------|--------------------------------------------------|
| (State                or other jurisdiction of incorporation) | (Commission                File Number) | (IRS                Employer Identification No.) |

| 300                Summers Street, Suite 970, Charleston, WV 25301                      |
|-----------------------------------------------------------------------------------------|
| (Address                of principal executive offices) (Zip Code)                      |
|                                                                                    |
| Registrant’s                telephone number, including area code: (304) 343-8171 |
|                                                                                    |

| Yes | [                X] | No | [_] |
|-----|---------------------|----|-----|

| Yes | [  ] | No | [X] |
|-----|----------------|----|-----|

| Yes | [  ] | No | [X] |
|-----|----------------|----|-----|

----

**Item      1. Financial Statements**

| Financial                  Statements (Unaudited)                                                                                           |   | Page   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                                        |   |   |
| Consolidated                Condensed Balance Sheets                                                                                        |   | F-1    |
| Consolidated                Condensed Statements of Operations                                                                              |   | F-2    |
| Consolidated                Condensed Statements of Comprehensive Income (Loss)                                                             |   | F-3    |
| Consolidated                Condensed Statements of Cash Flows                                                                              |   | F-4    |
| Consolidated                Condensed Statements of Mandatorily Redeemable Preferred Stock and                Stockholders Equity (Deficit) |   | F-6    |
| Notes                to Consolidated Condensed Financial Statements                                                                         |   | F-8    |

----

| **Jacobs                Financial Group, Inc.**                                                                                                                                                                                      |   |                                 |        |   |                                     |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-------------|--------|------------------------------------------|--------|
| **Consolidated                Condensed Balance Sheets (Unaudited)**                                                                                                                                                                 |   |                                 |        |   |                                     |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |
|                                                                                                                                                                                                                                 |   | **February                29, 2008** |        |   | **May                31,**** 2007** |   |
| **ASSETS**                                                                                                                                                                                                                           |   |                                 |        |   |                                     |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |
| **Investments                and Cash:**                                                                                                                                                                                             |   |                                 |        |   |                                     |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |
| Bonds                available for sale, at market value                                                                                                                                                                             |   | $                                    | 94,185      |   |                                     | $      | - |   |
| (amortized                cost - 02/29/08 $97,582)                                                                                                                                                                                   |   |                                 |        |   |                                     |   |   |   |
| Bonds                held to maturity, at amortized costs                                                                                                                                                                            |   |                                 | -           |   |                                     |   | 2,316,875 |   |
| (market                value -  05/31/07 $2,308,003)                                                                                                                                                                       |   |                                 |        |   |                                     |   |   |   |
| Mortgage-back                securities held to maturity, at amortized costs                                                                                                                                                         |   |                                 | 3,603,555   |   |                                     |   | 1,369,411 |   |
| (market                value - 02/29/08 $3,617,455; 05/31/07 $1,367,365)                                                                                                                                                             |   |                                 |        |   |                                     |   |   |   |
| Short-term                investments, at cost (approximates market value)                                                                                                                                                           |   |                                 | 1,235,348   |   |                                     |   | 335,729 |   |
| Cash                                                                                                                                                                                                                                 |   |                                 | 136,210     |   |                                     |   | 25,298 |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
| **Total                Investments and Cash**                                                                                                                                                                                        |   |                                 | 5,069,298   |   |                                     |   | 4,047,313 |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
| Investment                income due and accrued                                                                                                                                                                                     |   |                                 | 20,312      |   |                                     |   | 35,294 |   |
| Premiums                and other accounts receivable                                                                                                                                                                                |   |                                 | 37,727      |   |                                     |   | 38,668 |   |
| Deferred                policy acquisition costs                                                                                                                                                                                     |   |                                 | 89,290      |   |                                     |   | 52,365 |   |
| Furniture                and equipment, net of accumulated depreciation of $118,827 and $113,919,                respectively                                                                                                        |   |                                 | 18,179      |   |                                     |   | 23,628 |   |
| Note                receivable                                                                                                                                                                                                       |   |                                 | 50,000      |   |                                     |   | - |   |
| Other                assets                                                                                                                                                                                                          |   |                                 | 990,971     |   |                                     |   | 22,801 |   |
| Intangible                assets                                                                                                                                                                                                     |   |                                 | 150,000     |   |                                     |   | 150,000 |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
| **TOTAL                ASSETS**                                                                                                                                                                                                      |   | $                                    | 6,425,777   |   |                                     | $      | 4,370,069 |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY (DEFICIT)**                                                                                                                                                                    |   |                                 |        |   |                                     |   |   |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
| Reserve                for losses and loss expenses                                                                                                                                                                                  |   | $                                    | 203,419     |   |                                     | $      | 110,784 |   |
| Reserve                for unearned premiums                                                                                                                                                                                         |   |                                 | 303,327     |   |                                     |   | 144,188 |   |
| Advance                premiums                                                                                                                                                                                                      |   |                                 | -           |   |                                     |   | 127,034 |   |
| Accrued                expenses and professional fees                                                                                                                                                                                |   |                                 | 369,393     |   |                                     |   | 547,965 |   |
| Accounts                payable                                                                                                                                                                                                      |   |                                 | 223,348     |   |                                     |   | 345,895 |   |
| Notes                payable                                                                                                                                                                                                         |   |                                 | 2,804,536   |   |                                     |   | 410,136 |   |
| Accrued                interest payable                                                                                                                                                                                              |   |                                 | 118,766     |   |                                     |   | 16,095 |   |
| Other                liabilities                                                                                                                                                                                                     |   |                                 | 18,962      |   |                                     |   | 511,751 |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
| **Total                Liabilities**                                                                                                                                                                                                 |   |                                 | 4,041,751   |   |                                     |   | 2,213,848 |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
| **Series                A Preferred Stock**, $.0001 par value per share; 1 million shares                authorized; 2,198 shares issued and outstanding; stated liquidation                value                of $1,000 per share |   |                                 | 2,250,005   |   |                                     |   | 1,420,913 |   |
| **Series                B Preferred Stock**, $.0001 par value per share; 9,941.341 shares                authorized; 9,621.940 shares issued and outstanding; stated liquidation                value of $1,000 per share            |   |                                 | 9,581,861   |   |                                     |   | 8,526,059 |   |
|                                                                                                                                                                                                                                 |   |                                 | 11,831,866  |   |                                     |   | 9,946,972 |   |
| **Total                Mandatorily Redeemable Preferred Stock**                                                                                                                                                                      |   |                                 |        |   |                                     |   |   |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
| **Stockholders'                Equity (Deficit)**                                                                                                                                                                                    |   |                                 |        |   |                                     |   |   |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
| Common                stock, $.0001 par value per share; 490 million shares authorized;                157,455,938 shares issued and outstanding                                                                                     |   |                                 | 15,746      |   |                                     |   | 15,700 |   |
| Additional                paid in capital                                                                                                                                                                                            |   |                                 | 2,364,816   |   |                                     |   | 2,082,647 |   |
| Accumulated                deficit                                                                                                                                                                                                   |   |                                 | (11,824,224 | )      |                                     |   | (9,889,098 | ) |
| Accumulated                other comprehensive income (loss)                                                                                                                                                                         |   |                                 | (4,178      | )      |                                     |   | - |   |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
| **Total                Stockholders' Equity (Deficit)**                                                                                                                                                                              |   |                                 | (9,447,840  | )      |                                     |   | (7,790,751 | ) |
|                                                                                                                                                                                                                                 |   |                                 |        |   |                                     |   |   |   |
| **TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**                                                                                                                                                              |   | $                                    | 6,425,777   |   |                                     | $      | 4,370,069 |   |

----

| **Jacobs                Financial Group, Inc,**                                |   |                                  |        |   |                                 |   |        |     |   |   |        |   |
|--------------------------------------------------------------------------------|--------|---------------------------------------|-------------|--------|--------------------------------------|--------|-------------|----------|--------|--------|-------------|--------|
| **Consolidated                Condensed Statements of Operations (Unaudited)** |   |                                  |        |   |                                 |   |        |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |
|                                                                           |   | **Three                Months Ended** |        |   | **Nine                Months Ended** |   |
|                                                                           |   | **February                29**        |        |   | **February                29**       |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |
|                                                                           |   | **2008**                              |        |   | **2007**                             |   |        | **2008** |   |   | **2007**    |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |
| **Revenues:**                                                                  |   |                                  |        |   |                                 |   |        |     |   |   |        |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |
| Investment                advisory services                                    |   | $                                     | 63,486      |   |                                 | $      | 63,748      |     |   | $      | 193,103     |   |   | $ | 196,959 |   |
| Insurance                premiums and commissions                              |   |                                  | 136,077     |   |                                 |   | 78,486      |     |   |   | 319,685     |   |   |   | 241,296 |   |
| Net                investment income                                           |   |                                  | 58,123      |   |                                 |   | 48,049      |     |   |   | 165,183     |   |   |   | 137,786 |   |
| Net                realized investment gains                                   |   |                                  | 4,140       |   |                                 |   | -           |     |   |   | 3,589       |   |   |   | - |   |
| Other                income                                                    |   |                                  | -           |   |                                 |   | -           |     |   |   | -           |   |   |   | 5,195 |   |
| **Total                Revenues**                                              |   |                                  | 261,826     |   |                                 |   | 190,283     |     |   |   | 681,560     |   |   |   | 581,236 |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
| **Expenses:**                                                                  |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
| Incurred                policy losses                                          |   |                                  | 40,656      |   |                                 |   | 23,326      |     |   |   | 92,635      |   |   |   | 75,122 |   |
| Insurance                policy acquisition costs                              |   |                                  | 39,724      |   |                                 |   | 26,939      |     |   |   | 88,825      |   |   |   | 81,185 |   |
| General                and administrative                                      |   |                                  | 337,435     |   |                                 |   | 356,092     |     |   |   | 986,031     |   |   |   | 1,108,242 |   |
| Mutual                fund costs                                               |   |                                  | 27,557      |   |                                 |   | 38,222      |     |   |   | 113,067     |   |   |   | 132,804 |   |
| Depreciation                                                                   |   |                                  | 2,134       |   |                                 |   | 3,289       |     |   |   | 6,275       |   |   |   | 9,081 |   |
| **Total                Expenses**                                              |   |                                  | 447,506     |   |                                 |   | 447,868     |     |   |   | 1,286,833   |   |   |   | 1,406,434 |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
| **Net                Income (Loss) from Operations**                           |   |                                  | (185,680    | )      |                                 |   | (257,585    | )        |   |   | (605,273    | )      |   |   | (825,198 | ) |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
| Gain                on debt extinguishment                                     |   |                                  | 115,470     |   |                                 |   | 42,445      |     |   |   | 115,470     |   |   |   | 42,445 |   |
| Interest                income                                                 |   |                                  | 3,503       |   |                                 |   | 38          |     |   |   | 9,321       |   |   |   | 12,260 |   |
| Interest                expense                                                |   |                                  | (243,549    | )      |                                 |   | (25,183     | )        |   |   | (365,260    | )      |   |   | (137,870 | ) |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
| **Net                Income (Loss)**                                           |   |                                  | (310,256    | )      |                                 |   | (240,285    | )        |   |   | (845,742    | )      |   |   | (908,363 | ) |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
| Accretion                of Mandatorily Redeemable Convertible                 |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |
| Preferred                Stock, including accrued dividends                    |   |                                  | (371,231    | )      |                                 |   | (335,462    | )        |   |   | (1,089,383  | )      |   |   | (989,944 | ) |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
| **Net                Income (Loss) Attributable to Common Stockholders**       |   | $                                     | (681,487    | )      |                                 | $      | (575,747    | )        |   | $      | (1,935,125  | )      |   | $ | (1,898,307 | ) |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
| **Basic                and Dilutive Net Income (Loss) Per Share:**             |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
| **Net                Income (Loss) Per Share**                                 |   | $                                     | -           |   |                                 | $      | -           |     |   | $      | (0.01       | )      |   | $ | (0.01 | ) |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
|                                                                           |   |                                  |        |   |                                 |   |        |     |   |   |        |   |   |   |   |   |
| **Weighted-Average                Shares Outstanding**                         |   |                                  | 157,309,520 |   |                                 |   | 156,865,392 |     |   |   | 157,152,081 |   |   |   | 156,045,180 |   |

----

| **Jacobs                  Financial Group, Inc,**                                                                                                    |   |                                    |     |   |                                   |   |     |     |   |   |       |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|----------|--------|----------------------------------------|--------|----------|----------|--------|--------|------------|--------|
| **Consolidated                  Condensed Statements of Comprehensive Income (Loss)                  (Unaudited)**                                   |   |                                    |     |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |
|                                                                                                                                                 |   | **Three                  Months Ended** |     |   | **Nine                  Months Ended** |   |
|                                                                                                                                                 |   | **February                  29**        |     |   | **February                  29**       |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |
|                                                                                                                                                 |   | **2008**                                |     |   | **2007**                               |   |     | **2008** |   |   | **2007**   |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |
| **Comprehensive                  income (loss):**                                                                                                    |   |                                    |     |   |                                   |   |     |     |   |   |       |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |
| Net                  income (loss) attributable to common stockholders                                                                               |   | $                                       | (681,487 | )      |                                   | $      | (575,747 | )        |   | $      | (1,935,125 | )      |   | $ | (1,898,307 | ) |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |   |   |   |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |   |   |   |   |
| **Other                  comprehensive income (loss):**                                                                                              |   |                                    |     |   |                                   |   |     |     |   |   |       |   |   |   |   |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |   |   |   |   |
| Net                  unrealized gain (loss) of available-for-sale investments arising                  during                  period                |   |                                    | (3,942   | )      |                                   |   | -        |     |   |   | (2,681     | )      |   |   | - |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |   |   |   |   |
| Reclassification                  adjustment for realized (gain) loss included in net income                                                         |   |                                    | (1,497   | )      |                                   |   | -        |     |   |   | (1,497     | )      |   |   | - |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |   |   |   |   |
| Net                  unrealized gain (loss) attributable to available-for-sale investments                  recognized in other comprehensive income |   |                                    | (5,439   | )      |                                   |   | -        |     |   |   | (4,178     | )      |   |   | - |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |   |   |   |   |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |   |   |   |   |
| **Comprehensive                  income (loss) attributable to common stockholders**                                                                 |   | $                                       | (686,926 | )      |                                   | $      | (575,747 | )        |   | $      | (1,939,303 | )      |   | $ | (1,898,307 | ) |
|                                                                                                                                                 |   |                                    |     |   |                                   |   |     |     |   |   |       |   |   |   |   |   |

----

| **Jacobs                  Financial Group, Inc,**                                                          |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |
|------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|------------|--------|-----------------------------------------------------|--------|----------|----------|--------|--------|------------|--------|
| **Consolidated                  Condensed Statement of Cash Flows (Unaudited)**                            |   |                                                 |       |   |                                                |   |     |     |   |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |
|                                                                                                       |   | **Three                  Months Ended February 29,** |       |   | **Nine                  Months Ended February 29,** |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |
|                                                                                                       |   | **2008**                                             |       |   | **2007**                                            |   |     | **2008** |   |   | **2007**   |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |
| **CASH                  FLOWS FROM OPERATING ACTIVITIES**                                                  |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |
| Net                  Income (Loss)                                                                         |   | $                                                    | (310,256   | )      |                                                | $      | (240,285 | )        |   | $      | (845,742   | )      |   | $ | (908,363 | ) |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| Adjustments                  to reconcile net income (loss) to                                             |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| net                  cash provided by (used in) operating activities:                                      |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| Unearned                  premium                                                                          |   |                                                 | 137,724    |   |                                                |   | (21,315  | )        |   |   | 32,105     |   |   |   | (77,479 | ) |
| Stock                  option expense                                                                      |   |                                                 | 22,433     |   |                                                |   | 50,633   |     |   |   | 79,619     |   |   |   | 166,368 |   |
| Stock                  issued (or to be issued) in connection with financing                  arrangements |   |                                                 | 173,584    |   |                                                |   | -        |     |   |   | 201,771    |   |   |   | - |   |
| Provision                  for loss reserves                                                               |   |                                                 | 40,656     |   |                                                |   | 23,325   |     |   |   | 92,635     |   |   |   | 75,122 |   |
| Amortization                  of premium                                                                   |   |                                                 | 5,547      |   |                                                |   | 7,978    |     |   |   | 12,498     |   |   |   | 26,148 |   |
| Depreciation                                                                                               |   |                                                 | 2,134      |   |                                                |   | 3,289    |     |   |   | 6,275      |   |   |   | 9,082 |   |
| Premium                  and other receivables                                                             |   |                                                 | 3,378      |   |                                                |   | 11,309   |     |   |   | 941        |   |   |   | 7,795 |   |
| Accretion                  of discount                                                                     |   |                                                 | (2,853     | )      |                                                |   | (5,716   | )        |   |   | (9,025     | )      |   |   | (16,900 | ) |
| Investment                  income due and accrued                                                         |   |                                                 | 13,347     |   |                                                |   | (15,461  | )        |   |   | 16,505     |   |   |   | (17,647 | ) |
| Realized                  (gain) loss on sale of securities                                                |   |                                                 | (4,140     | )      |                                                |   | -        |     |   |   | (3,589     | )      |   |   | - |   |
| Deferred                  policy acquisition costs                                                         |   |                                                 | (41,277    | )      |                                                |   | 8,290    |     |   |   | (36,925    | )      |   |   | 27,374 |   |
| (Gain)                  on extinguishment of debt                                                          |   |                                                 | (115,470   | )      |                                                |   | (42,445  | )        |   |   | (115,470   | )      |   |   | (42,445 | ) |
| Loss                  on disposal of furniture and equipment                                               |   |                                                 | 684        |   |                                                |   |     |     |   |   | 684        |   |   |   |   |   |
| Change                  in operating assets and liabilities:                                               |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| Other                  assets                                                                              |   |                                                 | (553,680   | )      |                                                |   | (149,724 | )        |   |   | (943,513   | )      |   |   | (132,863 | ) |
| Accounts                  payable and cash overdraft                                                       |   |                                                 | (7,361     | )      |                                                |   | (6,198   | )        |   |   | (122,547   | )      |   |   | (100,467 | ) |
| Accrued                  expenses and other liabilities                                                    |   |                                                 | 42,293     |   |                                                |   | 133,877  |     |   |   | (453,220   | )      |   |   | 295,717 |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| **Net                  cash flows from (used in) operating activities**                                    |   |                                                 | (593,257   | )      |                                                |   | (242,443 | )        |   |   | (2,086,998 | )      |   |   | (688,558 | ) |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| **CASH                  FLOWS FROM INVESTING ACTIVITIES**                                                  |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| Advances                  to related party                                                                 |   |                                                 | -          |   |                                                |   | -        |     |   |   | -          |   |   |   | (76,173 | ) |
| Repayments                  from related party                                                             |   |                                                 | -          |   |                                                |   | -        |     |   |   | -          |   |   |   | 127,227 |   |
| Short-term                  loan                                                                           |   |                                                 | -          |   |                                                |   | -        |     |   |   | (50,000    | )      |   |   | - |   |
| (Increase)                  decrease in short-term investments                                             |   |                                                 | (690,072   | )      |                                                |   | 83,353   |     |   |   | (895,944   | )      |   |   | (56,360 | ) |
| Costs                  of available for sale securities acquired                                           |   |                                                 | (97,582    | )      |                                                |   | -        |     |   |   | (97,582    | )      |   |   | - |   |
| Costs                  of mortgaged-backed securities acquired                                             |   |                                                 | (2,181,077 | )      |                                                |   | (189,963 | )        |   |   | (2,503,752 | )      |   |   | (458,906 | ) |
| Costs                  of bonds acquired                                                                   |   |                                                 | -          |   |                                                |   | -        |     |   |   | -          |   |   |   | (100,000 | ) |
| Purchase                  of equity securities                                                             |   |                                                 | (438       | )      |                                                |   | -        |     |   |   | (25,438    | )      |   |   | - |   |
| Sale                  of securities available for sale                                                     |   |                                                 | -          |   |                                                |   | -        |     |   |   | 169,330    |   |   |   | - |   |
| Redemption                  of available for sale securities upon call                                     |   |                                                 | 830,000    |   |                                                |   |     |     |   |   | 830,000    |   |   |   |   |   |
| Repayment                  of mortgage-backed securities                                                   |   |                                                 | 116,751    |   |                                                |   | 106,950  |     |   |   | 257,071    |   |   |   | 371,246 |   |
| Redemption                  of bonds upon call or at maturity                                              |   |                                                 | 1,175,000  |   |                                                |   | -        |     |   |   | 1,325,000  |   |   |   | - |   |
| Purchase                  of furniture and equipment                                                       |   |                                                 | (1,510     | )      |                                                |   | (2,051   | )        |   |   | (1,510     | )      |   |   | (6,008 | ) |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| **Net                  cash flows from (used in) investing activities**                                    |   |                                                 | (848,928   | )      |                                                |   | (1,711   | )        |   |   | (992,825   | )      |   |   | (198,974 | ) |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| **CASH                  FLOWS FROM FINANCING ACTIVITIES**                                                  |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| Proceeds                  from related party debt                                                          |   |                                                 | -          |   |                                                |   | 36,908   |     |   |   | 127,200    |   |   |   | 115,457 |   |
| Repayment                  of related party debt                                                           |   |                                                 | -          |   |                                                |   | (73,647  | )        |   |   | (142,963   | )      |   |   | (133,698 | ) |
| Proceeds                  from borrowings                                                                  |   |                                                 | 175,000    |   |                                                |   | 25,000   |     |   |   | 2,625,000  |   |   |   | 325,000 |   |
| Repayment                  of borrowings                                                                   |   |                                                 | (59,952    | )      |                                                |   | (46,645  | )        |   |   | (214,837   | )      |   |   | (108,248 | ) |
| Proceeds                  from issuance of Series A preferred stock                                        |   |                                                 | 701,000    |   |                                                |   | 30,000   |     |   |   | 771,000    |   |   |   | 268,000 |   |
| Proceeds                  from issuance of Series B preferred stock                                        |   |                                                 | -          |   |                                                |   | 253,320  |     |   |   | 25,000     |   |   |   | 493,220 |   |
| Redemption                  of Series B preferred stock                                                    |   |                                                 | -          |   |                                                |   | -        |     |   |   | -          |   |   |   | (62,477 | ) |
| Proceeds                  from issuance of common stock                                                    |   |                                                 | -          |   |                                                |   | 6,680    |     |   |   | -          |   |   |   | 16,780 |   |
| Proceeds                  from exercise of common stock warrants                                           |   |                                                 | 335        |   |                                                |   | -        |     |   |   | 335        |   |   |   | 1,500 |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| **Net                  cash flows from financing activities**                                              |   |                                                 | 816,383    |   |                                                |   | 231,616  |     |   |   | 3,190,735  |   |   |   | 915,534 |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| **NET                  INCREASE (DECREASE) IN CASH**                                                       |   |                                                 | (625,802   | )      |                                                |   | (12,538  | )        |   |   | 110,912    |   |   |   | 28,002 |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| **CASH                  AT BEGINNING OF PERIOD**                                                           |   |                                                 | 762,012    |   |                                                |   | 40,540   |     |   |   | 25,298     |   |   |   | - |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| **CASH                  AT END OF PERIOD**                                                                 |   | $                                                    | 136,210    |   |                                                | $      | 28,002   |     |   | $      | 136,210    |   |   | $ | 28,002 |   |
|                                                                                                       |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |
| **See                  supplemental disclosures on following page**                                        |   |                                                 |       |   |                                                |   |     |     |   |   |       |   |   |   |   |   |

----

|                                                                                    |   | **Three                  Months Ended February 29,** |    |   | **Nine                  Months Ended February 29,** |   |
|-----------------------------------------------------------------------------------------|--------|------------------------------------------------------|---------|--------|-----------------------------------------------------|--------|
|                                                                                    |   |                                                 |    |   |                                                |   |   |   |   |   |   |   |
|                                                                                    |   | **2008**                                             |    |   | **2007**                                            |   |   | **2008** |   |   | **2007** |   |
|                                                                                    |   |                                                 |    |   |                                                |   |   |   |   |   |   |   |
| **SUPPLEMENTAL                  DISCLOSURES**                                           |   |                                                 |    |   |                                                |   |   |   |   |   |   |   |
|                                                                                    |   |                                                 |    |   |                                                |   |   |   |   |   |   |   |
| Interest                  paid                                                          |   | $                                                    | 8,637   |   |                                                | $      | 12,320 |   |   | $ | 49,295 |   |   | $ | 38,502 |   |
| Income                  taxes paid                                                      |   |                                                 | -       |   |                                                |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                    |   |                                                 |    |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
| Non-cash                  investing and financing transaction:                          |   |                                                 |    |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
| Assumption                  of accounts payable by related party                        |   |                                                 | -       |   |                                                |   | - |   |   |   | - |   |   |   | 365,000 |   |
| Additional                  consideration paid for issuance of debt                     |   |                                                 | 173,584 |   |                                                |   | - |   |   |   | 201,771 |   |   |   | - |   |
| Reclassification                  of bonds held-to-maturity to bonds available for sale |   |                                                 | -       |   |                                                |   | - |   |   |   | 998,534 |   |   |   | - |   |
|                                                                                    |   |                                                 |    |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |                                                 |    |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |                                                 |    |   |                                                |   |   |   |   |   |   |   |   |   |   |   |

----

| **Jacobs                  Financial Group, Inc.**                                                                                                               |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|--------|---------------------------------------------|--------|-----------|-----------------|--------|--------|------------|--------|--------|-----------------------------------------------------|-----------|--------|-----------------|--------|-------------|-------------------|--------|--------|-------------|--------|--------|------------------------------------|-----------|--------|
| **Consolidated                  Condensed Statement of Mandatorily Redeemable Preferred Stock and                  Stockholders' Equity (Deficit) (Unaudited)** |   |                                        |   |   |
| **For                  the Three Month Period Ended February 29, 2008**                                                                                         |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   | **Stockholders'                  Equity (Deficit)** |      |
|                                                                                                                                                            |   | **Series                  A**               |   |   | **Series                  B**               |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |
|                                                                                                                                                            |   | **Mandatorily                  Redeemable** |   |   | **Mandatorily                  Redeemable** |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        | **Accumulated**   |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      | **Convertible** |   |   |       |   |   |                                                |      |   | **Additional**  |   |        |              |   |   | **Other**   |   |   |                               |      |
|                                                                                                                                                            |   | **Preferred                  Stock**        |   |   | **Preferred                  Stock**        |   |      |            |   |   |       |   |   | **Paid-In**                                         |      |   | **Accumulated** |   |        | **Comprehensive** |   |
|                                                                                                                                                            |   | **Shares**                                  |   |   | **Amount**                                  |   |      | **Shares**      |   |   | **Amount** |   |   | **Shares**                                          |      |   | **Amount**      |   |        | **Capital**       |   |   | **Deficit** |   |   | **Income                  (Loss)** |      |   | **Total** |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |
| **Balance,                  November 30, 2007**                                                                                                                 |   |                                        | 1,497  |   |                                        | $      | 1,529,067 |            |   |   | 9,621.940  |   |   | $                                                   | 9,230,567 |   |            |   | 157,122,836 |              |   | $      | 15,712      |   |   | $                                  | 2,168,498 |   |   | $ | (11,142,736 | ) |   | $ | 1,261 |   |   | $ | (8,957,265 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of Series A and B Preferred Stock and common stock                                                                                    |   |                                        | 701    |   |                                        |   | 701,000   |            |   |   | -          |   |   |                                                | -         |   |            |   | -           |              |   |   | -           |   |   |                               | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock as additional consideration for financing                  arrangements                                               |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | -           |              |   |   | -           |   |   |                               | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock upon exercise of warrants                                                                                             |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | 333,102     |              |   |   | 34          |   |   |                               | 301       |   |   |   | - |   |   |   | - |   |   |   | 335 |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accretion                  of mandatorily redeemable convertible preferred stock                                                                                |   |                                        | -      |   |                                        |   | 4,038     |            |   |   | -          |   |   |                                                | 129,423   |   |            |   | -           |              |   |   | -           |   |   |                               | -         |   |   |   | (133,461 | ) |   |   | - |   |   |   | (133,461 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accrued                  dividends of mandatorily redeemable convertible preferred                  stock                                                       |   |                                        | -      |   |                                        |   | 15,900    |            |   |   | -          |   |   |                                                | 221,871   |   |            |   | -           |              |   |   | -           |   |   |                               | -         |   |   |   | (237,771 | ) |   |   |   |   |   |   | (237,771 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expense                  of common shares to be issued in connection with financing                  arrangements                                               |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | -           |              |   |   | -           |   |   |                               | 173,584   |   |   |   | - |   |   |   | - |   |   |   | 173,584 |   |
| Common                  stock option expense                                                                                                                    |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | -           |              |   |   | -           |   |   |                               | 22,433    |   |   |   | - |   |   |   | - |   |   |   | 22,433 |   |
| Unrealized                  net gain (loss) on available for sale securities                                                                                    |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | -           |              |   |   | -           |   |   |                               | -         |   |   |   | - |   |   |   | (5,439 | ) |   |   | (5,439 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss), three month period ended February 29, 2008                                                                                  |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | -           |              |   |   | -           |   |   |                               | -         |   |   |   | (310,256 | ) |   |   | - |   |   |   | (310,256 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance,                  February 29, 2008**                                                                                                                 |   |                                        | 2,198  |   |                                        | $      | 2,250,005 |            |   |   | 9,621.940  |   |   | $                                                   | 9,581,861 |   |            |   | 157,455,938 |              |   | $      | 15,746      |   |   | $                                  | 2,364,816 |   |   | $ | (11,824,224 | ) |   | $ | (4,178 | ) |   | $ | (9,447,840 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| **Jacobs                  Financial Group, Inc.**                                                                                                               |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|--------|---------------------------------------------|--------|-----------|-----------------|--------|--------|------------|--------|--------|-----------------------------------------------------|-----------|--------|-----------------|--------|-------------|-------------------|--------|--------|-------------|--------|--------|------------------------------------|-----------|--------|
| **Consolidated                  Condensed Statement of Mandatorily Redeemable Preferred Stock and                  Stockholders' Equity (Deficit) (Unaudited)** |   |                                        |   |   |
| **For                  the Nine Month Period Ended February 29, 2008**                                                                                          |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   | **Stockholders'                  Equity (Deficit)** |      |
|                                                                                                                                                            |   | **Series                  A**               |   |   | **Series                  B**               |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |
|                                                                                                                                                            |   | **Mandatorily                  Redeemable** |   |   | **Mandatorily                  Redeemable** |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        | **Accumulated**   |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      | **Convertible** |   |   |       |   |   |                                                |      |   | **Additional**  |   |        |              |   |   | **Other**   |   |   |                               |      |
|                                                                                                                                                            |   | **Preferred                  Stock**        |   |   | **Preferred                  Stock**        |   |      |            |   |   |       |   |   | **Paid-In**                                         |      |   | **Accumulated** |   |        | **Comprehensive** |   |
|                                                                                                                                                            |   | **Shares**                                  |   |   | **Amount**                                  |   |      | **Shares**      |   |   | **Amount** |   |   | **Shares**                                          |      |   | **Amount**      |   |        | **Capital**       |   |   | **Deficit** |   |   | **Income                  (Loss)** |      |   | **Total** |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |
| **Balance,                  May 31, 2007**                                                                                                                      |   |                                        | 1,427  |   |                                        | $      | 1,420,913 |            |   |   | 9,596.940  |   |   | $                                                   | 8,526,059 |   |            |   | 156,997,836 |              |   | $      | 15,700      |   |   | $                                  | 2,082,647 |   |   | $ | (9,889,098 | ) |   | $ | - |   |   | $ | (7,790,751 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of Series A and B Preferred Stock and common stock                                                                                    |   |                                        | 771    |   |                                        |   | 771,000   |            |   |   | 25.000     |   |   |                                                | 24,510    |   |            |   | 25,000      |              |   |   | 2           |   |   |                               | 488       |   |   |   | - |   |   |   | - |   |   |   | 490 |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock as additional consideration for financing                  arrangements                                               |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | 100,000     |              |   |   | 10          |   |   |                               | 1,546     |   |   |   | - |   |   |   | - |   |   |   | 1,556 |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock upon exercise of warrants                                                                                             |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | 333,102     |              |   |   | 34          |   |   |                               | 301       |   |   |   | - |   |   |   | - |   |   |   | 335 |   |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accretion                  of mandatorily redeemable convertible preferred stock                                                                                |   |                                        | -      |   |                                        |   | 11,952    |            |   |   | -          |   |   |                                                | 381,495   |   |            |   | -           |              |   |   | -           |   |   |                               | -         |   |   |   | (393,447 | ) |   |   | - |   |   |   | (393,447 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accrued                  dividends of mandatorily redeemable convertible preferred                  stock                                                       |   |                                        | -      |   |                                        |   | 46,140    |            |   |   | -          |   |   |                                                | 649,797   |   |            |   | -           |              |   |   | -           |   |   |                               | -         |   |   |   | (695,937 | ) |   |   | - |   |   |   | (695,937 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expense                  of common shares to be issued in connection with financing                  arrangements                                               |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | -           |              |   |   | -           |   |   |                               | 200,215   |   |   |   | - |   |   |   | - |   |   |   | 200,215 |   |
| Common                  stock option expense                                                                                                                    |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | -           |              |   |   | -           |   |   |                               | 79,619    |   |   |   | - |   |   |   | - |   |   |   | 79,619 |   |
| Unrealized                  net gain on available for sale securities                                                                                           |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | -           |              |   |   | -           |   |   |                               | -         |   |   |   | - |   |   |   | (4,178 | ) |   |   | (4,178 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss), nine month period ended February 29, 2008                                                                                   |   |                                        | -      |   |                                        |   | -         |            |   |   | -          |   |   |                                                | -         |   |            |   | -           |              |   |   | -           |   |   |                               | -         |   |   |   | (845,742 | ) |   |   | - |   |   |   | (845,742 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance,                  February 29, 2008**                                                                                                                 |   |                                        | 2,198  |   |                                        | $      | 2,250,005 |            |   |   | 9,621.940  |   |   | $                                                   | 9,581,861 |   |            |   | 157,455,938 |              |   | $      | 15,746      |   |   | $                                  | 2,364,816 |   |   | $ | (11,824,224 | ) |   | $ | (4,178 | ) |   | $ | (9,447,840 | ) |
|                                                                                                                                                            |   |                                        |   |   |                                        |   |      |            |   |   |       |   |   |                                                |      |   |            |   |        |              |   |   |        |   |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**Jacobs      Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

**Note        A – Basis of Presentation**

*Reclassifications*

*Liquidity        and Going Concern*

----

**Jacobs        Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

**Note        B – Recent Accounting Pronouncements**

*Accounting for Nonmonetary Transactions*

----

**Jacobs        Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

----

**Jacobs        Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

----

**Jacobs        Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

----

**Jacobs        Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

**Note        C – Investments**

|                                  |   | February                  29, 2008 |    |
|---------------------------------------|--------|------------------------------------|---------|
|                                  |   | Amortized                  Cost    |    |   | Gross                  Unrealized Gains |   |   | Gross                  Unrealized Losses |   |   | Fair                  Market Value |   |
| Municipal                  securities |   | $                                  | 97,582  |   |   | $ | - |   |   | $ | 3,397 |   |   | $ | 94,185 |   |
|                                  |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity                  securities    |   |                               | 25,438  |   |   |   | - |   |   |   | 781 |   |   |   | 24,657 |   |
|                                  |   | $                                  | 123,020 |   |   | $ | - |   |   | $ | 4,178 |   |   | $ | 118,842 |   |

----

**Jacobs        Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

|                                           |   | Three-Month                  Period EndedFebruary                  29, 2008 |   |   | Nine-Month                  Period EndedFebruary                  29, 2008 |   |
|------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------|--------|
|                                           |   |                                                                        |   |   |                                                                       |   |
| Available                  for sale securities |   |                                                                        |   |   |                                                                       |   |
|                                           |   |                                                                        |   |   |                                                                       |   |
| Gross                  realized gains          |   | $                                                                           | 835    |   |                                                                       | $      | 835 |   |
| Gross                  realized losses         |   |                                                                        | -      |   |                                                                       |   | (551 | ) |
| Net                  realized gain             |   |                                                                        | 835    |   |                                                                       |   | 284 |   |
|                                           |   |                                                                        |   |   |                                                                       |   |   |   |
| Held-to-maturity                  securities   |   |                                                                        |   |   |                                                                       |   |   |   |
|                                           |   |                                                                        |   |   |                                                                       |   |   |   |
| Gross                  realized gains          |   | $                                                                           | 3,305  |   |                                                                       | $      | 3,305 |   |
| Gross                  realized losses         |   |                                                                        | -      |   |                                                                       |   | - |   |
| Net                  realized gain             |   |                                                                        | 3,305  |   |                                                                       |   | 3,305 |   |
|                                           |   |                                                                        |   |   |                                                                       |   |   |   |
| Net                  realized gain             |   | $                                                                           | 4,140  |   |                                                                       | $      | 3,589 |   |

**Note        D – Notes Receivable**

----

**Jacobs        Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

**Note        E – Other Assets**

| Advance                  deposits for professional fees    |   | $      | 257,700 |   |
|------------------------------------------------------------|--------|--------|---------|--------|
| Deferred                  costs for professional services  |   |   | 561,600 |   |
| Escrow                  deposits for proposed acquisitions |   |   | 125,000 |   |
| (See                  Note I-Commitments)                  |   |   |    |   |
| Total                                                      |   | $      | 944,300 |   |

**Note        F – Notes Payable and Advances from Related Party**

----

**Jacobs        Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

| Unsecured                  demand notes payable to individuals; interest rate fixed @                  10.00%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $      | 95,000    |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |      |   |
| Unsecured                  notes payable (bridge-financing) to a group of individuals due                  in full                  upon consummation by Company of a qualified equity offering providing                  net                  proceeds of at least $50 million; or if such a qualified equity                  offering                  is not consummated by the six-month anniversary date of the notes                  (March                  10, 2008), accrued interest-to-date shall be payable, with quarterly                  installments of principal and interest in the amount of $160,685                  commencing June 10, 2008; interest rate fixed @ 10.00%.                                                                                                                                                   |   |   | 2,500,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |      |   |
| Furthermore,                  upon retirement of note upon consummation of a qualified equity                  offering,                  the Company shall issue 5.00% of the Company’s outstanding common shares                  immediately following such offering as additional consideration;                  in the                  event that consummation of a qualified equity offering is not achieved                  by                  March 10, 2008, then the Company shall issue 5.00% of the Company’s                  outstanding common shares at such date and shall issue 2.00% of                  the                  Company’s outstanding common shares upon each six-month anniversary date                  thereof until retirement of the notes. (See Note J-Subsequent                  Events) |   |   |      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |      |   |
| Unsecured                  term note payable to commercial bank in the original amount of                  $250,000                  and payable in equal monthly payments of $5,738; interest rate                  fixed @                  13.25%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | 209,536   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $      | 2,804,536 |   |

| 2009(including                  demand notes) |   | $      | 439,111   |   |
|-----------------------------------------------|--------|--------|-----------|--------|
| 2010                                          |   |   | 486,958   |   |
| 2011                                          |   |   | 539,749   |   |
| 2012                                          |   |   | 592,655   |   |
| 2013                                          |   |   | 589,330   |   |
| 2014                                          |   |   | 156,733   |   |
|                                          |   |   |      |   |
|                                          |   | $      | 2,804,536 |   |

----

**Jacobs        Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

**Note        G – Other Liabilities**

**Note        H – Mandatorily Redeemable Preferred Stock and Common        Stock**

**Note        I – Commitments and Material Agreements**

----

**Jacobs        Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

**Note        J – Subsequent Events**

----

**Jacobs        Financial Group, Inc.**

**NOTES        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

**Note        K – Segment Reporting**

|                                           |   | **Three-Month                  Period Ended**  |     |
|------------------------------------------------|--------|------------------------------------------------|----------|
| **Industry                  Segment**          |   | **February                  29**** 2008** |     |   | **February                  28 2007** |   |
| **Revenues:**                                  |   |                                           |     |   |   |   |
|  Investment                  advisory     |   | $                                              | 63,925   |   |   | $ | 63,748 |   |
|  Surety                  insurance        |   |                                           | 198,340  |   |   |   | 126,535 |   |
|  Corporate                                |   |                                           | 118,534  |   |   |   | 42,483 |   |
|  Total                  revenues          |   | $                                              | 380,799  |   |   | $ | 232,766 |   |
|                                           |   |                                           |     |   |   |   |   |   |
| **Net                  Income (Loss):**        |   |                                           |     |   |   |   |   |   |
|  Investment                  advisory     |   | $                                              | (45,718  | ) |   | $ | (56,361 | ) |
|  Surety                  insurance        |   |                                           | 62,416   |   |   |   | (2,947 | ) |
|  Corporate                                |   |                                           | (326,954 | ) |   |   | (180,977 | ) |
|  Total                  net income (loss) |   | $                                              | (310,256 | ) |   | $ | (240,285 | ) |
|                                           |   |                                           |     |   |   |   |   |   |
|                                           |   | **Nine-Month                  Period Ended**   |     |
| **Industry                  Segment**          |   | **February                  29**** 2008** |     |   | **February                  28 2007** |   |
| **Revenues:**                                  |   |                                           |     |   |   |   |   |   |
|  Investment                  advisory     |   | $                                              | 193,546  |   |   | $ | 202,154 |   |
|  Surety                  insurance        |   |                                           | 488,457  |   |   |   | 379,082 |   |
|  Corporate                                |   |                                           | 124,348  |   |   |   | 54,705 |   |
|  Total                  revenues          |   | $                                              | 806,351  |   |   | $ | 635,941 |   |
|                                           |   |                                           |     |   |   |   |   |   |
| **Net                  Income (Loss):**        |   |                                           |     |   |   |   |   |   |
|  Investment                  advisory     |   | $                                              | (160,451 | ) |   | $ | (286,415 | ) |
|  Surety                  insurance        |   |                                           | 100,337  |   |   |   | (38,848 | ) |
|  Corporate                                |   |                                           | (785,628 | ) |   |   | (583,100 | ) |
|  Total                  net income (loss) |   | $                                              | (845,742 | ) |   | $ | (908,363 | ) |

----

**Item      2**
**Management’s Discussion and Analysis of Financial Condition      and Results of Operations**

***Recent      Developments and Future Direction of Company***

----

***Results      of Operations for the Three-Month Period Ended February 29,      2008***

|                                         |   | 3                Month Period Ended |    |
|----------------------------------------------|--------|-------------------------------------|---------|
|                                         |   | February                29,         |    |
|                                         |   | 2008                                |    |   | 2007 |   |
| Premium                earned                |   | $                                   | 135,603 |   |   | $ | 77,829 |   |
| Net                investment income         |   |                                | 58,123  |   |   |   | 48,049 |   |
| Net                realized investment gains |   |                                | 4,140   |   |   |   | - |   |
| Commissions                earned            |   |                                | 474     |   |   |   | 657 |   |
| Total                                        |   | $                                   | 198,340 |   |   | $ | 126,535 |   |

----

|                                                  |   | Three-month                Period EndedFebruary                29, |    |   |   |   |
|-------------------------------------------------------|--------|--------------------------------------------------------------------|---------|--------|--------|--------|
|                                                  |   | 2008                                                               |    |   | 2007   |   |   | Difference |   |
| Salaries                and related costs             |   | $                                                                  | 175,998 |   |   | $      | 209,021 |   |   | $ | (33,023 | ) |
| General                office expense                 |   |                                                               | 32,157  |   |   |   | 30,168 |   |   |   | 1,989 |   |
| Legal                and other professional fees      |   |                                                               | 26,114  |   |   |   | 26,329 |   |   |   | (215 | ) |
| Audit,                accounting and related services |   |                                                               | 37,267  |   |   |   | 26,500 |   |   |   | 10,767 |   |
| Travel,                meals and entertainment        |   |                                                               | 19,413  |   |   |   | 17,904 |   |   |   | 1,509 |   |
| Other                general and administrative       |   |                                                               | 46,486  |   |   |   | 46,170 |   |   |   | 316 |   |
|                                                  |   |                                                               |    |   |   |   |   |   |   |   |   |   |
| Total                general and administrative       |   | $                                                                  | 337,435 |   |   | $      | 356,092 |   |   | $ | (18,657 | ) |

----

|                                             |   | Three-month                Period EndedFebruary                29, |    |   |   |   |
|--------------------------------------------------|--------|--------------------------------------------------------------------|---------|--------|--------|--------|
|                                             |   | 2008                                                               |    |   | 2007   |   |   | Difference |   |
| Salaries                and taxes                |   | $                                                                  | 167,728 |   |   | $      | 154,087 |   |   | $ | 13,641 |   |
| Commissions                                      |   |                                                               | 31,632  |   |   |   | - |   |   |   | 31,632 |   |
| Stock                option expense              |   |                                                               | 22,433  |   |   |   | 50,633 |   |   |   | (28,200 | ) |
| Fringe                benefits                   |   |                                                               | 13,050  |   |   |   | 16,001 |   |   |   | (2,951 | ) |
| Key-man                life insurance            |   |                                                               | 12,704  |   |   |   | 4,948 |   |   |   | 7,756 |   |
| Deferred                policy acquisition costs |   |                                                               | (71,549 | )      |   |   | (16,648 | ) |   |   | (54,901 | ) |
|                                             |   |                                                               |    |   |   |   |   |   |   |   |   |   |
| Total                salaries and related costs  |   | $                                                                  | 175,998 |   |   | $      | 209,021 |   |   | $ | (33,023 | ) |

** **
** **
** **

----

----

|                                                                                                                                                       |   | Three-month                Period EndedFebruary                29, |    |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|---------|--------|--------|--------|
|                                                                                                                                                       |   | 2008                                                               |    |   | 2007   |   |   | Difference |   |
| Interest                expense on bridge financing                                                                                                        |   | $                                                                  | 59,803  |   |   | $      | - |   |   | $ | 59,803 |   |
| Expense                of common shares to be issued in connection with bridge financing                arrangements                                       |   |                                                               | 173,584 |   |   |   | - |   |   |   | 173,584 |   |
| Interest                expense on demand and term notes                                                                                                   |   |                                                               | 10,017  |   |   |   | 14,162 |   |   |   | (4,145 | ) |
| Interest                expense accrued on debt obligations subsequently settled and recorded                as                gain on debt extinguishment |   |                                                               | -       |   |   |   | 9,375 |   |   |   | (9,375 | ) |
| Other                finance charges                                                                                                                       |   |                                                               | 145     |   |   |   | 1,646 |   |   |   | (1,501 | ) |
| Total                interest expense                                                                                                                      |   | $                                                                  | 43,549  |   |   | $      | 25,183 |   |   | $ | 18,366 |   |

***Results      of Operations for the Nine-Month Period Ended February 29,      2008***

----

|                                         |   | 9                Month Period Ended |    |
|----------------------------------------------|--------|-------------------------------------|---------|
|                                         |   | February                29,         |    |
|                                         |   | 2008                                |    |   | 2007 |   |
| Premium                earned                |   | $                                   | 309,181 |   |   | $ | 234,786 |   |
| Net                investment income         |   |                                | 165,183 |   |   |   | 137,786 |   |
| Net                realized investment gains |   |                                | 3,589   |   |   |   | - |   |
| Commissions                earned            |   |                                | 10,504  |   |   |   | 6,510 |   |
| Total                                        |   | $                                   | 488,457 |   |   | $ | 379,082 |   |

----

|                                                  |   | Nine-month                Period EndedFebruary                29, |    |   |   |   |
|-------------------------------------------------------|--------|-------------------------------------------------------------------|---------|--------|--------|--------|
|                                                  |   | 2008                                                              |    |   | 2007   |   |   | Difference |   |
| Salaries                and related costs             |   | $                                                                 | 544,788 |   |   | $      | 610,092 |   |   | $ | (65,304 | ) |
| General                office expense                 |   |                                                              | 84,062  |   |   |   | 86,218 |   |   |   | (2,156 | ) |
| Legal                and other professional fees      |   |                                                              | 101,847 |   |   |   | 121,485 |   |   |   | (19,638 | ) |
| Audit,                accounting and related services |   |                                                              | 92,913  |   |   |   | 93,470 |   |   |   | (557 | ) |
| Travel,                meals and entertainment        |   |                                                              | 49,473  |   |   |   | 67,092 |   |   |   | (17,619 | ) |
| Other                general and administrative       |   |                                                              | 112,948 |   |   |   | 129,885 |   |   |   | (16,937 | ) |
|                                                  |   |                                                              |    |   |   |   |   |   |   |   |   |   |
| Total                general and administrative       |   | $                                                                 | 986,031 |   |   | $      | 1,108,242 |   |   | $ | (122,211 | ) |

|                                             |   | Nine-month                Period EndedFebruary                29, |     |   |   |   |
|--------------------------------------------------|--------|-------------------------------------------------------------------|----------|--------|--------|--------|
|                                             |   | 2008                                                              |     |   | 2007   |   |   | Difference |   |
| Salaries                and taxes                |   | $                                                                 | 464,224  |   |   | $      | 421,840 |   |   | $ | 42,384 |   |
| Commissions                                      |   |                                                              | 31,855   |   |   |   | - |   |   |   | 31,855 |   |
| Stock                option expense              |   |                                                              | 79,619   |   |   |   | 166,367 |   |   |   | (86,748 | ) |
| Fringe                benefits                   |   |                                                              | 44,747   |   |   |   | 43,350 |   |   |   | 1,397 |   |
| Key-man                life insurance            |   |                                                              | 30,639   |   |   |   | 20,141 |   |   |   | 10,498 |   |
| Deferred                policy acquisition costs |   |                                                              | (106,296 | )      |   |   | (41,606 | ) |   |   | (64,690 | ) |
|                                             |   |                                                              |     |   |   |   |   |   |   |   |   |   |
| Total                salaries and related costs  |   | $                                                                 | 544,788  |   |   | $      | 610,092 |   |   | $ | (65,304 | ) |

----

** **
** **
** **

----

|                                                                                                                                                       |   | Nine-month                Period EndedFebruary                29, |    |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|--------|--------|--------|
|                                                                                                                                                       |   | 2008                                                              |    |   | 2007   |   |   | Difference |   |
| Interest                expense on bridge financing                                                                                                        |   | $                                                                 | 108,056 |   |   | $      | 110 |   |   | $ | 108,056 |   |
| Expense                of common shares to be issued in connection with bridge financing                arrangements                                       |   |                                                              | 200,216 |   |   |   | - |   |   |   | 200,216 |   |
| Interest                expense on demand and term notes                                                                                                   |   |                                                              | 39,260  |   |   |   | 41,726 |   |   |   | (2,466 | ) |
| Interest                expense accrued on debt obligations subsequently settled and recorded                as                gain on debt extinguishment |   |                                                              | 13,075  |   |   |   | 92,886 |   |   |   | (79,811 | ) |
| Other                finance charges                                                                                                                       |   |                                                              | 4,653   |   |   |   | 3,148 |   |   |   | 1,395 |   |
| Total                interest expense                                                                                                                      |   | $                                                                 | 365,260 |   |   | $      | 137,870 |   |   | $ | 227,390 |   |

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***Critical      Accounting Policies and Estimates***

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***Analysis      of Liquidity, Capital Resources and Financial      Position***

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**Item      3.                      Controls and Procedures**

***Evaluation      of Internal and Disclosure Controls***

**PART      II – OTHER INFORMATION**

**Item      1. Legal Proceedings**

**Item      2. Unregistered Sales of Equity Securities**

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**Item      3. Defaults upon Senior Securities**

**Item      4. Submission of Matters to a Vote of Security Holders**

**Item      5. Other Information**

**Item      6. Exhibits**

| 3.1    | Company’s                Articles of Incorporation (1)                                                                                                                                                  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2    | Company’s                By-laws (1)                                                                                                                                                                    |
| 3.3    | Certificate                of the Designations, Powers, Preferences and Rights of Series A Preferred                Stock of Jacobs Financial Group (1)                                                       |
| 3.4    | Certificate                of the Designations, Powers, Preferences and Rights of Series B Preferred                Stock of Jacobs Financial Group (1)                                                       |
| 4.1    | Certificate                of the Designations, Powers, Preferences and Rights of Series A Preferred                Stock of Jacobs Financial Group (1)                                                       |
| 4.2    | Certificate                of the Designations, Powers, Preferences and Rights of Series B Preferred                Stock of Jacobs Financial Group (1)                                                       |
| 10.1   | Agreement                with National Indemnity Company to purchase Unione Italiana Insurance                Company of America dated December 3, 2007 (3)                                                   |
| 10.2   | Engagement                Agreement between Friedman, Billings, Ramsey & Co., Inc. and Jacobs                Financial Group, Inc. dated December 5, 2007                                                 |
| 10.3   | Agreement                to acquire by merger Reclamation Surety Holding Company, Inc. (4)                and                (5)                                                                              |
| 31.1   | Certification                of Chief Executive Officer pursuant to Rule 13a-146.1 promulgated                under                the Securities Exchange Act of 1934                                        |
| 31.2   | Certification                of Chief Financial Officer pursuant to Rule 13a-146.1 promulgated                under                the Securities Exchange Act of 1934                                        |
| 32.1   | Certification                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002 |
| 32.2   | Certification                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as                adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002 |
| 99.1   | Form                of Subscription Agreement and Promissory Note (2)                                                                                                                                         |
|   | (1)                                                                                                                                                                                                           | Incorporated                by reference to the Company’s Current Report on form 8-K dated December                29, 2005. |
|   | (2)                                                                                                                                                                                                           | Incorporated                by reference to the Company’s Current Report on form 8-K dated September                14, 2007. |
|   | (3)                                                                                                                                                                                                           | Incorporated                by reference to the Company’s Current Report on form 8-K dated December 3,                2007. |
|   | (4)                                                                                                                                                                                                           | Incorporated                by reference to the Company’s Current Report on form 8-K dated December                14, 2007. |
|   | (5)                                                                                                                                                                                                           | Incorporated                by reference to the Company’s Current Report on form 8-K dated February 8,                2008. |

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**SIGNATURES**

| Date:                April 21, 2008 | JACOBS                FINANCIAL GROUP, INC. |
|-------------------------------------|---------------------------------------------|
|                                | (Registrant)                                |
|  By:                           |                                        |
|                                | /s/John                M. Jacobs            |
|                                | John                M. Jacobs, President    |

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