**America First Associates Corp.**

**Financial Statements Three Months ended March 31, 2002 Index to Financial Statements**

| Statements of Financial Condition             | F-2  |
|-----------------------------------------------|------|
| Statements of Operations                      | F-3  |
| Statements of Changes in Stockholders' Equity | F-4  |
| Statements of Cash Flow                       | F-5  |
| Notes to Financial Statements                 | F-6  |
| Management Discussion and Analysis            | F-10 |

 

  

**America First Associates Corp. Statements of Financial Condition***For The Three Months Ended March 31, 2002*

|  | March 31, 2002AssetsCash and cash equivalents$ 1,007,488Securities owned555,919Office furniture and equipment, net of accumulated      depreciation of $21,632; for three months ended 20025,941Other assets             31,175Total Assets$ 1,600,523Liabilities and shareholder's equityLiabilities:                         Total Liabilities$                    -Shareholders' equity:Common stock, $.001 par value 20,000,000 shares authorized      9,018,000 Issued and outstanding as of March 31, 20029,018Additional paid-in capital 2,121,230Retained earnings(425,351)Net Income         (104,374)Total shareholders' equity   1,600,523Total liabilities and shareholders' equity$ 1,600,523
**F-2**

**America First Associates Corp. Statements of Operations For the Three Months Ended March 31, 2002 And For the Three Months Ended March 31, 2001**
Revenues:20022001    Commissions $ 82,358$ 163,531   Syndicate income60,000   Principal transactions(114,086)(14,368)   Interest and other income                4,295              75,524Total Revenues$            32,567$          224,687Expenses:   Employee compensation and benefits44,28545,578   Clearing charges48,80280,780   Communications and data processing3,3742,515   Business development-3,900   Occupancy costs12,60012,300   Regulatory and registration fees 17,35116,555   Depreciation and amortization540540   Travel and entertainment2,2225,026   Other expenses               7,767             12,191Total expenses           136,941           179,385Income (loss) before income taxes (104, 374)45,302Provision for income taxes.                      -                      9Net income (loss)$  (104,374)$           45,293Earnings Per Share    Basic and Dilutive(0.0115) 0.005   Weighted Average Common Shares Outstanding.   9,018,000         9,018,000
**F-3**

**America First Associates Corp.**

**Statements of Changes in Shareholders' Equity**

**For Three Months Ended March 31, 2002**
Common StockPaid-in CapitalRetained EarningsShareholder's EquityBalance, December 31, 20019,0182,121,230(425,351)1,704,897    Net income (loss)                                                  (104,374)    (104,374)   Balance, March 31,2002$    9,018$ 2,121,230$ ( 529,725)$ 1,600,523
**F-4**

**America First Associates Corp. Statement of Cash Flows For the Three Month Period Ended March 31, 2002**

March 31, 2002OPERATING ACTIVITIES   Net Income -104,374   Adjustments to reconcile Net Income   to net cash provided by operations:      Due from Clearing Broker 5,177      Cash Equivalent:Error Acct 17,670      Cash Equivalent:Fees Acct-26      Cash Equivalent:Trading Acct 49,572      Marketable Securities, at      mkt:Deposit Acct -430      Marketable Securities, at      mkt:Error Acct-Long -19,962      Marketable Securities, at      mkt:Trading Acct-Long116,067      Prepaid Expense15,429      Accounts Payable            -21,440   Net cash provided by Operating Activities57,683   FINANCING ACTIVITIES      Retained Earnings                  -29   Net cash provided by Financing Activities                                 -29Net cash increase for period57,654Cash at beginning of period              2,903Cash at end of period       60,557
**F-5**

**America First Associates Corp.**

**Notes to Financial Statements**

**Three Months Ended March 31, 2002**

**NOTE 1 - BASIS OF FINANCIAL STATEMENTS**

   The accompanying unaudited financial statements have beenprepared in accordance with Item 310(b) of Regulation S-B, "InterimFinancial Statements" and, accordingly, do not include all information andfootnotes required under accounting principles generally accepted in the UnitedStates for complete financial statements. For additional information, refer tothe financial statements and footnotes for the year ended December 31, 2001included in the America First Associates Corp. (the "Company") Form10K-SB Report. Financial information as of December 31, 2001 has been derivedfrom the audited financial statements of the Company for the year ended December31, 2001. In the opinion of management, all adjustments (consisting only ofnormal recurring adjustments) necessary to present fairly the financial positionas of March 31, 2002, the results of operations for the three months ended March31, 2002 and cash flows for the three months ended March 31, 2002 have beenincluded in the accompanying financial statements. The results of operations andcash flows for the interim periods, is not necessarily indicative of the resultsof operations or cash flows that may be expected for the remainder of the year. 

   The "Company" operates under the provisions ofParagraph (k) (2) (ii) of Rule 15c3-3 of the Securities Exchange Commission, andaccordingly is exempt from the remaining provisions of that rule. Essentially,the requirements of Paragraph (k) (2) (ii) provide that the Company clears alltransactions on behalf of customers on a fully disclosed basis with a clearingbroker/dealer, and promptly transmits all customer funds and securities to theclearing broker/dealer. The clearing broker/dealer carries all of the accountsof the customers and maintains and preserves all related books and records asare customarily kept by a clearing broker/dealer.

**F-6**

**Note 2. Securities Owned**

Securities owned consist of marketable trading and investment securities atquoted market values. These securities consist of the following as of March 31,2002.
As of March 31, 2002Common stock $ 455,948U.S. Obligations     99,971$ 555,919
**Note 3. Property and Equipment:**

   Office furniture and equipment are carried at cost and isdepreciated over a useful life of five years using the straight-line method.Leasehold improvements are amortized over the lesser of the economic useful lifeof the improvement or the terms of the lease.

For Three Months Ended March 31,2002Office Equipment$ 27,573Accumulated Depreciation$(21,632)
*Use of Estimates:*

   The process of preparing financial statements in conformity withgenerally accepted accounting principles requires the use of estimates andassumptions regarding certain types of assets, liabilities, revenues andexpenses. Such estimates primarily relate to unsettled transactions and eventsas of the date of the financial statements. Accordingly, upon settlement, actualresults may differ from estimated amounts.

**Note 4. Income Taxes:**

   The Company accounts for income taxes under SFAS No. 109,"Accounting for Income Taxes," which requires an asset and liabilityto financial accounting and reporting for income taxes. Deferred income taxassets and liabilities are computed annually for differences between thefinancial statement and tax bases of assets and liabilities that will result intaxable or deductible amounts in the future based on enacted tax laws and ratesapplicable to the periods in which the differences are expected to affecttaxable income. Valuation allowances are established when necessary to reducedeferred tax assets to the amount expected to be realized. Income tax expense isthe tax payable or refundable for the period plus or minus the change during theperiod in deferred tax assets and liabilities.

   Income taxes for the interim periods were computed using theeffective tax rate estimated to be applicable for the full fiscal year, which issubject to an ongoing quarterly review by management.

**Note 5. Net Capital Requirement**

   The Company is subject to the Securities and Exchange CommissionUniform Net Capital rule (SEC rule 15c3-1) which requires the maintenance ofminimum net capital and requires that the ratio of aggregate indebtedness to netcapital, both as defined, shall not exceed 15 to 1. At March 31, 2002 theCompany had net capital of $1,495,015 which was $1,395,015 in excess of itsrequired net capital of $100,000. The Company's net capital ratio was 7.18% atMarch 31, 2002.

**Note 6. Description of Securities**

   Mr. Ricupero has agreed to deliver 3,000,000 shares of hiscommon stock to the Company in 2001. This reduces the amount of sharesoutstanding to 9,018,000.

   Our authorized capital stock consists of 20,000,000 shares ofcommon stock, par value $0.001 per share, 9,018,000 of which are outstanding and3,000,000 held in treasury stock, as adjusted.

**F-8**

**7. Earning Per Share**
For Three Months Ended        March 31 20022001Net Earnings available to common shareholders$ (104, 374)$    45,302Weighted Ave. shares outstanding  9,018,000 9,018,000Basic Earnings Per Share $   (0.0115)$      0.005
**EARNINGS PER SHARE:**

   The company sold warrants in April 1999, which enabled theholders of the warrants to purchase 2,700,000 shares of stock at prices from $1to $5 per share. Currently, there is no market price for the shares of stock onhand, therefore, the calculation for diluted earnings per share did not includethe conversion of the warrants into stock as it would be antidilutive. Inaddition, the Chief Executive Officer contributed 3,000,000 shares into treasurystock in 2001. This contribution was reflected in calculating the earnings pershare for the three month period of 2001.

**F-9**

**MANAGEMENT DISCUSSION AND ANALYSIS**

   The following discussion of the financial condition and resultsof financial condition and the results of operation of the Company should beread in conjunction with the Consolidated Financial Statements and the relatedNotes and other financial information included elsewhere in this Prospectus.This discussion contains forward-looking statements that involve risks anduncertainties. The Company's actual results may differ materially from thoseanticipated in these forward-looking statements as a result of certain factors,including but not limited to, those set forth under Risk Factors and elsewherein this Prospectus.

***Overview***

   America First Associates (The "Company") has conductedits operations as a fully disclosed brokerage firm registered with theSecurities and Exchange Commission, the National Association of SecuritiesDealers, the Municipal Securities Rulemaking Board and 50 state securitiesdivisions including the District of Columbia and Puerto Rico. The Company is aprovider of cost-effective, full-service online financial service targeting therapid growth momentum of individual investors who utilize the Internet for theirpersonal investment objectives. The Company provides customers the ability tobuy and sell securities, security options, mutual funds, bonds and otherinvestment financial instruments as well as providing clients with 24 houraccount access and real-time electronic information on stocks, market indices,analysts' research and news. The Company plans to continue to provide qualityservice to our current customers while increasing brand awareness and customerloyalty. Management's strategy is to expand the Company's business andoperations by strategically using the Internet and other advertising outlets toefficiently market and distribute our services to potential customers and buildbrand awareness on a national level to increase our customer base.

***Results of Operations***

*Three Months Ended March 31, 2002 compared to Three months Ended March 31,2001*

Total revenues the three months ended March 31, 2001 were $224,687, comparedto $32,566 in the three months ended March 31, 2002. The decrease in revenue wasthe result of a decrease in losses in principle transactions caused by asignificant down turn in the overall market, which resulted in a decrease inoverall business activity. 

**F-10**

   Commissions were $163,531 for the three months ended March 31,2001 a decrease of 50% compared to $82,357 for the three months ended March 31,2002. The decrease in commission revenues was primarily attributable to adecrease in the stock market, which reduced the number of online transactionsprocessed. Our focus will be to cost effectively increase our client basethrough internet marketing, which will increase our transaction volume. As aresult of a rapid increase in customer applications, The Company expectstransaction volume and commission revenues to increase substantially.

   Syndicate income was non-existent for the three months endedMarch 31, 2001 and $60,000 for the three months ended March 31, 2002. For theremainder of 2002, the company expects additional private placements which willincrease syndicate income. It is expected that the Company will participate inand generate more syndicate deals, which will further increase future syndicaterevenue. Principal transactions, which include securities brokeragetransactions, were ($14,368) for the three months ended March 31, 2001, anddecreased to ($114,086) for the three months ended March 31, 2002. The loss isdue to a decrease in securities owned at market value. Interest and other incomerevenue decreased to $4,295 for the three months ended March 31, 2002 from$75,524 for the three months ended March 31, 2001. This decrease was primarilydue to the company investing excess funds in U.S.Obligatons at lowered interestrates and a gain in other income of $51,173 in 2001.

   The Company's total expenses decreased from $179,385 for thethree months ended March 31, 2001 to $136,941 for the three months ended March31, 2002. This 34% decrease is attributed to lower clearing charges, which is aresult of lower trading volume in the overall market. Employee compensation andbenefits expense decreased from $45,578 for the three months ended March 31,2001 to $44,285 for the three months ended March 31, 2002. The Company expectsthat employee compensation will increase as the need to hire addition employeesbecomes necessary to accommodate the growth in online trading volume andcommissions paid to investment banking activities. Clearing charges decreased to$48,802 for the three months ended March 31, 2002 from $80,780 for the threemonths ended March 31, 2001. It is expected that clearing charges will increaseas online trading activity increases.

**F-11**

   Communication and data processing expense was $3,374 for thethree months ended March 31, 2002, compared to $2,515 for the three months endedMarch 31, 2001. The increase between 2002 and 2001 in communication and dataprocessing is primarily a result of additional usage.

   Business development, which includes printing and advertisingdecreased to non- existent for the three months ended March 31, 2002, from$3,900 for the three months ended March 31, 2001. The printing expenditures in2001 were related to our company brochure. However, due to the fluctuating andunpredictable market, the Company decreased its advertising budget, limiting itto advertising on a per account basis. In order to remain competitive and toincrease the number of customer accounts, we need to actively promote ourservice in order to build brand awareness. Therefore, for future growth andexpansion, The Company expects an increase in advertising expense. Our businessdevelopment costs for 2001 will be associated with promoting our website andfinancial services to continue to expand our customer base through significantadvertising efforts.

   Occupancy costs relate to our leasing of office space in NewYork City. Occupancy expense for the three months ended March 31, 2002 was$12,600 and $12,300 for the three months ended March 31, 2001. This increase isthe result of a $100 increase in our annual rent. The Company currently leases2,000 square feet at $4,200 per month under a three-year lease expiring March31, 2003. Management believes the office will provide ample amount of space forour current needs.

   Regulatory and registration fees are costs associated with aBroker/Dealer to be registered with the NASD and in all appropriate states. Inthe three months ended March 31, 2002 regulatory and registration fees amountedto $17,351, compared to $16,555 for the three months ended March 31, 2001. NASDfees are usually applied in the first quarter for the entire year.

   Depreciation and amortization primarily consists of depreciationof property and equipment. Depreciation and amortization costs were $540 for thethree months ended March 31, 2002 and 2001. As we continue to expand weanticipate the purchase of additional property and equipment, which will resultin an increase in depreciation and amortization expense.

**F-12**

   Travel and entertainment expenses decreased to $2,222 for thethree months ended March 31, 2002 from $5,026 for the three months ended March31, 2001. Other expenses, which includes office supplies and expenses decreasedto $7,767 for the three months ended March 31, 2002 from $12,191 for the threemonths ended March 31, 2001. 

**Liquidity and Capital Resources**

   Net Cash provided by operating activities during the threemonths ended March 31, 2002 were $57,683. The Company had a net loss of$104,374, an increase in deposits from clearing organization of $72,392, anincrease in securities owned of $95,675, an increase in prepaid expense of$15,429 and a decrease in accounts payable of $21,440.

   Cash at beginning of period were $2,903 and cash at end ofperiod were $60,557. The net cash increase for the three months ended March 31,2002 were $57,683.

   The Company is subject to the net capital rules of the SEC. AtMarch 31, 2002, the Company had regulatory net capital of $1,495,015, whichexceeded the minimum requirements by $1,395,015.

**F-13**

SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, theRegistrant caused this Registration Statement to be signed by the undersigned,thereunto duly authorized.
**AMERICA FIRST ASSOCIATES CORP.**Date:       May 15,      2002                    By:   /s/ Joseph Ricupero                     Joseph Ricupero, Chief Executive      Officer,       Financial Operations Officer
**F-14** |
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