<PAGE>


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



                                   FORM 10-QSB


    /X/         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended March 31, 2001

                                       OR

    / /         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _______________________ to ______________________


                         Commission file number 0-22271

                                CFI MORTGAGE INC.
             (Exact name of registrant as specified in its charter)

                  Delaware                                       65-0127741
       (State of other jurisdiction of                        (I.R.S. Employer
       incorporation or organization)                        Identification No.)

       601 Cleveland Street, Suite 500
             Clearwater, Florida                                    33755
   (Address of principal executive office)                       (zip code)


        Registrant's telephone number, including area code: 727-674-1010

                                 Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)


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


             27,171,151 shares, $.01 par value, as of March 31, 2001

(Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date)

<PAGE>

                                     PART I

ITEM 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations

Forward Looking Statements

The following discussion contains certain "forward-looking statements" (rather
than historical facts) which are subject to the safe harbor provision created by
the "Private Securities Litigation Reform Act of 1995" (the "Act") and
regulations and interpretations there under, including Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. All statements and other information contained herein
including such words as "may," "will," "expect," "believe," "plan," "estimate,"
"goal," "anticipate," "intend," and other similar terminology and use of future
tense, constitute forward-looking statements. These forward-looking statements
represent management's current expectations and are subject to business and
economic uncertainties and risks. Actual results could differ materially from
those set forth in and suggested by the forward-looking statements. This
discussion should be read in conjunction with the consolidated financial
statements of the Company and the related notes thereto.

Company Overview

CFI Mortgage, Inc. (the "Company") is engaged in two lines of business: First,
residential mortgage lending; and, second, development and licensing of
proprietary computer software solutions, primarily for the ground transportation
industry. The Company is incorporated in Delaware, and may be described as a
holding company. Its executive offices and operations are located in Clearwater,
Florida. The Company conducts its operations through two wholly owned
subsidiaries. First United MortgageBanc, Inc., a Florida corporation founded by
the Company, conducts the Company's mortgage lending business. Inventek, Inc., a
Florida corporation doing business as Surfside Software Systems, conducts the
Company's computer software business.

Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

Results of Operations

The results of operations for the three months ended March 31, 2000 reflect no
mortgage related revenue, as the Company did not begin any mortgage operations
until June 2000.

The Company recognized a loss from operations of $417,210 for the three months
ended March 31, 2001 compared to $208,238 for the comparable period in 2000 an
increase of $208,972. The increase is primarily the result of a significant drop
in revenue from the mortgage operation that is the direct result of the
termination of the warehouse line of credit that was due in part to the
unauthorized misrepresentations by a former officer of the Company in the
initial credit application. This resulted in a loss per share of $0.02 from
continuing operations for the three months ended March 31, 2001 compared to a
loss per share of $0.01 from continuing operations for the same period in 2000.
The net loss for the three months ended March 31, 2001 is $442,210 compared to
$37,698 for the same period in 2000. The increase is the result of one-time
gains attributable to forgiveness of debt and a cancellation penalty for the
three months ended March 31, 2000.

Total revenues increased $671,403 or 84% to $795,552 for the three months ended
March 31, 2001 compared to $124,149 for the same period in 2000. The increase is
the direct result of revenues from the mortgage operation for the three months
ended March 31, 2001 compared to no mortgage related operations for the same
period in 2000. The increase, while dramatic, is much less than the Company
would have achieved had it not been for the unauthorized misrepresentation on
the credit application with the Company's warehouse lender perpetrated by a
former officer, which resulted in the termination of the Company's warehouse
line. In February 2001, the Company discovered that this same officer who was
responsible for overseeing the Company's mortgage lending operations had
diverted approximately $40,000 in mortgage payment checks due to the Company to
his own company. The Company is seeking a criminal prosecution of this person
for embezzlement. The Company believes that all the funds are in an account that
has been frozen and is confident that it will be able to recover the funds in
civil litigation.

                                       1
<PAGE>


Total operating expenses increased $880,375 or 72% to $1,212,762 for the three
months ended March 31, 2001 compared to $332,387 for the same period in 2000.
Selling expenses increased $321,931 or 91% to $350,114 for the three months
ended March 31, 2001 compared to $28,183 for the same period in 2000. The
primary reason for this was an increase of $313,266 or 97% for salaries and
broker commissions related to the mortgage operation compared to none for the
same period in 2000. General and administrative expenses increased $338,870 or
52% to $635,013 for the three months ended March 31, 2001 compared to $296,143
for the same period in 2000. Office and computer expenses increased $57,849 or
81% to $71,166 for the three months ended March 31, 2001 compared to $13,317 for
the same period in 2000, which is the direct result of increased operations.
Employee benefits and related payroll taxes increased $91,189 or 85% to $106,902
for the three months ended March 31, 2001 compared to $15,713 for the same
period in 2000. The increase is the result of the addition of employees related
to the mortgage operations. Rent expense increased $23,177 or 58% to $39,310 for
the three months ended March 31, 2001 compared to $16,133 for the same period in
2000, due to the renting of additional office space resulting from increased
operations. Depreciation and Amortization expense increased $52,292 or 56% to
$92,521 for the three months ended March 31, 2001 compared to $40,229 for the
same period in 2000. Interest expense increased $219,574 or 96% to $227,635 for
the three months ended March 31, 2001 compared to $8,061 for the same period in
2000. The increase is the result of interest expense charged for loans on the
warehouse line until sold for the three months ended March 31, 2001 compared to
none for the same period in 2000.

Liquidity and Capital Resources

The Company has been dependent on stock sales and third party borrowings to
sustain its operations. In April 2000, the Company sold 1,787,143 shares of
common stock plus 1,787,143 warrants to purchase one share of CFI common stock
at $1.67 per share in a private placement for $500,400. Going forward, the
Company believes that cash flow from operations will be sufficient to fund
operations. However, if additional funds are needed to support working capital
or to complete acquisitions, the Company would seek to raise such funds through
one or more public or private financing of equity, or from other sources. There
is no assurance any such additional financing, if needed, will be available or,
if available, that it would be on terms acceptable to the Company.

Net cash provided by operating activities was $10,631,814 for the three months
ended March 31, 2001 compared to net cash provided by operations of $98,032 for
the comparable period in 2000. The increase is primarily due to the selling of
the mortgage loans held for resale on the Company's warehouse line.

Net cash of $14,127 was used in investing activities for the three months ended
March 31, 2001 compared to net cash used in investing activities of $70,641 for
the comparable period in 2000. The change is due to no expenses generated for
software development costs for the three months ended March 31, 2001 compared to
$63,953 for the comparable period in 2000.

Net cash of $10,632,015 was used in financing activities for the three months
ended March 31, 2001 compared to net cash used in investing activities of
$19,942 for the comparable period in 2000. This was primarily the result of
selling the majority of the loans on the warehouse line of credit, and paying
down the line.

Working capital at March 31, 2001 was a deficit of $1,393,421 as compared with a
deficit of $1,066,324 at December 31, 2000. The increase of $327,097 or 30% in
the deficit is primarily the result of selling off the mortgage loans from the
warehouse line. Without the warehouse line, the deficit would have decrease by
$41,176 at March 31, 2001.

In April 2001, the Company signed a letter of intent with Tidalwave Holdings,
Inc., to form a joint venture which will provide the Company with $10,000,000
non-conforming (sub prime), and conforming revolving warehouse lines of credit.
This joint venture will enable the Company to establish and operate a national
wholesale mortgage conduit that will purchase loans on a wholesale basis. The
loans will be processed, underwritten and funded by FUMB for sale in
institutional private placement transactions.

Under the terms of the Agreement with FAMS, FUMB is provided warehouse funding
by FAMS at interest rates ranging from (New York) Prime to Prime plus 2%, and
utilizing compensating balances on deposit at FAMS's participating warehouse
banks, and receives 100% advances on loans funded. The company has executed a
Letter of Intent that will allow the Company to participate in mortgage

                                       2
<PAGE>


securitization issues with one of its investment mortgage bankers that will
allow the company to retain an interest in the servicing rights for loans
securitized per that Agreement.

                           Part II - Other Information


ITEM 1: Legal Proceedings.

In the ordinary course of its business, the Company forecloses on real estate
secured mortgage loans in default and may be involved in other legal proceedings
as a plaintiff or a defendant, none of which the Company believes will be
material.

As a result of the reorganization in Chapter 11, the Company is no longer
threatened with any litigation, claims and assessments, which may have existed
prior to filing of the petition.

A former executive officer, and two of his relatives who were formerly employed
by the Company have filed suit against the Company for unpaid wages and other
matters. The Company terminated this person for cause and believes it has no
liability under the employment agreement. This individual has filed a lawsuit
against the Company seeking back wages. The Company is vigorously defending this
action and expects to prevail, and is currently negotiating a settlement of this
matter. Two other former executive officers were also terminated for cause. The
Company is negotiating with these persons to settle any claims they may have
under their employment agreements and is optimistic in reaching a settlement.

All three former executive officers mentioned in the preceding paragraph had
employment agreements, which included a stock bonus provision, entitling them to
maintain a specified percentage of the Company's common stock as determined at
the end of each fiscal year. The Company believes this bonus provision was
illegal, and based on the advice of counsel, has terminated this provision and
intends to vigorously defend against any attempt to enforce it.

A fourth executive officer was terminated for cause on February 2, 2001. This
person holds one share of the Company's Class 4 convertible preferred stock and
one share of the Company's Class 5 convertible preferred stock. The original par
value was equal to the value of the commercial real estate in Evansville,
Indiana acquired by the Company, less mortgages, liens and encumbrances, which
are now in dispute. The par value of the Class 5 preferred stock is to be equal
to two and one half times the "net profits" from the Company's mortgage lending
operation for the eighteen-month period beginning July 2000. Because this person
will no longer be contributing to the success of the mortgage lending operation
due to his termination, the Company intends to modify the par value of the Class
5 preferred stock. Furthermore, the Company intends to reduce the par value of
its Class 4 preferred stock held by this person by an amount equal to
undisclosed liens on the commercial real estate, which the Company acquired from
this person. This person may seek to enforce the Company's full obligations
under the Class 4 and 5 preferred stock. The Company is presently seeking
criminal prosecution against this person for embezzlement. In addition, the
Company has begun a civil suit to recover the embezzled funds, which are in a
bank account that has been frozen, and bonded by the court.

Item 2. Changes in Securities

None

Item 3. Defaults Upon Senior Securities

None

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

None

Item 5. Other Information

None

                                       3
<PAGE>


Item 6. Exhibits and Reports Filed on Form 8-K

None

SIGNATURES

In accordance with the requirements of Section 13 or 15(d) of the Exchange Act,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                     CFI MORTGAGE INC.
                       (Registrant)


Date: May 18, 2001  /s/ Stephen E. Williams
                    Stephen E. Williams
                    President and Chief Executive Officer


Date: May 18, 2001  /s/ Daniel M. Brown
                    Daniel M. Brown
                    Chief Financial Officer and Principal Accounting Officer

                                       4
<PAGE>


                       CFI MORTGAGE INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 2001
                                   (Unaudited)

                                    I N D E X

                                                                        Page No.
                                                                        --------

Part I  - Financial Information:

          Item 1.   Consolidated Financial Statements:

                    Consolidated Balance Sheets
                    As at March 31, 2001 and December 31, 2000 .......F-2 - F-3


                   Consolidated Statements of Operations
                    For the Three Months Ended
                    March 31, 2001 and 2000 ..........................    F-4


                    Consolidated Statement of Stockholders' Equity
                    For the Three Months Ended March 31, 2001 ........    F-5


                   Consolidated Statements of Cash Flows
                    For the Three Months
                    Ended March 31, 2001 and 2000 ....................F-6 - F-7


                    Notes to Consolidated Financial Statements .......F-8 - F-22


          Item 2.   Management's Discussion and Analysis of
                      Financial Condition and Results of Operations ..F-? - F-?



Part II - Other Information:

                    Item 3 Through Item 9 - Not Applicable ............     F-??

                    Signatures ........................................     F-??

                                      F-1
<PAGE>


                       CFI MORTGAGE INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)


                                   A S S E T S

                                                        March 31,   December 31,
                                                          2001          2000
                                                       -----------  ------------
Current assets:
  Cash                                                 $    19,219   $    33,547
  Mortgage loans held for sale                           1,793,283    13,149,612
  Other receivable                                         293,973            --
  Accounts receivable                                       51,117        20,428
  Note receivable                                          100,000            --
  Rent receivable                                          172,612       115,075
  Due from related parties                                  85,726        85,726
  Deferred finance costs                                    73,125            --
  Prepaid expenses and other current assets                 30,071        17,811
                                                       -----------   -----------
        Total current assets                             2,619,126    13,422,199
                                                       -----------   -----------
Property and equipment, at cost, less accumulated
  depreciation of $129,143 and $97,524, respectively     2,837,341     2,854,833
                                                       -----------   -----------
Other assets:
  Investments - at equity                                  120,000       120,000
  Capitalized software development costs, less
    accumulated amortization of $256,109
    and $230,368, respectively                             258,709       284,450
  Goodwill, less accumulated amortization
    of $158,827 and $123,666, respectively               1,306,253     1,341,414
  Notes receivable                                              --       100,000
  Security deposits                                         17,205        18,955
                                                       -----------   -----------
        Total other assets                               1,702,167     1,864,819
                                                       -----------   -----------
                                                       $ 7,158,634   $18,141,851
                                                       ===========   ===========

                 See accompanying notes to financial statements.

                                      F-2
<PAGE>


                       CFI MORTGAGE INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

                         LIABILITIES AND STOCKHOLDER'S
                                     EQUITY
                                                       March 31,    December 31,
                                                         2001           2000
                                                      ----------   -------------
Current liabilities:
  Warehouse bank line of credit                    $  1,739,139    $ 12,727,195
  Accounts payable                                      142,665         153,744
  Current portion of mortgage payable                    84,654          66,754
  Note payable - bank                                   128,541              --
  Due to affiliated company                             153,191         150,135
  Due to related party                                  175,262              --
  Due to officer                                         30,806         206,068
  Notes payable - other                                  56,000         138,500
  Convertible debentures payable                        225,000              --
  Accrued expenses and other current liabilities      1,277,289       1,046,127
                                                   ------------    ------------
        Total current liabilities                     4,012,547      14,488,523
                                                   ------------    ------------
Mortgage payable - long-term portion                  1,407,797       1,425,697
                                                   ------------    ------------
Deferred income                                          41,427         221,058
                                                   ------------    ------------
Commitments and contingencies                                --              --

Stockholders' equity:
  Common stock, $.01 par value
    Authorized 35,000,000 shares
    Issued and outstanding - 27,171,151 and             271,711         263,311
      26,331,151, respectively
  Preferred stock, no par value
    Authorized 10,000,000 shares
    Issued and outstanding - 2 shares                 1,721,596       1,721,596
  Additional paid-in capital                          7,240,421       7,066,321
  Accumulated deficit                                (7,441,048)     (6,998,838)
                                                   ------------    ------------
                                                      1,792,680       2,052,390
  Less: Stock subscriptions receivable                  (95,817)        (45,817)
                                                   ------------    ------------
        Total stockholders' equity                    1,696,863       2,006,573
                                                   ------------    ------------
                                                   $  7,158,634    $ 18,141,851
                                                   ============    ============

                 See accompanying notes to financial statements.

                                      F-3
<PAGE>


                       CFI MORTGAGE INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                         For the Three
                                                         Months Ended
                                                           March 31,
                                                  ----------------------------
                                                     2001              2000
                                                  -----------     ------------
Revenues:
  Commissions, fees and interest - mortgages      $    661,045             $--
  Software                                              76,971         124,149
  Rental income                                         57,536              --
                                                  ------------    ------------
Total revenues                                         795,552         124,149
                                                  ------------    ------------
Expenses:
  Selling                                              350,114          28,183
  General and administrative                           635,013         296,143
  Interest                                             227,635           8,061
                                                  ------------    ------------
Total expenses                                       1,212,762         332,387
                                                  ------------    ------------
Loss from operations                                  (417,210)       (208,238)
                                                  ------------    ------------
Other income (expense):
  Financial costs                                      (25,000)             --
  Settlement fee from cancelled acquisition                 --         100,000
                                                  ------------    ------------
Total other income (expense)                           (25,000)        100,000
                                                  ------------    ------------
Loss before extraordinary gain                        (442,210)       (108,238)

Extraordinary gain - forgiveness of debt                    --          70,540
                                                  ------------    ------------
Net loss                                          ($   442,210)   ($    37,698)
                                                  ============    ============
Basic earnings per common share:
  Loss before extraordinary gain                  ($   442,210)   ($   108,238)
  Extraordinary gain                                        --          70,540
                                                  ------------    ------------
Net loss available for common stockholders        ($   442,210)   ($    37,698)
                                                  ============    ============
Weighted average shares                             26,328,618      14,647,255
                                                  ============    ============
Loss per share - basic:
  Loss per share from continuing operations
    before extraordinary gain                     ($      0.02)         ($0.01)
  Extraordinary gain                                        --            0.01
                                                  ------------    ------------
  Net loss                                        ($      0.02)   $         --
                                                  ============    ============

                 See accompanying notes to financial statements.

                                      F-4
<PAGE>


                       CFI MORTGAGE INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                    FOR THE THREE MONTHS ENDED MARCH 31, 2001
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                  Additional
                                        Common Stock         Preferred Stock       Paid-In    Accumulated
                                      Shares     Amount    Shares      Amount      Capital      Deficit         Total       Total
                                      ------     ------    ------      ------      -------      -------         -----       -----
<S>                                 <C>          <C>          <C>   <C>           <C>          <C>            <C>         <C>
Balance - January 1, 2001           26,331,151   $263,311      2    $1,721,596    $7,066,321   ($6,998,838)   ($45,817)   $2,006,573

Shares to be issued as repayment
  of advance                           375,000      3,750     --            --        81,250            --          --       85,000

Shares to be issued  pursuant to
  employment contract                  375,000      3,750     --            --        71,250            --     (50,000)      25,000

Shares to be issued for sale of
  convertible debentures                90,000        900     --            --        21,600            --          --       22,500

Net loss for the three months
  ended March 31, 2001                      --         --     --            --            --      (442,210)         --     (442,210)
                                    ----------   --------  -----    ----------    ----------    -----------   --------    ----------

Balance - March 31, 2001            27,171,151   $271,711      2    $1,721,596    $7,240,421   ($7,441,048)   ($95,817)  $1,696,863
                                    ==========   ========  =====    ==========    ==========   ===========    ========   ==========

</TABLE>


                 See accompanying notes to financial statements.

                                      F-5
<PAGE>


                       CFI MORTGAGE INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                For the Three
                                                                Months Ended
                                                                   March 31,
                                                         --------------------------
                                                             2001            2000
                                                         ------------     ---------
<S>                                                      <C>              <C>
Cash flows from operating activities:
  Net loss from operations                               ($   442,210)    ($ 37,698)
                                                         ------------     ---------
  Adjustments to reconcile net loss to net
      cash provided by operating activities:
    Write down on mortgages held for sale                      81,897            --
    Forgiveness of debt                                            --       (70,540)
    Deferred income                                          (179,631)           --
    Depreciation and amortization                              92,521        40,229
    Common stock issued for salaries and other expenses        25,000        43,480
    Interest accrued on related party loans                     3,056         3,061
    Increase (decrease) in cash flows as a result of
        changes in asset and liability account balances:
      Mortgage loans held for sale                         11,356,329            --
      Accounts receivable                                     (30,689)         (364)
      Rent receivable                                         (57,537)           --
      Other receivable                                       (293,973)           --
      Prepaid expenses and other current assets               (12,260)       (3,018)
      Security deposits                                         1,750       (10,300)
      Accounts payable                                        (11,079)           --
      Accrued expenses and other current liabilities           98,640       133,182
                                                         ------------     ---------
  Total adjustments                                        11,074,024       135,730
                                                         ------------     ---------
Net cash provided by operating activities                  10,631,814        98,032
                                                         ------------     ---------
Cash flows from investing activities:
  Software development costs                                       --       (63,953)
  Expenditures for property and equipment                     (14,127)       (6,688)
                                                         ------------     ---------
Net cash used in investing activities                         (14,127)      (70,641)
                                                         ------------     ---------
Cash flows from financing activities:
  Warehouse bank line of credit                           (10,988,056)           --
  Note payable - bank                                         128,541            --
  Proceeds from convertible debentures                        225,000            --
  Common stock issued                                          85,000            --
  Notes payable - other                                       (82,500)      (17,942)
  Due to affiliate                                                 --        (2,000)
                                                         ------------     ---------
Net cash used in financing activities                     (10,632,015)      (19,942)
                                                         ------------     ---------

Net increase (decrease) in cash                               (14,328)        7,449

Cash at beginning of period                                    33,547         7,574

Cash of subsidiary acquired                                        --         2,466
                                                         ------------     ---------
Cash at end of period                                    $     19,219     $  17,489
                                                         ============     =========

</TABLE>

                 See accompanying notes to financial statements.

                                       F-6
<PAGE>

                       CFI MORTGAGE INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                For the Three
                                                                Months Ended
                                                                   March 31,
                                                         --------------------------
                                                             2001            2000
                                                         ------------     ---------
<S>                                                      <C>              <C>

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the periods for:

    Income taxes                                         $         --     $      --
                                                         ============     =========
    Interest                                             $    195,670     $      --
                                                         ============     =========

Supplemental Schedules of Noncash Investing
    and Financing Activities:

  Common stock issued for convertible debenture          $     22,500     $      --
                                                         ============     =========

  Common stock issued for salaries and other expenses    $     25,000     $  43,480
                                                         ============     =========

  Transfer in interest of notes payable
    from officer to related party                        $    175,262     $      --
                                                         ============     =========

</TABLE>

                 See accompanying notes to financial statements.

                                      F-7
<PAGE>


                       CFI MORTGAGE INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 2001
                                   (UNAUDITED)

NOTE  1 -   GOING CONCERN.

                  The accompanying interim unaudited consolidated financial
            statements have been prepared assuming the Company will continue as
            a going concern. The Company recently completed a voluntary plan of
            reorganization. The Company may continue to need to raise additional
            capital to fund operations until such time as operating cash flows
            are sufficient to sustain the operations of the Company. There are
            no assurances that the Company can raise capital to sustain
            operations until cash flows from operations are sustainable. Should
            the Company be unable to obtain such capitalization, management
            might be forced to cease operations and liquidate the Company. Such
            conditions raise substantial doubt about the Company's ability to
            continue as a going concern. The consolidated financial statements
            contained herein do not include any adjustments that might result
            from the outcome of this uncertainty.

NOTE 2 -    SIGNIFICANT ACCOUNTING POLICIES.

            (a)   Basis of Presentation:

                  The accompanying interim unaudited consolidated financial
            statements have been prepared in accordance with accounting
            principles generally accepted in the United States of America. The
            financial statements include the accounts of CFI mortgage Inc.
            ("CFI"), First United MortgageBanc, Inc. ("FUMB"), Inventek, Inc.,
            doing business as Surfside Software Systems ("Surfside") and
            Monetech, Inc., all wholly owned subsidiaries of CFI. The financial
            statements also include the Company's 40% minority interest in First
            Mortgage Securities, Inc., of Clearwater Florida ("FMS") accounted
            for under the equity method. CFI and its subsidiaries are hereafter
            collectively referred to as the "Company".

                  The accompanying unaudited consolidated financial statements
            have been prepared in accordance with accounting principles
            generally accepted in the United States of America for interim
            financial information and with instructions for Form 10-QSB and
            Article 10 and Regulation S-B. Accordingly, they don not include all
            of the information and footnote required by generally accepted
            accounting principles for complete financial statements. In the
            opinion of management, the statements contain all adjustments
            (consisting only of normal recurring accruals) necessary to present
            fairly the financial position as of March 31, 2001 and the results
            of operations and cash flows for the three months ended March 31,
            2001 and 2000. The results of operations for the three months ended
            March 31, 2001 and 2000 are not necessarily indicative of the
            results to be expected for the full year.

NOTE 2 -    SIGNIFICANT ACCOUNTING POLICIES. (Continued)

            (a)   Basis of Presentation: (Continued)

                  The December 31, 2000 balance sheet has been derived from the
            audited financial statements at that date included in the Company's
            annual report on Form 10-KSB. These unaudited financial statements
            should be read in conjunction with the financial statements and
            notes thereto included in the Company's annual report on
            Form-10-KSB.

                                      F-8
<PAGE>


            (b)   Use of Estimates:

                  The preparation of financial statements in conformity with
            accounting principles generally accepted in the United States of
            America requires management to make estimates and assumptions in
            determining the reported amounts of assets and liabilities and
            disclosures of contingent assets and liabilities as of the date of
            the consolidated financial statements, and the reported amounts of
            revenues and expenses during the year. Actual results could differ
            from those estimates.


            (c)   Applicable Accounting Pronouncements:

                  The Company has previously adopted Statement of Financial
            Accounting Standards No. 125, "Accounting for Transfers and
            Servicing of Financial Assets and Extinguishments of Liabilities"
            ("SFAS No. 125"), which provides accounting and reporting standards
            for transfers and servicing of financial assets and extinguishments
            of liabilities. The statement also provides standards for
            distinguishing transfers of financial assets that are sales from
            transfers that are secured borrowings.

                  Fee income in connection with mortgage loans, is accounted for
            in conformity with Statement of Financial Accounting Standards No.
            91. This statement requires that fees are offset by their direct
            loan costs and the net deferred income is recognized over the life
            of the loan. The Company has previously adopted the guidance under
            SFAS No. 91.

                  Upon sale of the related collateral mortgages, the net fee
            income previously being amortized is then recognized into income.

                  Concurrent with the acquisition of its new subsidiary,
            Surfside, the Company has adopted the guidance provided under SFAS
            No. 86, "Accounting for the Costs of Computer Software to Be Sold,
            Leased, or Otherwise Marketed". SFAS No. 86 provides guidance for
            the specific costs in the development of proprietary software
            products which may be capitalized, and the stages of development
            during which they may be capitalized.

NOTE 2 -     SIGNIFICANT ACCOUNTING POLICIES. (Continued)

            (d)   Property and Equipment:

                  Property and equipment are stated at cost less accumulated
            depreciation. The Company's policy is to provide for depreciation
            over the estimated useful lives of the assets ranging from 3 to 39
            years. Expenditures for leasehold improvements are capitalized and
            amortized over their estimated useful lives or the life of the
            lease, whichever is shorter in duration. Expenditures for
            betterments are capitalized and depreciated as described above.

                  Expenditures for repairs, maintenance and minor renewals are
            charged to operations as incurred. Upon retirement or abandonment of
            the property and equipment, the carrying value and related
            accumulated depreciation and amortization are removed from the
            accounts.

            (e) Capitalized Software Development Costs:

                                       F-9
<PAGE>


                  Capitalized software costs, which represent the costs incurred
            by the Company to develop its proprietary software products
            subsequent to determining the programs' technical feasibility and
            prior to availability for sale to the general public, are
            capitalized and amortized over a period of five years. Any remaining
            unamortized costs relating to program development which is
            considered obsolete is written off in the period of obsolescence.

                  Amortization of capitalized software development costs
            amounted to $25,741 and $10,645 for the three months ended March 31,
            2001 and 2000, respectively.


           (f)    Mortgage Loans Held for Sale:

                  Mortgage loans are carried at the lower of cost or market
            determined on an aggregate basis.


           (g)    Sale of Loans:

                  Premiums received from investors are recognized as revenue
            upon the sale of mortgage loans when all of the incidence of
            ownership passes to the permanent investor.

NOTE  2-    SIGNIFICANT ACCOUNTING POLICIES. (Continued)

            (h)   Goodwill:

                  In conjunction with the Company's acquisition of a 100%
            interest in Surfside, the value of assets exchanged, which was in
            excess of the value of assets received, net of liabilities, resulted
            in the creation of goodwill in the amount of $1,347,880. The Company
            is amortizing the goodwill over a period of ten years. Additionally,
            the acquisition by one of the Company's subsidiaries of two
            buildings net of liabilities resulted in the creation of goodwill in
            the amount of $117,200. The subsidiary is amortizing the goodwill
            created in the acquisition of the buildings over a period of 15
            years. Amortization expense charged to operations amounted to
            $35,161 and $24,058 for the three months ended March 31, 2001 and
            2000, respectively.

                  Management periodically reviews the value of all long-lived
            assets, including goodwill, to determine if there has been any
            impairment in the carrying value of the asset. Should management
            determine that such an impairment has occurred, an appropriate
            allowance will be set up to reflect the impairment of said asset.


            (i)   Income Taxes:

                  The Company complies with SFAS No.109, "Accounting for Income
            Taxes", which requires an asset and liability approach to financial
            accounting and reporting for income taxes. Deferred income tax
            assets and liabilities are computed for differences between the
            financial statement and tax bases of assets and liabilities that
            will result in future taxable or deductible amounts, based on the
            enacted tax laws and rates in the periods in

                                      F-10
<PAGE>


            which differences are expected to effect taxable income. Valuation
            allowances are established, when appropriate, to reduce deferred tax
            assets to the amount to be realized.


            (j)   Loss Per Common Share:

                  Earnings (loss) per common share is based on the weighted
            average number of common shares outstanding. SFAS No. 128, "Earnings
            Per Share", requires dual presentation of basic and diluted earnings
            per share on the face of the statements of operations. Basic
            earnings (loss) per share excludes any dilutive common stock
            equivalents and is computed by dividing net income or loss by the
            weighted average number of shares outstanding for the period.
            Diluted earnings per share reflect the potential dilution to common
            shareholders as if all common stock equivalents were converted into
            equivalent shares of common stock, thereby diluting net income
            available to holders of the common stock.

                  Diluted loss per share has not been presented in the financial
            statements herein, as the effect of including the common stock
            equivalents would be antidilutive for all periods presented.

NOTE  2 -   SIGNIFICANT ACCOUNTING POLICIES. (Continued)

            (k)   Recently Issued Accounting Pronouncements.

                  The Financial Accounting Standards Board issued Statement of
            Financial Accounting Standards No. 130 - "Reporting Comprehensive
            Income", No. 131 - "Disclosures about Segments of an Enterprise and
            Related Information", No. 132 - "Employer's Disclosures about
            Pension and Other Postretirement Benefits" and No. 133 - "Accounting
            for Derivative Instruments and Hedging Activities". Management does
            not believe that the effect of implementing these new standards will
            be material to the Company's financial position, results of
            operations and cash flows.

NOTE  3 -   FORGIVENESS OF DEBT.

                  On July 6, 1999, pursuant to the filing of Chapter 11 by the
            Company, the Court confirmed a plan of reorganization effective
            August 2, 1999 (the "Plan"), whereby creditors' claims that were
            approved by the Court were satisfied by the issuance of one share of
            the Company's common stock in exchange for each dollar of debt of
            the approved claim. As a result of the satisfaction of the
            pre-petition liabilities, the Company has recognized forgiveness of
            debt in the amount of $-0- and $70,540 for the three months ended
            March 31, 2001 and 2000, respectively.

NOTE 4 -    ACQUISITIONS.

            (a)   On January 14, 2000, the Company acquired a 65% interest in
                  Inventek, Inc. (Doing business as Surfside Software Systems of
                  Clearwater, Fl.) ("Surfside"), in exchange for the Company's
                  convertible preferred stock and certain common stock purchase
                  warrants valued at approximately $1,080,000. Surfside creates
                  and markets proprietary software products. The Company issued
                  preferred stock with a par value of $700,000 and 1,000,000
                  common stock purchase warrants, to which the Company
                  attributed a value of $380,000. The preferred stock is
                  convertible into shares of the Company's common stock based on
                  the average ask price for the five trading days at the end of
                  the month prior

                                      F-11
<PAGE>


                  to conversion. The preferred shares have no cumulative
                  dividend features, but do entitle the holders thereof to
                  participate in any dividends payable to holders of common
                  stock on a pro rata basis as if the shares had previously been
                  converted.

                  The warrants entitle the holders thereof to purchase one share
                  of the Company's common stock at an exercise price of $.15 per
                  share for a period of five years from the issue date.

NOTE  4 -  ACQUISITIONS. (Continued)

                  On August 4, 2000, the Company acquired the remaining 35%
                  minority interest in Inventek, Inc. in exchange for 300,000
                  shares of the Company's common stock and 30,000 common stock
                  purchase warrants at an exercise price of 120% of the average
                  closing price or average closing asked price for the Company's
                  common stock on the date of the grant. These warrants are
                  exercisable for a period of two years.

                  The Company also agreed to contribute $250,000 as additional
                  paid-in capital, at various dates through June 1, 2000. As of
                  March 31, 2001, the Company has contributed $229,000 of the
                  total due to be contributed.

                  The agreement calls for a potential adjustment to the purchase
                  price, based on earnings of Surfside over the twenty-four
                  month period following the closing of the transaction. Such
                  adjustment would be in the form of additional convertible
                  preferred stock up to an additional $4,000,000 at par value.

            (b)   On June 13, 2000, the Company acquired two commercial office
                  buildings from Flamingo Financial Services, Inc. The buildings
                  have been appraised at a value of $2,550,000 and the Company
                  assumed the related collateral mortgages, which amounted to
                  $1,528,404. In exchange, the Company gave the sellers one
                  share of its convertible preferred stock with a par value of
                  $1,021,596 and warrants to purchase 750,000 shares of its
                  common stock. CFI then contributed the two buildings along
                  with the underlying mortgage to a newly formed company, First
                  United MortgageBanc, Inc. ("FUMB"), a wholly owned subsidiary.
                  The agreement also provides for a potential adjustment to the
                  purchase price, based on the net profit of FUMB over the
                  eighteen month period following the closing of the
                  transaction. This adjustment will be satisfied by the issuance
                  of a 2nd share of CFI's preferred stock.

                  The preferred stock is convertible into shares of the
                  Company's common stock based on the average asking price for
                  the five trading days at the end of the month prior to
                  conversion. The preferred shares have no cumulative dividends
                  rights, but permit the holders thereof to participate in any
                  dividends payable to holders of common stock on a pro rata
                  basis, as if the shares had been converted. The three
                  warrants, each for 250,000 shares of the Company's common
                  stock, are exercisable at prices of $.15, $.35 and $.50 per
                  share, respectively. The warrants are exercisable for a period
                  of five years from the date of issuance.

                                      F-12
<PAGE>


NOTE  4 -   ACQUISITIONS. (Continued)

            (c)   On May 4, 2000, the Company acquired a 40% interest in First
                  Mortgage Securities, Inc., of Clearwater Florida, in exchange
                  for 400,000 shares of its common stock and common stock
                  purchase warrants to acquire 400,000 shares of the Company's
                  common stock at an exercise price of $.67 per share. The
                  acquisition was accounted for under the equity method.

                  The Company attributed a value of $225,000 to the common stock
                  and common stock purchase warrants exchanged for the interest
                  in FMS. The Company wrote down the investment by $105,000
                  during fiscal 2000, based on then most current financial
                  information available for FMS. The Company has become aware
                  through public documents, that FMS and its parent company were
                  acquired by Tidalwave Holdings, Inc. in a stock exchange. As a
                  result of the Tidalwave acquisition, the Company's investment
                  in FMS may be worth at least $225,000. However, the Company
                  could not quantify the value as of the date of this report.

                  On April 28, 2000, the Company formed a wholly-owned
                  subsidiary Monetech, Inc. for the purpose of acquiring the net
                  assets of RJ Systems, Inc., a software development company. At
                  March 31, 2001 the Company has determined that this
                  acquisition would not be beneficial to its future plans and
                  has decided not to pursue the acquisition. Monetech, Inc. will
                  continue as an inactive company, to be used for future
                  acquisitions the Company may be involved with.

            (d)   On April 12, 2001, the Company signed a letter of intent with
                  Tidalwave Holdings, Inc., a Florida corporation ("Tidalwave")
                  to form a joint venture for the purpose of originating, buying
                  and funding collateral mortgages primarily in the sub-prime
                  mortgage market.

                  Under the terms of the proposed agreement, a new corporation
                  will be formed. CFI will acquire preferred stock in the
                  corporation in exchange for its preferred stock with a value
                  of $2.5 million. Tidalwave will acquire all of the issued
                  common stock in exchange for $2.5 million of its preferred
                  stock.

                  Tidalwave will provide the new corporation with access to its
                  warehouse lines and secondary marketing and will receive a fee
                  of one percent of each loan funded under the joint venture.
                  CFI, through its wholly-owned subsidiary FUMB, will be
                  responsible for all costs associated with the loan origination
                  and will receive all income, less the one percent.

NOTE 5 -    OTHER RECEIVABLE.

                  In connection with the sale of the collateral mortgages the
            bank has retained 10% of the principal balance on those mortgages
            that are more than 90 day old, and still not sold as at March 31,
            2001. Upon the sale of all the mortgages (which occurred in May
            2001), and payment of all outstanding interest and fees due the
            bank, any balance remaining will be remitted to the Company.

                                      F-13
<PAGE>


NOTE 6 -    PROPERTY AND EQUIPMENT.

                  Property and equipment, at cost, consists of the following:

                                                     March 31,  December 31,
                                                       2001         2000
                                                   -----------   ----------
            Buildings                               $2,550,000   $2,550,000
            Leasehold improvements                      15,031       15,031
            Furniture                                  217,661      217,661
            Computer equipment                         129,508      115,381
            Office equipment                            54,284       54,284
                                                    ----------   ----------
                                                     2,966,484    2,952,357
            Less: Accumulated depreciation
                    and amortization                   129,143       97,524
                                                    ----------   ----------
                                                    $2,837,341   $2,854,833
                                                    ==========   ==========

                  Depreciation and amortization expense amounted to $31,619 and
            $5,526 for the three months ended March 31, 2001 and 2000,
            respectively.



NOTE  7 -   RELATED PARTY TRANSACTIONS.

            (a)   For the three months ended March 31, 2001, all of the rental
                  income was derived from a company owned by a preferred
                  stockholder of the Company. The Company was due $172,612 and
                  $115,075 at March 31, 2001 and December 31, 2000, respectively
                  from this company for rent and is reflected in the financial
                  statements as a current asset. In addition there is a note
                  receivable from this company in the amount of $100,000. The
                  note receivable with accrued interest at 6% is due on March
                  31, 2002. On September 1, 2000 this company filed a petition
                  for reorganization under Chapter XI of the United States
                  Bankruptcy Codes. Neither the lease or the note have been
                  included in the petitioner's schedule of debts submitted to
                  the court. Management of the Company expects full recovery of
                  both amounts. Should the Company be unsuccessful in asserting
                  these claims, it believes it can offset them against certain
                  stock rights the individual has been granted by the Company in
                  the aforementioned acquisition of the Indiana property. The
                  ultimate resolution of these events are undeterminable as of
                  the date of this report.

NOTE  7 -  RELATED PARTY TRANSACTIONS. (Continued)

                  As of March 31, 2001, the Company owes this preferred
                  stockholder $175,262. The notes payable were originally issued
                  to an officer of the Company who has assigned his rights to
                  the aforementioned individual.

            (b)   The Company has made advances to two individuals, one of whom
                  is a former director of the Company. The balance amounted to
                  $85,726 at each of March 31, 2001 and December 31, 2000. The
                  advances are due on demand and there has been no interest
                  charged on the outstanding balances.

            (c)   The Company has a revolving line of credit with an affiliate,
                  whereby it can borrow up to $150,000, with interest charged at
                  9% per annum. The loan is due on demand. The Company was
                  liable under this credit facility for $153,191 and $150,135 at
                  March 31, 2001 and December 31, 2000, respectively. The

                                      F-14
<PAGE>

                  balances include accrued interest of $15,450 and $12,400,
                  respectively.

                  As an inducement to make the loan, the affiliate was
                  previously granted warrants to purchase 150,000 shares of the
                  Company's common stock at an exercise price of $.25 per share,
                  which represented 105% of the closing bid price on the date of
                  the grant. During the year 2000 the sole stockholder of this
                  affiliate passed away and all interests have passed through to
                  his estate.

NOTE 8 -    NOTE PAYABLE - BANK.

                  The note is payable in twelve monthly installments of
            approximately $11,800 including interest at a rate of prime plus 2%.

NOTE  9 -   DUE TO OFFICER.

                  During the period ended December 31, 2000, the Company
            received advances from an officer totaling $200,000 of which
            $170,000 plus interest was assigned to a preferred stockholder of
            the Company. The remaining loan balance is payable on demand and
            bears interest at 9% per annum. The balance at March 31, 2001 of
            $30,806 includes accrued interest of $806.

NOTE 10 -   WAREHOUSE LINE OF CREDIT.

                  FUMB had an agreement with an institution that provided a
            $15,000,000 warehouse credit facility, whereby advances were
            available up to the extent of the loan limit based upon submitted
            mortgage documents which collateralize the loan. As the mortgages
            were sold to investors, the proceeds were used to reduce the loan
            advances specifically identified with those mortgages sold.

                  As of February 13, 2001 the financial institution terminated
            the warehouse line of credit due in part to the unauthorized
            misrepresentation of a former officer of the Company. As a result of
            this default the outstanding principal balance, accrued interest and
            fees became due. As of the report date, the Company has sold all of
            the collateral mortgages and expects to repay the institution in
            full. The Company and two stockholders have guaranteed payment of
            the credit facility.

                  The terms of the credit facility called for an interest rate
            at the bank's prime rate. Interest expense on the warehouse line
            amounted to $196,000 and $-0- for the three months ended March 31,
            2001 and 2000, respectively.

                  In addition, for the three months ended March 31, 2001 the
            Company charged operations for approximately $82,000 to recognize
            the loss on the mortgages sold subsequent to March 31, 2001.

                                      F-15
<PAGE>


NOTE 11 -   MORTGAGE PAYABLE.

                  The mortgage is payable in monthly installments of $15,168
            including interest at 7.75% with a final payment due on December 31,
            2014. The buildings collateralize the mortgage, and in addition, the
            sellers remain primarily liable. The mortgage balance consists of
            the following:


                                                      March 31,  December 31,
                                                        2001         2000
                                                     ----------   ----------

            Current portion                          $   84,654   $   66,754
            Long-term portion                         1,407,797    1,425,697
                                                     ----------   ----------
                                                     $1,492,451   $1,492,451
                                                     ==========   ==========

NOTE 11 -   MORTGAGE PAYABLE.  (Continued)

                  Annual maturities for the next five years are as follows:

                  Years Ending
                    March 31,
                  ------------
                      2002                                         $   84,654
                      2003                                             73,623
                      2004                                             79,367
                      2005                                             86,127
                      2006                                             93,167
                  Thereafter                                        1,075,513
                                                                   ----------

                                                                   $1,492,451
                                                                   ==========

                  Interest expense amounted to $28,910 and $-0- for the three
            months ending March 31, 2001 and 2000, respectively. In addition at
            March 31, 2001 the Company is in arrears on its mortgage principal
            payments for the 1st quarter of 2001 amounting to $16,593 plus
            unpaid interest of $28,910.



NOTE 12 -  DUE TO BANKS AND SUNDRY CREDITORS.

                  The Plan of Reorganization as discussed in note 3 included
            claims from two financial institutions in the amount of $4,000,000,
            as well as certain non-priority claims from present and former
            employees for unpaid compensation up to the petition date amounting
            to $83,328. During the year December 31, 2000, the Company issued
            2,400,000 shares of its common stock in satisfaction of the claims
            from the two financial institutions, which resulted in the
            recognition of forgiveness of debt amounting to $3,100,000.

                                      F-16
<PAGE>


            Additionally, the Company issued 467,531 shares of its common stock
            in satisfaction of liabilities resulting in forgiveness of debt of
            $168,216.

NOTE  13 -  12% CONVERTIBLE DEBENTURES.

                  During the quarter ending March 31, 2001, the Company received
            $225,000 from the sale of 12% convertible debentures through a
            private securities subscription agreement. The agreement calls for a
            maximum of $700,000 in debentures to be sold in $25,000 minimum
            increments. The debentures are collaterilized by a second trust deed
            up to the value of $700,000 in the Company's real property. The
            debentures have a maturity date of 190 days from the date of issue
            and allow the holders the option of converting 15% of their
            investment into the Company's common stock at $0.10 per share upon
            maturity. In addition each holder of a $25,000 unit shall be issued
            10,000 shares of the Company's common stock upon subscription.

                                      F-17
<PAGE>


NOTE  14 -  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES.

                  Accrued expenses and other current liabilities are comprised
            of the following:

                                                         March 31,  December 31,
                                                           2001         2000
                                                        ---------   ------------

        Professional fees                              $  120,089     $   96,900
        Accrued writedown on mortgages held for sale       81,897              -
        Accrued compensation of employees                       -         52,206
        Accrued compensation of officers                  520,151        512,651
        Accrued finance costs -
          convertible debentures                           50,625              -
        General and administrative expenses               177,541         23,899
        Payroll taxes, penalties and interest             298,077        210,069
        Interest accrued on warehouse line                 28,909        150,402
                                                       ----------     ----------
                                                       $1,277,289     $1,046,127
                                                       ==========     ==========

                  Included in accrued compensation of officers is $405,150 which
            represents the aggregate compensatory element of stock bonuses to be
            issued pursuant to employment agreements entered into, subsequent to
            the effective date of the Plan.



NOTE 15 -   COMMITMENTS AND CONTINGENCIES.

            (a)   Leases:

                  In January 2000, the Company's wholly owned subsidiary,
            Surfside, entered into a lease for office space which runs through
            December 31, 2004. Minimum annual rents under the lease are as
            follows:

                      Years Ending
                        March 31,

                           2002                            $151,635
                           2003                             159,150
                           2004                             167,091
                           2005                             129,942
                                                           --------
                                                           $607,818
                                                           ========

                  Rent expense amounted to $39,310 and $16,133 for the three
            months ended March 31, 2001 and 2000, respectively.

                                      F-18
<PAGE>

NOTE 15 -   COMMITMENTS AND CONTINGENCIES.  (Continued)

            (b)   Employment Contracts:

                  In August 1999, the Company entered into employment contracts
            with the (then) four officers. The contracts provided for annual
            base salaries and escalation clauses. They also provided for
            mandatory cash bonuses accruable ratably throughout the year and
            payable at the end of each fiscal year. The contracts also included
            a provision which granted each of the four individuals a stock bonus
            equal to 5% of the Company's common stock issued during each fiscal
            year of the contract. The mandatory cash bonuses were accrued
            throughout fiscal year and payable at the end of the year. Each of
            the individuals were given the option to take the bonus in shares of
            the Company's common stock, valued at a 50% discount to the average
            closing bid price for the five trading days immediately after the
            close of the fiscal year.

                  In November 2000, the Company's corporate counsel advised
            management that the stock bonus provision of the employment
            contracts were illegal under Delaware corporate law. Accordingly, in
            December 2000, the Company's Board of Directors voted to terminate
            this provision retroactively to January 1, 2000. As a result of the
            board's action, the Company' reversed approximately $539,000 of
            compensation in the fourth quarter that had been accrued through
            September 30, 2000.

                  In September 2000, one of the above individuals and in
            December 2000 two of the other individuals covered by these
            employment contracts were terminated for cause. All other
            compensation due these individuals under the agreements has been
            accrued to the date of termination.

                  Included in the results of operations is $58,667 and $72,324
            for the three months ended March 31, 2001 and 2000, respectively,
            for compensation due to the officers under the terms of the
            contracts. At March 31, 2001, $520,151 remains unpaid of which
            $7,500 applies to 2001 and $512,651 applies to 2000 and prior.

                  In July 2000, the Company entered into an employment contract
            with an individual to become the Company's Chief Financial Officer
            ("CFO"). The contract is for a period of three years and provides
            for a base salary of $120,000 per annum for the first year. Salary
            increases and cash bonuses, if any, shall be determined by The Board
            of Directors. This contract was verbally amended in August 2000 to
            allow for the CFO to receive stock options. The manner of granting
            the options, the number of shares under option, the per share price
            of the option are currently under negotiation.

                                      F-19
<PAGE>


NOTE 15 -   COMMITMENTS AND CONTINGENCIES.  (Continued)

            (b)   Employment Contracts: (Continued)

                  In March 2001, the Company entered into an employment contract
            with an individual to become the president of ("FUMB"). The contract
            is for a period of three years and provides for a base salary of
            $130,000 per annum for the first year. Salary increases shall be
            determined by the Board of Directors on an annual basis. The
            individual has agreed to purchase 375,000 shares of the Company's
            common stock at a price of $0.20 per share for a total of $75,000.
            The March 31, 2001 financial statements give recognition to the
            shares as being issued. In addition the contract allows for a stock
            bonus to be issued to the individual each year during the employment
            contract. The terms call for the Company to issue shares of its
            common stock, the number of shares determined by taking the earnings
            before income tax and depreciation of FUMB and multiplying that
            number by 8.5%. The quotient shall be divided by the mean bid/ask
            price of the Company's common stock for the month following the
            anniversary date of the executives employment contract. The
            individual shall have at his option the right to take up to 15% of
            the stock bonus in cash.

            (c)   Mortgage Loans Held for Sale:

                  The Company sells mortgage loans on a non-recourse basis with
            certain representations and warranties. The Company may be obligated
            by industry practice under certain circumstances to repurchase a
            loan if it goes into default within the first year.

NOTE 16 -   LIIGATION.

                  An officer, and two of his relatives who were formerly
            employed by the Company have filed suit against the Company for
            unpaid wages and other matters. The Company is vigorously defending
            the action while considering opportunities to settle the matter. The
            minimum potential cost to the Company is not readily determinable
            because all the plaintiffs have not made demand nor disclosed their
            damages. Management is of the opinion this suit will not have a
            material impact on the financial statements.



NOTE 17 -  INCOME TAXES.

                  The Company and its wholly owned subsidiaries file a
            consolidated federal income tax return. As of December 31, 2000, the
            Company and its subsidiaries have a net operating loss carryforward
            of approximately $21,000,000 available to reduce future taxable
            income through the year 2020. The Company's ability to utilize its
            net operating loss carryforward could be limited following a change
            in ownership in excess of 50%, which resulted from the Company's
            reorganization and recapitalization under the Plan. The Company has
            fully reserved its deferred tax asset due to the uncertainty about
            its ability to utilize it in future periods.

                                      F-20
<PAGE>


NOTE 18 -   STOCKHOLDERS' EQUITY.

            (a)   Common Stock:

                  In February 2001 the Board of Directors approved the issuance
            of 375,000 shares of the Company's common stock to a board member in
            consideration of an advance made by him to the Company. The issuance
            at this stock resulted in a charge to operations of $25,000 for
            financial costs.

                  In conjunction with an employment contract between the Company
            and an individual 375,000 shares of common stock were issued for
            $25,000 cash and a subscription receivable for $50,000 pursuant to
            the terms of the agreement.

                  In March 2001 the Company issued 90,000 shares of its common
            stock for $225,000 in conjunction with the issuance of 12%
            convertible debentures.

            (b)   Warrants:

                  During the three months ended March 31, 2001 in connection
            with loans made to the Company by an individual, the Company issued
            10,000 and 5,000 common stock purchase warrants both exercisable at
            $.18 per share, as an inducement to make the loans. The warrants are
            exercisable for a period of one year expiring on February 9, 2002
            and February 22, 2002, respectively.

                  At March 31, 2001 the Company had outstanding warrants
            entitling the holders to purchase common stock as follows:


                                   Exersise                Expiration
            Number of               Price                     Date
             Shares                (Range)              (Fiscal Year End)
            ---------           -------------           -----------------
              476,000           $0.08 - $0.41           December 31, 2001
            3,382,143           $0.18 - $1.44           December 31, 2002
              110,000               $0.39               December 31, 2003
            1,750,000           $0.15 - $0.50           December 31, 2005

                  The warrants are not valued in the financial statements as the
            amounts are immaterial.

                                      F-21
<PAGE>


NOTE 19 -   SEGMENT INFORMATION.

                  The Company is engaged in two segments; residential mortgage
            lending and licensing of proprietary computer software solutions.


                                                       Three Months Ended
                                                           March 31,
                                               -------------------------------
                                                    2001              2000
                                               ------------       ------------
            Revenues:
              Mortgage lending                 $    661,000       $         --
              Licensing computer software            77,000            124,000
              Other                                  58,000                 --
                                               ------------       ------------
                                               $    796,000       $    124,000
                                               ============       ============
            Operating income (loss):
              Mortgage lending                 ($    73,000)      $         --
              Licensing computer software          (146,000)           (89,000)
              Other                                (198,200)          (119,000)
                                               ------------       ------------
                                               ($   417,200)      ($   208,000)
                                               ============       ============

                                                  March 31,        December 31,
                                                    2001               2000
                                                ------------       ------------
            Identifiable assets:
              Mortgage lending                 $  5,975,000       $ 16,937,000
              Licensing computer software         1,575,000          1,607,000
              Other                               3,637,000          3,542,000
              Eliminations                       (4,028,000)        (3,944,000)
                                               ------------       ------------
                                               $  7,159,000       $ 18,142,000
                                               ============       ============

                                      F-22