FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

[x]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

                 For the fiscal year ended December 31, 2001

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

                  For the transition period from _____ to _____.

                       Commission file number: (33-19961)

                         Covenant Financial Corporation
              -----------------------------------------------------
             (Exact name of registrant as specified in its charter)

      Delaware                                                  01-0623010
-----------------------                                   ----------------------
(State of Incorporation)                                       (Tax ID No.)

          6060 N. Central Expressway, Suite 560 #7, Dallas, Texas 75206
          -------------------------------------------------------------
               (Address of principal executive offices)(ZIP code)

Registrant's telephone number, including area code: 214-800-2842

Securities registered pursuant to Section 12(b) of the Act:   NONE

Securities registered pursuant to Section 12(g) of the Act:  Common Stock

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the past
12 months and (2) has been  subject to such filing  requirement  for the past 90
days.

                            X  YES                   NO
                           ----                  ----
Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant as of March 26, 2002:
                                      $ 6,750

Shares of common stock outstanding at December 31, 2001: 850,000
<PAGE>

                                    PART I.

ITEM 1 DESCRIPTION OF BUSINESS

The Company was incorporated in the State of Delaware on February 25, 2000 under
the name of HMGT  Management  Corporation.  On July 6, 2000, the Company merged
with Spartan Oil  Corporation  which was accounted for as a reverse  merger.  On
August 1, 2000, the Company changed its name to HomeGate  Corporation.  On March
28, 2002, the Company changed its name to Covenant Financial Corporation.

The Company is in the  business of buying  real estate  properties  and plans to
manage them as well. As of December 31, 2001,  the Company did not own or manage
any real estate  properties.  As of December 31, 2000,  the Company had ten (10)
hotels  under  management  contracts  which paid them four percent (4%) of gross
revenue,  two percent (2%) of net revenue and a $1,500 accounting fee per month.
The Company had as many as ten under  management  contracts  until the owners of
many of those hotels had financial  problems and lost ownership of the hotels in
the fourth  quarter and some more into the first quarter of 2001.  However,  the
Company continues to pursue hotel management contracts and believes that it will
secure some in the near future.

ITEM 2 DESCRIPTION OF PROPERTY

The Company has no  property.  The  Company  maintains  its office at 6060 North
Central  Expressway,  Suite 560 #7,  Dallas,  Texas 75206,  which it shares with
Hospitality  Plus where Keith  Newton,  a former  Company  officer and director,
serves  as an  officer,  and  which is owned by the  Wickliffe  Trust,  of which
Charles Wilkerson is the beneficial owner. The Company does not pay any rent for
use of such property.
<PAGE>

ITEM 3 LEGAL PROCEEDINGS

The Company is not involved in and is not aware of any legal proceedings.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted  during the fourth quarter of the fiscal year covered by
this report.

In March  2002,  the  majority  stockholders  acted by  consent to elect Doug M.
Larson, Steve Vandeberg and Dean Grosskopf to serve as Company directors.  Also,
the Company's majority stockholders  consented to the amendment to the Company's
Articles  of  Incorporation  to  change  the  name of the  Company  to  Covenant
Financial  Corporation  from Homegate  Corporation,  effect a 1:10 reverse stock
split reauthorizing  50,000,000 shares of common stock with a par value of $.001
per share,  and authorized the issuance of 5,000,000  shares of preferred  stock
with a par value of $.001 per share.  The  Company's  directors  elected Doug M.
Larson to serve as the Company's  President and Jeffrey  Heinzen to serve as the
Company's Secretary.

                                    PART II.

ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     a.   Market Information.

         The Company's stock began trading on the OTC Bulletin Board on February
13, 2002 under the stock  symbol HMGT and traded  under that symbol  until March
28, 2002 when the Company began trading under the symbol CVTF in connection with
the Company  changing its name from Homegate  Corporation to Covenant  Financial
Corporation.

     b.   Holders.

         There are approximately one hundred (100) shareholders.
<PAGE>

     c.   Dividends

     Registrant  has not paid a dividend to the holders of its common  stock and
     does not anticipate paying dividends in the near future.

     d.   Warrants

         Registrant has no warrants outstanding.

     e.   Stock Issuances

     The  Registrant  issued  approximately  27,000 shares during the year ended
     December 31, 2001 to consultants for services rendered.


ITEM 6 MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS
       OF OPERATIONS

Overview

The Company seeks to purchase real estate properties and manage them as well. At
December 31, 2001, the Company did not own or manage any real estate properties.
As of December  31, 2000 the Company had ten hotels under  management  contract.
The Company had as many as ten under  management  contracts  until the owners of
many of those hotels had financial  problems and lost ownership of the hotels in
the fourth quarter and some more into the first quarter of 2001.

Comparison of Operating Results For the Year Ended December 31, 2001 Compared to
the Year Ended December 31, 2000

The Company's  revenues  decreased by $243,830 or 64% from $378,127 for the year
ended  December 31, 2000 to $134,297 for the year ended  December 31, 2001.  The
decrease in revenues resulted from the loss of management contracts.
<PAGE>

General and  administrative  expenses decreased by $325,234 or 72% from $451,465
for the year ended December 31, 2000 to $126,231 for the year ended December 31,
2001.  The  decrease  in  general  and  administrative  expenses  was due to the
decreased operations of the Company.

For the year ended  December 31, 2000,  the Company  wrote-off an  investment of
$1,800,000 associated with 2,000,000 shares of Ameri-First Financial Group, Inc.
which were  acquired  by the  Company as  founders  shares and now equal  80,000
shares  following a reverse stock split.  There were no  write-downs  during the
year ended December 31, 2001.

The Company's  income (loss) from operations  increased  $1,896,865 or 100% from
($1,893,410)  for the year ended  December 31, 2000 to $3,455 for the year ended
December  31,  2001.  The  change  from a loss to net income  resulted  from the
decrease  in general  and  administrative  expenses  and from the  write-off  of
investment.

For the year ended December 31, 2000, the Company recorded an extraordinary loss
on trademark and goodwill in the amount of $62,339.  For the year ended December
31, 2001, the Company did not record any extraordinary items.

Net loss per share decreased from $.24 per share inclusive of the  extraordinary
loss for the year ended  December  31, 2000 to $.00 per share for the year ended
December 31, 2001.

As of December 31, 2001, the Company had an accumulated deficit of $1,961,169.

Liquidity and Capital Resources

For the year ended  December  31, 2001,  the Company did not generate  cash flow
from its operations which exceeding  operating  costs. As a result,  the Company
will  require  additional  working  capital to develop  its  business  until the
Company either achieves a level of revenues adequate to generate sufficient cash
flows from operations or obtains additional  financing  necessary to support its
working capital requirements.

As of December 31, 2001,  the Company had accounts  receivable of $2,387,  notes
receivable of $12,000 and a working capital deficit of $48,367.

The Company is taking steps to raise equity  capital.  There can be no assurance
that any new capital  would be available to the Company or that  adequate  funds
for the Company's  operations,  whether from the Company's  revenues,  financial
markets,  or  other  arrangements  will be  available  when  needed  or on terms
satisfactory  to the  Company.  The Company has no  commitments  from  officers,
directors or affiliates to provide funding. The failure of the Company to obtain
adequate additional financing may require the Company to delay, curtail or scale
back  some  or all of its  operations.  Any  additional  financing  may  involve
dilution to the Company's then-existing shareholders.
<PAGE>

ITEM 8 CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

     In January 2002, the client-auditor relationship between Covenant Financial
Corporation,  formerly  Homegate  Corporation  (the "Company") and J. S. Osborn,
P.C. ("Osborn") ceased as Osborn was dismissed as the Company's auditor.

      To the  knowledge of the Company's  current  Board of Directors,  Osborn's
report of the financial statements of the Registrant for the year ended December
31, 2000 and any related  interim period did not contain any adverse  opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting  principles  during the fiscal year ended  December 31, 2000
except that the opinion for the year ended  December 31, 2000  contained a going
concern paragraph.

      During the audit of the Company's financial  statements for the year ended
December  31,  2000  and any  subsequent  interim  period  through  the  date of
dismissal,  Osborn did not have any disagreements with the Company on any matter
of accounting  principles  or  practices,  financial  statement  disclosure,  or
auditing scope or procedure.

     The Company decided not to reappoint Osborn as its independent accountant.

     The decision to change  accountants was approved by the Registrant's  Board
of Directors; and

     There were no disagreements  related to accounting  principles or practices
auditing  scope or procedure  during the fiscal year ended December 31, 2000 and
the interim period through March 28, 2002.

     On January 15, 2002,  the  Registrant  engaged  Malone & Bailey PLLC as its
independent  accountants for the fiscal year ended December 31, 2001. During the
most recent  fiscal year and any  subsequent  interim  period  prior to engaging
Malone & Bailey,  the  Company did not  consult  with Malone & Bailey  regarding
either (i) the application of accounting principals to a specified  transaction,
either  completed  or  proposed;  or the type of  audit  opinion  that  might be
rendered  on the  Company's  financial  statements;  or (ii) any matter that was
either the subject matter of a disagreement (as defined in Item 304(a)(1)(iv) of
Regulation S-K and the related  instructions)  or a reportable event (as defined
in Item  304(a)(1)(v) of Regulation S-K).  Malone & Bailey PLLC has reviewed the
disclosure  required by Item 304(a) before it was filed with the  Commission and
has been provided an opportunity to furnish the Company with a letter addresssed
to the Commission containing any new information, clarification of the Company's
expression  of its views,  or the  respects  in which it does not agree with the
statements made by the Company in response to Item 304(a).  Malone & Bailey PLLC
did not furnish a letter to the Commission.
<PAGE>

                                   PART III.

ITEM 9 DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

         The following  persons serve or served as directors and officers of the
registrant:

Name                              Age                   Position
----                              ---                   --------
Douglas A. Larson                 56                    President and Director

Steve Vande Berg                  61                    Director

Dean Grosskopf                    52                    Director

Jeffrey Heinzen                   50                    Secretary

Douglas A. Larson has served as the Company's President and Director since March
2002.  Mr.  Larson  received a Bachelor  of Science  degree from  University  of
Wisconsin - Eau Claire and has completed  most of the  coursework  for a Masters
Degree in Public  Administration  from the  University of Minnesota.  From April
1979 to  present,  Mr.  Larson  has  been  the  owner  and  operator  of  Larson
Enterprises  in Menomonie,  Wisconsin.  Larson  Enterprises  specializes in real
estate investment.  He has a controlling interest in Quality  Investments,  Inc.
and has served as its  President  since 1992.  Quality  Investments,  Inc. has a
focused expertise in real estate acquisition and development.  Its portfolio has
contained a history of successful turn arounds including residential apartments,
commercial strip centers,  office buildings,  industrial  buildings and shopping
malls.  Mr. Larson  currently owns or controls over 45 million dollars of income
producing investment real estate.

Steve Vande Berg has served as a Company  director  since March 2002.  Mr. Vande
Berg has been  associated with the hotel industry since 1968. Upon completion of
a Bachelor Degree in Business  Administration with a major in Hotel & Restaurant
Management from Florida State in 1967 he began working for American  Airlines as
a Purchasing  Controller for food and beverages for in-flight services,  airport
restaurants,  and coffee shops.  In 1971 he became  co-owner and operator of the
Best Western Holiday Manor and recently added a new AmericInn  franchised  hotel
in  Menomonie.  Mr.  Vande  Berg has  served on the Board of  Directors  of Best
Western  International  and was  Chairman of the Board from 1996 - 1997.  He has
also served on the Board of Directors of the  Wisconsin  Innkeepers  Association
and was  Chairman  of the Board  from 1985 to 1986.  Mr.  Vande Berg has been an
Academic  Staff  Instructor  for the  University  of Wisconsin - Stout School of
Hospitality and Tourism from 1972 to 1987, currently serves as Vice-President of
the Stout Foundation and will be its President for the 2003 -2004 year.
<PAGE>

Dean Grosskopf has served as a Company  director since March 2002. Mr. Grosskopf
is a Certified  Public  Accountant,  who upon completion of a Bachelor Degree in
Business  Administration  with a major  in  accounting  from the  University  of
Wisconsin  -  Milwaukee  began  working  for  five  years  with  Grant  Thornton
Accountants.  Mr.  Grosskopf  became co-owner and President of Excel  Management
Associates,  Inc.  serving in that capacity for nearly 20 years.  Excel provided
management  services  to 34  regional  hotels in seven  states.  Since  1997 Mr.
Grosskopf has been a co-owner and President of  Professional  Hospitality,  LLC.
Professional Hospitality has been in business over 20 years providing management
services  to various  franchised  hotel  management  businesses  in  multi-state
locations.

Jeffrey  Heinzen has served as Company  director  since March 2002.  Mr. Heinzen
completed  his Bachelor of Arts degree in 1973 with a major in  psychology  from
the  St.  John's   University,   Collegeville,   Minnesota,   a  Certificate  of
Administration from DePaul University,  Chicago, Illinois, and his Master Degree
with an emphasis in Vocational Rehabilitation from the University of Wisconsin -
Stout. Upon completion of his bachelors degree, Mr. Heinzen began his employment
in the hotel industry as a desk manager. From 1977 to 1993 Mr. Heinzen worked in
the  human  services  field  gaining   experience   through  various  management
opportunities.  In 1993,  Mr.  Heinzen  joined A. J. Heinzen &  Associates  as a
Senior  Consultant.  Projects included work with Larson Enterprises in the areas
of marketing, systems analysis and project management.

ITEM 10 EXECUTIVE COMPENSATION

         The Company paid no compensation  to its officers and directors  during
both calendar year 2000 and 2001.

         The Company has no retirement or stock option or bonus plan.

<PAGE>

ITEM 11 SECURITY OWNERSHIP OF MANAGEMENT AND BENEFICIAL OWNERS

         Set forth below is the direct ownership of Registrant's common stock by
management and any owner of 5% or more of Registrant's  common stock as of March
14, 2002 taking into effect the 1:10 reverse stock split which occurred on March
28, 2002.

Name and address                 Amount of shares
of owner                               owned            Percentage Owned
-------------------              -----------------     ------------------
Doug A. Larson (1)                        0                     *

Steve Vande Berg(1)                       0                     *

Dean Grosskopf(1)                         0                     *

Jeffrey Heinzen(1)                        0                     *

Wilkerson Consulting(2)             715,000                  84.1%
13663 Jupiter, Suite 401
Dallas, Texas 75238

Sean Gallagher                       75,000                   8.8%
5417 Knollridge Drive
Garland, Texas 75043


All Officers and Directors
as a Group (4)                           0                     *

*    Less Than One Percent

(1)  Same business address of the Company.

(2)  Owned by the Wickliffe Trust of whom Charles Wilkerson is an affiliate.

ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In July 2001, the Company sold management contracts covering three properties to
the Wilkerson Group, affiliated with C. Keith Wilkerson II, in consideration for
a note receivable in the original  amount of $268,000.  As of December 31, 2001,
$242,654 remained  outstanding.  The note is non-interest bearing and payable in
44  installments of $1,000 and 112  installments  of $2,000.  The note is due in
July 2014.
<PAGE>

During the period ended  December 31, 2000, the Company  received  $378,127 from
Amerand and Ameri-First  Financial Group,  Inc. for management fees.  Amerand is
owned and  controlled  by the Wickliffe  Trust of which Charles  Wilkerson is an
affiliate,  and Ameri-First Financial Group, Inc. is majority-owned by Wilkerson
Consulting of which Charles Wilkerson is an affiliate.  The Company paid $77,901
to The Tour Group which is owned by Gary Bell and C. Keith  Wilkerson II, former
directors and officers of the Company, for general and administrative expenses.

During the year ended  December 31, 2001,  the Company  received  $108,951  from
Amerand and Ameri-First  Financial Group,  Inc. for management fees.  Amerand is
owned and  controlled  by the Wickliffe  Trust of which Charles  Wilkerson is an
affiliate,  and Ameri-First Financial Group, Inc. is majority-owned by Wilkerson
Consulting of which Charles Wilkerson is an affiliate.  The Company paid $10,100
to The Tour Group which is owned by Gary Bell and C. Keith  Wilkerson II, former
directors and officers of the Company, for general and administrative expenses.

The Company received advances of $30,687 from Wilkerson  Consulting and The Tour
Group.  Wilkerson  Consulting  is owned by the  Wickliffe  Trust of whom Charles
Wilkerson is an affiliate,  advanced approximately $11,000. The Tour Group which
is owned by Gary Bell and C. Keith Wilkerson II advanced approximately $19,000.

The Company utilizes office space from Hospitality Plus of which Keith Newton, a
former director and officer of the Company,  serves as an officer,  and which is
owned by the Wickliffe Trust, of whom Charles Wilkerson is an affiliate.

The Company acquired a trademark from Amerand,  which is controlled and owned by
the Wickliffe  Trust, of whom Charles  Wilkerson is an affiliate.  The trademark
was originally valued at $315,972. See Note 11 to the financial statements.

The  Company  issued  approximately  27,000  shares to various  consultants  for
services rendered. Wilkerson Consulting received 19,500 of these shares.
<PAGE>

ITEM 13 EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K

(a)  The following documents are filed as a part of this report:

     Report of Independent Public Accountant

     Balance Sheet as of December 31, 2001

     Statement of Operations  For the Years Ended December 31, 2000 and December
     31, 2001

     Statement of Stockholders'  Equity - Period from February 25, 2000 (date of
     inception) through December 31, 2001

     Statement of Cash Flows For the Years Ended  December 31, 2000 and December
     31, 2001

     Notes to the Financial Statements

Exhibits

3.3* Certificate of Amendment to Articles of Incorporation

*    Filed herein

(b)  No reports on Form 8-K were filed for the Company  during the last  quarter
     of the period covered by this report.
<PAGE>

                                  SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.




                                                  Covenant Financial Corporation
                                                  Registrant


                                                  By: /s/ Doug M. Larson
                                                  -----------------------------
                                                         Doug M. Larson
                                                         Its: President

Date:     March 31, 2002

         Pursuant to the  requirements  to the  Securities  and  Exchange Act of
1934,  this report has been signed below by the  following  persons on behalf of
Registrant and in the capacities and on the dates indicated.

Signature                            Title                     Date
----------                          -------                   -------


/s/  Doug M. Larson           President and Director             March 31, 2002
---------------------
   Doug M. Larson

/s/  Steve Vande Berg         Director                           March 31, 2002
---------------------
Steve Vande Berg

/s/ Dean Grosskopf            Director                           March 31, 2002
------------------
Dean Grosskopf

/s/Jeffrey Heinzen            Secretary                          March 31, 2002
------------------
Jeffrey Heinzen


<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Homegate Corporation
Dallas, Texas

We have audited the  accompanying  balance sheet of Homegate  Corporation  as of
December 31,  2001,  and the related  statements  of  operations,  stockholders'
equity,  and cash flows for the year ended  December 31, 2001 and for the period
from February 25, 2000  (inception)  through  December 31, 2000. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Homegate  Corporation  as of
December 31, 2001,  and the results of its operations and its cash flows for the
year  ended  December  31,  2001  and for the  period  from  February  25,  2000
(inception) through December 31, 2000, in conformity with accounting  principles
generally accepted in the United States.


Malone & Bailey, PLLC
Houston, Texas
www.malone-bailey.com


March 18, 2002


<PAGE>




                              HOMEGATE CORPORATION
                                  BALANCE SHEET
                                December 31, 2001


                                     ASSETS

Current assets
  Accounts receivable                                                  $ 2,387
  Note receivable - related party                                       12,000
                                                                   ------------
    Total current assets                                                14,387

Property and equipment, net                                             67,690

Note receivable - related party                                        230,654

                                                                   ------------
                                                                      $312,731
                                                                   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                     $ 8,728
  Advances - related party                                              30,687
  Current portion of notes payable                                      11,339
  Deferred gain                                                         12,000
                                                                   ------------
     Total current liabilities                                           62,754
                                                                   ------------

Notes payable                                                           49,496
Deferred gain                                                          230,654

STOCKHOLDERS' EQUITY:
  Common stock, $.001 par value, 50,000,000 shares
  Authorized, 8,448,429 shares issued and outstanding                    8,448
Additional paid in capital                                           1,922,548
Accumulated deficit                                                 (1,961,169)
                                                                   ------------
  Total Stockholders' Equity                                           (30,173)
                                                                   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $312,731
                                                                   ============
                See accompanying summary of accounting policies
                       and notes to financial statements

<PAGE>


                              HOMEGATE CORPORATION
                             STATEMENT OF OPERATIONS
                        For the Years Ended December 31,


                                                       2001             2000
                                                   -----------       ----------

Revenues                                        $     134,297      $  378,127

Cost and Expenses:
  General and administrative                          126,231         451,465
  Depreciation and amortization                         4,611          20,072
  Write off of investment                                   -       1,800,000
                                                   -----------    ------------
                                                      130,842       2,271,537
                                                   -----------    ------------

Income (loss) from operations                           3,455       (1,893,410)

Interest expense                                          346           8,529

                                                   -----------    ------------
Net income (loss) before extraordinary item              3,109      (1,901,939)

Extraordinary loss on trademark and goodwill                -          (62,339)

                                                   -----------    ------------
Net income (loss)                               $        3,109 $    (1,964,278)
                                                   ===========    ============

Net income (loss) per share:
  Net loss before extraordinary loss                   $ (0.00)        $ (0.23)
  Extraordinary loss on trademark and goodwill               -           (0.01)
                                                   -----------    ------------
  Net loss basic and diluted                           $ (0.00)        $ (0.24)
                                                   ===========    ============

Weighted average shares outstanding:
  Basic and diluted                                 8,320,009       8,220,888
                                                   ===========    ============


                See accompanying summary of accounting policies
                        and notes to financial statements


<PAGE>

                              HOMEGATE CORPORATION
                        STATEMENT OF STOCKHOLDERS' EQUITY
   For the Period from February 25, 2000 (Inception) through December 31, 2001
<TABLE>

                                             Common stock
                                                                   Additional
                                       -------------------------     paid        Accumulated
                                        Shares          Amount     in capital      deficit
                                       ----------     ----------  ------------- -------------
<S>                                    <C>            <C>         <C>           <C>

Issuance of common stock to founders
for net assets
                                        7,000,000     $   7,000     $ 1,931,000  $          -

Issuance of common stock in
connection with merger with Spartan
Oil Corporation
                                        1,220,888         1,221         (10,500)            -

Net loss                                        -             -               -      (1,964,278)
                                       ------------  ------------  -------------  -------------

Balance,
  December 31, 2000                     8,220,888         8,221       1,920,500      (1,964,278)

Issuance of common stock for services
                                          227,541           227           2,048              -

Net loss                                        -             -               -          3,109
                                       ------------  ------------  -------------  -------------

Balance,
  December 31, 2001                     8,448,429     $   8,448     $ 1,922,548  $   (1,961,169)
                                       ============  ============  =============  =============
</TABLE>

                See accompanying summary of accounting policies
                        and notes to financial statements
<PAGE>

                              HOMEGATE CORPORATION
                             STATEMENT OF CASH FLOWS
                         For the Years Ended December 31


                                                       Years ended December 31,
                                                       2001             2000
                                                     ----------      ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                   $    3,109   $  (1,964,278)
Adjustments to reconcile net deficit to cash used
by operating activities:
Depreciation and amortization                           4,611           20,072
Common stock for services                               2,275
Write off of investment                                     -        1,800,000
Write off of trademark                                      -          250,000
Cancellation of note payable                                -         (250,000)
Extraordinary loss - trademark                              -           55,139
Extraordinary loss - goodwill                               -            7,200
Earnings effect from merger                                 -           (4,143)
Net change in:
  Accounts receivable                                  57,613          (60,000)
  Accounts payable                                     (91,109)         94,401
                                                     ---------   --------------

CASH FLOWS USED IN OPERATING ACTIVITIES                (23,501)        (51,609)
                                                     ---------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES
                                                     ---------   --------------
Purchase of equipment                                  (68,958)          (3,554)
                                                     ---------   --------------

CASH FLOWS FROM FINANCING ACTIVITIES
Sale of stock                                               -          131,100
Advances, net                                          30,687
Proceeds from debt                                     63,004                -
Payment on debt                                         (2,169)        (75,000)
                                                     ---------   --------------
CASH FLOWS FROM FINANCING ACTIVITIES                   91,522           56,100
                                                     ---------   --------------

NET INCREASE (DECREASE) IN CASH                           (937)            937
Cash, beg. of period                                       937               -
                                                     ---------   --------------
Cash, end of period                                 $        - $           937
                                                     =========   ==============

SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid                                     $     346  $         8,529
  Income taxes paid                                 $       -  $             -

NON-CASH TRANSACTIONS:
  Issuance of common stock for net assets           $       -  $     1,938,000
  Issuance of note receivable for contracts         $ 268,000  $             -

                See accompanying summary of accounting policies
                        and notes to financial statements

<PAGE>
                              HOMEGATE CORPORATION
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

Nature of business

Homegate Corporation fka Spartan Oil Corporation  ("Spartan") referred to as the
("Homegate") was incorporated on February 7, 2000 under the laws of the state of
Delaware.  The  Company  is in the  business  of  hotel  management.  Currently,
Homegate has no hotels under contract for its management services.

On July 6, 2000, HMGT Corporation  ("HMGT") merged with Spartan in a transaction
accounted for as a reverse  merger of Spartan  pursuant to an agreement  whereby
100% of the common  shares of Spartan were  exchanged  for 100% of HMGT.  At the
time of the merger Spartan had 1,220,888  common shares issued and  outstanding.
In connection  with the merger,  the name of the company was changed to Homegate
Corporation.  For accounting  purposes,  the  acquisition has been treated as an
acquisition  of Spartan and as a  recapitalization  of Homegate.  The historical
financial  statements  presented  above include the net  liabilities of Spartan.
Homegate  is the  accounting  acquirer  and the  results of its  operations  and
deficit carries over.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and  assumptions  that affect the reported  amounts of assets and liabilities at
the date of the balance sheet. Actual results could differ from those estimates.

Basic loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period.

Revenue Recognition

Revenues are recorded in the period the management  fees are earned and expenses
are recognized in the period in which the related liability is incurred.

Customer Concentration

The  majority  of managed  hotels  have the same  owner.  Although  Homegate  is
expanding its customer base, this concentration  could have an adverse effect on
the operations of the Company.

Long-lived Assets

Property, plant and equipment are stated at cost less accumulated  depreciation.
Major renewals and improvements are capitalized; minor replacements, maintenance
and  repairs  are  charged to current  operations.  Depreciation  is computed by
applying the straight-line method over the estimated useful lives of each asset.
Homegate  performs  reviews for the  impairment  of long-lived  assets  whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.

Income Taxes

The  asset  and  liability  approach  is used to  account  for  income  taxes by
recognizing  deferred tax assets and  liabilities  for the  expected  future tax
consequences of temporary  differences  between the carrying amounts and the tax
bases of assets and liabilities.  Compaq records a valuation allowance to reduce
the  deferred  tax  assets  to the  amount  that is more  likely  than not to be
realized.
<PAGE>

Earnings Per Common Share

Basic net loss per share excludes  dilution and is computed by dividing net loss
by the  weighted  average  number of common  shares  outstanding  for the period
presented.  Diluted net loss per common share was the same as basic net loss per
common  share for the period  presented  since the  Company  has no  potentially
dilutive securities and because of the Company's net loss.

Recent Accounting Pronouncements

The  Company  does  not  expect  the  adoption  of  recently  issued  accounting
pronouncements  to  have a  significant  impact  on  the  Company's  results  of
operations, financial position or cash flow.

NOTE 2 - NOTE RECEIVABLE - RELATED PARTY

Homegate has a note  receivable  dated July 25, 2001 in the  original  amount of
$268,000 from the Wilkerson Group, an affiliated  group. As of December 31, 2001
$242,654 is  outstanding.  The note is non-interest  bearing,  and payable in 44
monthly  installments  of $1,000 and 112  monthly  installments  of $2,000.  The
current portion of the note receivable is $12,000. Homegate acquired the note in
exchange for  management  contracts.  Homegate  recorded a deferred  gain and is
records revenue as the installments are received.

NOTE 3 - Property and Equipment

Property and equipment consisted of the following at December 31:

                                                   2001              2000
                                               -------------    ------------
    Office equipment                                $ 3,554         $ 3,554
    Transportation equipment                         68,958               -
                                               -------------    ------------
                                                     72,512           3,554
    Less: Accumulated depreciation                    4,822             211
                                               -------------    ------------
                                                    $67,690         $ 3,343
                                               =============    ============

Depreciation expense totaled $4,611 and $211 in 2001 and 2000, respectively.

NOTE 4 - ADVANCES - RELATED PARTY

Homegate has advances  totaling  $30,687 due to an affiliated  entity owned by a
shareholder. The advances are non-interest bearing and are due upon demand.

NOTE 5 - NOTES PAYABLE

Notes payable consists of the following:
<TABLE>


                                                                                              2001
                                                                                            ---------
<S>                                                                                         <C>

Installment note payable due in monthly installments of $720 including principal
and interest, maturing on September 1, 2006, secured by a truck
                                                                                         $     35,847


Installment note payable due in monthly installments of $502 including principal
and interest, maturing on September 1, 2006, secured by a truck
                                                                                               24,988
                                                                                             ---------
                                                                                               60,835
Less current portion                                                                           11,339
                                                                                             ---------
                                                                                             $ 49,496
                                                                                             =========
</TABLE>
<PAGE>


NOTE 6 - SHAREHOLDERS' EQUITY

Common Stock:

In July 2001, Homegate issued 227,541 common shares for a services for $2,275.

NOTE 7 - INCOME TAXES

For the years ended December 31, 2001 and 2000, Homegate has incurred net losses
and,  therefore,  has no tax liability.  The net deferred tax asset generated by
the loss  carry-forward  has been fully  reserved.  The cumulative net operating
loss  carry-forward  is  approximately  $184,000 at December 31, 2001,  and will
expire in the years 2020 through 2021.

Deferred income taxes consist of the following at December 31,:

                                                      2001           2000
                                                  ------------    ------------
    Long-term:
      Deferred tax assets                            $63,000       $ 56,000
      Valuation allowance                            (63,000)       (56,000)
                                                  ------------    ------------
                                                   $       -       $      -
                                                  ============    ============

NOTE 8 - RELATED PARTY TRANSACTIONS

In July 2001,  Homegate  issued 227,541 common shares for a note receivable to a
related entity for $268,000.

During the period ended December 31, 2001 and 2000,  Homegate  received $108,951
and  $378,127  from  related  parties for  management  fees and paid $10,100 and
$77,901 to related  parties for general and  administrative  expenses during the
year.

NOTE 9 WRITE-OFF

The Company  acquired  2,000,000  common shares of Ameri-First  Financial Group,
Inc. as part of the net assets  contributed  by the founders.  The common shares
were classified as trading securities.

By December 31, 2000,  the value of the common shares was zero and  accordingly,
Homegate recorded a $1,800,000 write-off in its statement of operations.

NOTE 10 - EXTRAORDINARY LOSS

The Company  acquired a trademark  valued at $315,972 and a related note payable
for $325,000 in July 2000. The excess purchase price over the fair value for the
net assets resulted in goodwill.

During  the  year,  the  Company  determined  the  trademark  had no  value  and
negotiated  the  forgiveness  of the related  note  payable.  The  Company  made
payments on the note in the amount of $75,000 and recorded  amortization expense
of $19,861.  The Company wrote off the asset,  accumulated  amortization and the
note payable and recorded a $55,139 loss.

As the result of the above, Homegate wrote off the remaining goodwill.