<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 September 30, 2000

                                       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                                     52-2023491
(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
                                       ---      ---

            24,121,015 shares, $.01 par value, as of October 24, 2000

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

                                      F-1
<PAGE>




                       CFI MORTGAGE INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000
                                   (Unaudited)




                                    I N D E X

                                                                        Page No.

Part I  - Financial Information:

          Item 1. Consolidated Financial Statements:

                  Consolidated Balance Sheets
                  As at September 30, 2000 and December 31, 1999 ...   F-3 - F-4

                  Consolidated Statements of Operations
                  For the Nine and Three Months Ended
                  September 30, 2000 and 1999 ......................      F-5

                  Consolidated Statement Stockholders' Equity
                  For the Nine Months Ended
                  September 30, 2000 ...............................      F-6

                  Consolidated Statements of Cash Flows
                  For the Nine Months Ended
                  September 30, 2000 and 1999 ......................   F-7 - F-8

                  Notes to Consolidated Financial Statements .......  F-9 - F-21

          Item 2. Management's Discussion and Analysis of
                  Financial Condition and Results of Operations .... F-22 - F-31



Part II - Other Information:

                  Item 3 Through Item 9 - Not Applicable ...........      F-33

                  Signatures .......................................      F-34


                                      F-2
<PAGE>



                       CFI MORTGAGE INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

                                    A S S E T S

                                                     September 30,  December 31,
                                                         2000           1999
                                                     -------------  ------------

Current assets:
  Cash                                                $   32,906     $    7,574
  Accounts receivable                                     55,396           --
  Due from related parties                               244,265         90,726
  Prepaid expenses and other current assets               75,180           --
                                                      ----------     ----------
        Total current assets                             407,747         98,300
                                                      ----------     ----------

Property, plant and equipment, at cost, less
  accumulated depreciation of $149,702
  and $94,059, respectively                            2,854,995         55,418
                                                      ----------     ----------

Other assets:
  Investment - at equity                                 120,000           --
  Capitalized software development costs, less
    accumulated amortization of $199,858                 246,434           --
  Goodwill, less accumulated amortization
    of $84,527                                         1,380,553           --
  Notes receivable                                          --           25,000
  Security deposits                                       24,955           --
                                                      ----------     ----------
        Total other assets                             1,771,942         25,000
                                                      ----------     ----------

                                                      $5,034,684     $  178,718
                                                      ==========     ==========


                 See accompanying notes to financial statements.


                                      F-3
<PAGE>

                       CFI MORTGAGE INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

             LIABILITIES AND STOCKHOLDERS' CAPITAL EQUITY (DEFICIENCY)

<TABLE>
<CAPTION>
                                                              September 30,         December 31,
                                                                  2000                  1999
                                                              -------------         ------------
<S>                                                            <C>                  <C>
Current liabilities:
  Accounts payable                                             $     43,567         $       --
  Due to affiliated company                                         147,011              139,735
  Due to officer                                                    200,000                 --
  Current portion of mortgage payable                                68,938                 --
  Accrued expenses and other current liabilities                  1,672,293            2,401,423
                                                               ------------         ------------
        Total current liabilities                                 2,131,809            2,541,158

Liabilities not subject to compromise:
  Accounts payable of subsidiary                                       --              1,237,552

Liabilities under plan of reorganization:
  Due to banks and sundry creditors                                  14,913            4,083,328

Mortgage payable - long-term portion                              1,439,502                 --
                                                               ------------         ------------
        Total liabilities                                         3,586,224            7,862,038
                                                               ------------         ------------

Commitments and contingencies                                          --                   --

Stockholders' capital equity (deficiency):
  Common stock, $.01 par value
    Authorized 35,000,000 shares
    Issued and outstanding - 24,133,015 and
      15,676,451 shares, respectively                               241,330              156,764
  Preferred stock, $1,721,596 no par value
    Authorized 10,000,000 shares
    Issued and outstanding - 2 shares                             1,721,596                 --
  Additional paid-in capital                                     16,664,461           12,434,602
  Accumulated deficit                                           (17,178,927)         (20,274,686)
                                                               ------------         ------------
        Total stockholders' capital equity (deficiency)           1,448,460           (7,683,320)
                                                               ------------         ------------
                                                               $  5,034,684         $    178,718
                                                               ============         ============
</TABLE>

                See accompanying notes to financial statements.

                                      F-4

<PAGE>

                       CFI MORTGAGE INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  For the Nine Months Ended     For the Three Months Ended
                                                        September 30,                 September 30,
                                                 ---------------------------   ---------------------------
                                                      2000          1999             2000         1999
                                                 ------------   ------------   ------------  ------------

Revenues:
<S>                                              <C>            <C>            <C>           <C>
  Rental income                                  $     76,690   $       --     $     57,518  $       --
  Sales                                               314,307           --           58,453          --
  Commissions and fees                              1,135,196          1,358        974,217          --
                                                 ------------   ------------   ------------  ------------
Total revenues                                      1,526,193          1,358      1,090,188          --
                                                 ------------   ------------   ------------  ------------

Expenses:
  Direct costs                                         77,187           --            6,733          --
  Selling                                             363,232         11,742        253,910        11,742
  General and administrative                        1,927,715        465,468        624,187       274,529
  Interest                                             70,376         15,120         37,598         9,657
                                                 ------------   ------------   ------------  ------------
Total expenses                                      2,438,510        492,330        922,428       295,928
                                                 ------------   ------------   ------------  ------------
Income (loss) from operations                        (912,317)      (490,972)       167,760      (295,928)
                                                 ------------   ------------   ------------  ------------

Other income (expenses):
  Financial costs                                    (389,071)          --             --            --
  Settlement fee from cancelled acquisition           100,000           --             --            --
  Writedown of investment                            (105,000)          --             --            --
                                                 ------------   ------------   ------------  ------------
Total other income (expenses)                        (394,071)          --             --            --
                                                 ------------   ------------   ------------  ------------
Income (loss) before extraordinary gain            (1,306,388)      (490,972)       167,760      (295,928)

Extraordinary gain - forgiveness of debt            4,402,147           --           30,168          --
                                                 ------------   ------------   ------------  ------------
Net income (loss)                                $  3,095,759   ($   490,972)  $    197,928  ($   295,928)
                                                 ============   ============   ============  ============

Basic earnings per common share:

  Income (loss) before extraordinary gain          (1,306,388)      (490,972)       167,760      (295,928)
  Less:  Preferred stock dividends                       --         (136,100)          --         (56,460)
                                                 ------------   ------------   ------------  ------------
  Income (loss) available for
    common shareholders                            (1,306,388)      (627,072)       167,760      (352,388)
  Extraordinary gain                                4,402,147           --           30,168          --
                                                 ------------   ------------   ------------  ------------

Net income (loss) available for
  common shareholders                            $  3,095,759   ($   627,072)  $    197,928  ($   352,388)
                                                 ============   ============   ============  ============
Weighted average shares - basic                    17,727,305      3,748,164     22,820,267     3,826,412
                                                 ============   ============   ============  ============

Earnings (loss) per share - basic:
  Loss per share from continuing
    operations before extraordinary gain                ($.07)         ($.17)          $.01         ($.09)
  Extraordinary gain                                      .25             --             --            --
                                                 ------------   ------------   ------------  ------------
  Net income (loss)                                      $.18          ($.17)          $.01         ($.09)
                                                 ============   ============   ============  ============
Weighted average shares - diluted                  19,300,941      3,748,164     24,626,245     3,826,412
                                                 ============   ============   ============  ============

Earnings (loss) per share - diluted:
  Loss per share from continuing
    operations before extraordinary gain                ($.07)         ($.17)          $.01         ($.09)
  Extraordinary gain                                      .23             --             --            --
                                                 ------------   ------------   ------------  ------------
  Net income (loss)                                      $.16          ($.17)          $.01         ($.09)
                                                 ============   ============   ============  ============

</TABLE>


                See accompanying notes to financial statements.

                                      F-5

<PAGE>

                       CFI MORTGAGE INC. AND SUBSIDIARIES

                  ONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                   FOR THE NINE MONTHS ENDED SEPTEMBER 30 2000
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                Common Stock        Preferred Stock       Additional
                                            --------------------   -----------------       Paid-In        Accumulated
                                            Shares       Amount    Shares     Amount       Capital         Deficit          Total
                                            -------      -------   ------     -------      --------        --------         -----

<S>                                       <C>           <C>        <C>        <C>        <C>            <C>             <C>
Balance at January 1, 2000                15,676,451    $156,764      -        $   -     $12,434,602    ($20,274,686)   ($7,683,320)

Shares issued for payment of prior
  period liability on February 22, 2000       59,000         590      -            -          21,535              -          22,125

Shares issued for payment of prior
  period liability on March 10, 2000          53,864         539      -            -          19,660              -          20,199

Issuance of preferred stock for
  acquisition of Inventek, Inc.                  -            -        1       700,000       454,143              -       1,154,143

Issuance of preferred stock for
  acquisition of land and buildings              -            -        1     1,021,596       117,200              -       1,138,796

Shares issued for payment
  of prior period liabilities                170,000       1,700      -            -          18,175              -          19,875

Shares issued in conjunction with
  a private placement funding              1,778,143      17,781      -            -         871,690              -         889,471

Shares issued for employee compensation
  bonus, previously accrued                3,135,288      31,353      -            -       1,389,246              -       1,420,599

Shares issued for 40% investment
  in First Mortgage Securities, Inc.         400,000       4,000      -            -         221,000              -         225,000

Shares issued for payment of bank debt     2,400,000      24,000      -            -         876,000              -         900,000

Shares issued for exercise
  of common stock warrants                   100,000       1,000      -            -          19,000              -          20,000

Shares issued for acquisition of
  minority interest of Inventek, Inc.        300,000       3,000      -            -         194,640              -         197,640

Shares issued for payment of
  prior period liabilities                    48,269         483      -            -          17,618              -          18,101

Shares to be issued for settlement
  of legal services                           12,000         120      -            -           9,952              -          10,072

Net income for the nine months
  ended September 30, 2000                       -           -        -            -             -         3,095,759      3,095,759
                                          ----------    --------      -    ----------   -----------     ------------     ----------
Balance at September 30, 2000             24,133,015    $241,330      2    $1,721,596   $16,664,461     ($17,178,927)    $1,448,460
                                          ==========    ========      =    ==========   ===========     ============     ==========
</TABLE>



                See accompanying notes to financial statements.

                                       F-6
<PAGE>

                       CFI MORTGAGE INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                 For the Nine
                                                                 Months Ended
                                                                 September 30,
                                                           --------------------------
                                                               2000          1999
                                                           -----------    -----------
<S>                                                        <C>            <C>
Cash flows from operating activities:

  Net income (loss) from operations                        $ 3,095,759    ($  490,972)
                                                           -----------    -----------
  Adjustments to reconcile net income (loss)
      to net cash used in operating activities:
    Forgiveness of debt                                     (4,402,147)          --
    Writedown of investment                                    105,000           --
    Depreciation and amortization                              175,397          4,620
    Financial costs                                            389,071           --
    Common stock issued for salaries and other expenses         53,552           --
    Interest accrued on related party loans                      9,276         15,120
    Increase (decrease) in cash flows as a result of
        changes in asset and liability account balances:
      Accounts receivable                                      105,650           --
      State tax refund receivable                                 --           76,621
      Prepaid expenses and other current assets                 44,113         42,126
      Security deposits                                        (23,625)          --
      Accounts payable, accrued expenses
        and other current liabilities                          408,445         30,675
                                                           -----------    -----------
  Total adjustments                                         (3,135,268)       169,162
                                                           -----------    -----------

Net cash used in operating activities                          (39,509)      (321,810)
                                                           -----------    -----------

Cash flows from investing activities:

  Due from related parties                                    (153,539)          --
  Software development costs                                  (182,639)          --
  Expenditures for property and equipment                     (244,566)          --
                                                           -----------    -----------
Net cash used in investing activities                         (580,744)          --
                                                           -----------    -----------

Cash flows from financing activities:

  Proceeds from 15% demand convertible debentures                 --          245,420
  Mortgage payable                                             (19,964)          --
  Common stock issued for exercise of warrants                  20,000           --
  Due to officer                                               200,000        130,000
  Due to affiliate                                              (2,000)          --
  Proceeds from private placement                              445,083           --
                                                           -----------    -----------
Net cash provided by financing activities                      643,119        375,420
                                                           -----------    -----------

Net increase in cash                                            22,866         53,610

Cash at beginning of period                                      7,574          2,371

Cash of subsidiary                                               2,466           --
                                                           -----------    -----------

Cash at end of period                                      $    32,906    $    55,981
                                                           ===========    ===========
</TABLE>


                 See accompanying notes to financial statements.


                                      F-7
<PAGE>



                       CFI MORTGAGE INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                      For the Nine
                                                                      Months Ended
                                                                      September 30,
                                                                ----------------------
                                                                   2000         1999
                                                                -----------   --------
<S>                                                             <C>           <C>
Supplemental Disclosures of Cash Flow Information:
  Cash paid during the period for:

    Income taxes                                                $      --     $   --
                                                                ===========   ========

    Interest                                                    $    41,187   $   --
                                                                ===========   ========


Supplemental Schedules of Noncash Investing
    and Financing Activities:

  Accrued dividends on preferred stock                          $      --     $136,100
                                                                ===========   ========

  Common stock issued and to be issued
    for salaries and other expenses                             $    53,552   $   --
                                                                ===========   ========

  Common stock issued for investment in subsidiaries            $   422,640   $   --
                                                                ===========   ========

  Preferred stock issued for acquisition of subsidiary          $ 1,154,143   $   --
                                                                ===========   ========

  Preferred stock issued for acqusition of land and buildings   $ 1,138,796   $   --
                                                                ===========   ========

  Common stock issued in satisfaction of liabilities            $ 2,370,938   $   --
                                                                ===========   ========
</TABLE>


                 See accompanying notes to financial statements.

                                      F-8

<PAGE>


                       CFI MORTGAGE INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 3O, 2000
                                   (UNAUDITED)

NOTE  1-  BASIS OF PRESENTATION.

                     The accompanying interim unaudited consolidated financial
          statements include the accounts of CFI mortgage Inc. ("CFI"), Direct
          Mortgage Partners, Inc. ("DMP"), 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. As discussed in Note
          6, DMP was dissolved in June, 2000. CFI and its subsidiaries are
          hereafter collectively referred to as the "Company".

                     The accompanying unaudited consolidated financial
          statements have been prepared in accordance with generally accepted
          accounting principles for interim financial information and with
          instructions for Form 10-QSB and Article 10 and Regulation S-B.
          Accordingly, they do not include all of the information and footnotes
          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
          September 30, 2000 and the results of operations and cash flows for
          the nine months and three months ended September 30, 2000 and 1999.
          The results of operations for the nine months and three months ended
          September 30, 2000 and 1999 are not necessarily indicative of the
          results to be expected for the full year.

                     The December 31, 1999 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-9

<PAGE>


NOTE 2 - 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. 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. Surfside creates and markets proprietary
                      software products. 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 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 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.

                      The Company also agreed to contribute $250,000 as
                      additional paid-in capital, at various dates through June
                      1, 2000. As of September 30, 2000, 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 vaue.

           (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


                                      F-10
<PAGE>


NOTE  2 -  ACQUISITIONS.  (Continued)

           (b)        (Continued)

                      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 warrants consist of three issuances, each
                      for a total of 250,000 shares of the Company's common
                      stock. The first 250,000 are exercisable at a price of
                      $.15 per share, the next 250,000 shares are exercisable at
                      a price of $.35 per share and the last 250,000 are
                      exercisable at a price of $.50 per share. The warrants are
                      exercisable for a period of five years from the date of
                      issuance.

           (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 has been accounted for under the
                      equity method of accounting.

                      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 has written down its
                      investment by $105,000 at September 30, 2000, based on the
                      most recently available financial information for FMS.

           (d)        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. On May 11, 2000, the Company executed a letter of
                      intent to acquire RJ Systems, Inc., and is in the process
                      of performing its due diligence.


                                      F-11
<PAGE>

NOTE  3 -  GOING CONCERN.

                      The accompanying financial statements have been prepared
           assuming the Company will continue as a going concern. As described
           more fully in the Company's Form 10-K for the year ended December 31,
           1999, the Company has completed a voluntary plan of reorgani-zation.
           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  4 -  SIGNIFICANT ACCOUNTING POLICIES.

           (a)        Use of Estimates:

                      The preparation of financial statements in conformity with
           generally accepted accounting principles 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 financial statements, and the reported
           amounts of revenues and expenses during the period. Actual results
           could differ from those estimates.

           (b)        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. The adoption of SFAS No. 125 by the Company did
           not have a material impact on the Company's financial statements.

                      Origination fee income is accounted for in conformity with
           Statement of Financial Accounting Standards No. 91. This statement
           requires that origination 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.


                                      F-12
<PAGE>

NOTE  4 -  SIGNIFICANT ACCOUNTING POLICIES.  (Continued)

           (b)        Applicable Accounting Pronouncements: (Continued)

                      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. The adoption by the Company of SFAS No. 86
           did not have a material impact on the Company's financial statements.

           (c)        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 three 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.

                      Depreciation expense attributable to property and
           equipment and charged to operations was $44,351 and $4,620 for the
           nine months ended September 30, 2000 and 1999, respectively and
           $28,230 and $1,540 for the three months ended September 30, 2000 and
           1999, respectively.

           (d)        Capitalized Software Development Costs:

                      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 $46,519 and $-0- for the nine months ended September 30,
           2000 and 1999, respectively, and $17,410 and $-0- for the three
           months ended September 30, 2000 and 1999, respectively.

                                      F-13
<PAGE>

NOTE  4 -  SIGNIFICANT ACCOUNTING POLICIES.  (Continued)

           (e)        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 $84,527 and $-0- for the
           nine months ended September 30, 2000 and 1999, respectively, and
           $30,906 and $-0- for the three months ended September 30, 2000 and
           1999, respectively.

                      Management will periodically review 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.

           (f)        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 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.

           (g)        Earnings (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, less any accretion for
           preferred stock discounts and dividends, which totaled $-0- in 2000
           and $136,100 and $56,460 for the nine and three months ended
           September 30, 1999, respectively, by the weighted average number of
           shares outstanding for the period. Diluted earnings per share in 2000
           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.

                                      F-14
<PAGE>


NOTE  4 -  SIGNIFICANT ACCOUNTING POLICIES.  (Continued)

           (g)        Earnings (Loss) Per Common Share: (Continued)

                      Diluted loss per share in 1999 has not been presented in
           the financial statements herein, as the effect of including the
           common stock equivalents would be antidilutive. Below is the
           calculation of basic and diluted earnings per share for each of the
           periods presented in the financial statements:

<TABLE>
<CAPTION>
                                          For the Nine                For the Three
                                          Months Ended                 Months Ended
                                          September 30,               September 30,
                                    ----------------------        -------------------
                                      2000         1999            2000          1999
                                  -----------   -----------    -----------   -----------
<S>                               <C>           <C>            <C>           <C>
Net income (loss) available
  to common stockholders          $ 3,095,759   $   627,072    $   197,928   $   352,388
                                  ===========   ===========    ===========   ===========

Weighted average shares
  outstanding - basic              17,727,305     3,748,164     22,820,267     3,826,412

Warrants                            1,573,636          --        1,805,978          --
                                  -----------   -----------    -----------   -----------

Weighted average shares
  outstanding - diluted           $19,300,941   $ 3,748,164    $24,626,245   $ 3,826,412
                                  ===========   ===========    ===========   ===========

Income (loss) per common share:

  Basic                                  $.18         ($.17)          $.01         ($.09)
                                  ===========   ===========    ===========   ===========

  Diluted                                $.16         ($.17)          $.01         ($.09)
                                  ===========   ===========    ===========   ===========
</TABLE>


NOTE  5 -  RELATED PARTY TRANSACTIONS.

                      For the nine months ended September 30, 2000, all rental
           and substantially all commission and fee income was derived from a
           company owned by a preferred stockholder of the Company. At September
           30, 2000, $38,345 was due from this related company for rent and
           $115,194 for advances which is included in due from related parties.
           On September 1, 2000 this related company filed a petition for
           bankruptcy under Chapter XI. Subsequent to September 30, 2000,
           $50,000 has been collected and it is the intention of the related
           company management to pay the balance within a year.

                      In addition, the Company has made advances to three
           individuals, one of whom is a former officer of the Company. The
           balance amounted to $90,726 at each of September 30, 2000 and
           December 31, 1999. The advances are due on demand and there has been
           no interest charged on the outstanding balances.

                      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 $147,011 and $139,735, at
           September 30, 2000 and December 31, 1999, 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.

                                      F-15
<PAGE>

NOTE  6 -  DISSOLUTION OF SUBSIDIARY AND CANCELLATION OF DEBT.

                      On June 9, 2000, Direct Mortgage Partners, Inc. ("DMP"), a
           wholly owned subsidiary of the Company, made an assignment for the
           benefit of creditors for the purpose of liquidating DMP. On June 29,
           2000, articles of dissolution were filed with the Delaware Secretary
           of State.

                      As a result of the assignment and subsequent dissolution,
           the Company has recognized forgiveness of debt in the amount of
           $1,168,314 for the nine months then ended September 30, 2000.

NOTE  7 -  DUE TO OFFICER.

                      During the period ended September 30, 2000, the Company
           received advances from an officer totaling $200,000. The loans are
           payable on demand and bear an interest rate of 9% per annum.

NOTE  8 -  MORTGAGE PAYABLE.

                      The mortgage is payable in monthly installments of $15,168
           including interest at 7.75% with a final payment due on January 5,
           2014. The buildings collateralize the mortgage, and in addition the
           sellers remain primarily liable. At September 30, 2000, the mortgage
           balance consisted of the following:

                           Current portion                     $  68,938
                           Long-term portion                    1,439,503
                                                                ---------
                                                               $1,508,441
                                                               ==========


                      Annual maturities for the next five years are as follows:


                           Years Ending
                           September 30,
                           -------------

                               2001                            $ 68,938
                               2002                              73,007
                               2003                              78,871
                               2004                              85,205
                               2005                              92,048


                      Interest expense charged to operations for the period
           ending September 30, 2000 amounted to $41,187.


                                      F-16
<PAGE>


NOTE  9 -  DUE TO BANKS AND SUNDRY CREDITORS.

                      As described more fully in the notes to the audited
           financial statements included in the Company's Form 10- KSB for the
           period ended December 31, 1999, the Plan of Reorganization 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 nine months ended September 30, 2000, the
           Company issued 2,400,000 shares of its common stock in satisfaction
           of the claims from the two financials institutions which resulted in
           the recognition of forgiveness of debt amounting to $3,100,000.
           Additionally, the Company issued 68,415 shares of its common stock in
           satisfaction of $68,415 of liabilities.

NOTE  10 -  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES.

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


                                                September 30,  December 31,
                                                     2000          1999
                                                -------------  ------------

           Professional fees                     $  106,044    $  241,300
           Accrued compensation of employees         14,913       127,000
           Accrued compensation of officers       1,217,414     2,002,731
           General and administrative expenses      192,180        30,392
           Payroll taxes                            141,742          --
                                                 ----------    ----------

                                                 $1,672,293    $2,401,423
                                                 ==========    ==========


                      Included in accrued compensation of officers are $990,433
           and $1,775,750 at September 30, 2000 and December 31, 1999,
           respectively, which represent the compensatory element of stock
           bonuses to be issued pursuant to employment agreements entered into
           subsequent to the effective date of the Plan. The accrued
           compensation to officers also includes $119,000 due to officers of
           the Company as part of the administrative expenses approved by the
           court under the plan.



                                      F-17
<PAGE>


NOTE 11 -  COMMITMENTS AND CONTINGENCIES.

           (a)        Leases:

                      In January 2000, the Company's 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
                         September 30,

                             2001                          $148,011
                             2002                           155,325
                             2003                           163,071
                             2004                           171,192
                             2005                            43,311
                                                            -------
                                                           $680,910
                                                           ========

                      Rent expense amounted to $88,779 and $11,340 for the nine
           ended September 30, 2000 and 1999, respectively and $38,551 and
           $5,670 for the three months ended September 30, 2000 and 1999,
           respectively.

           (b)        Employment Contracts:

                      In August 1999, the Company entered into employment
           contracts with four officers. The contracts are for a period of three
           years and are described in greater detail in the notes to the audited
           financial statements included in the Company's Form 10-KSB for the
           year ended December 31, 1999.

                      The contracts include provisions for salary escalations
           for each year of service under the contract, which are accrued
           ratably throughout the year and payable at the end of the fiscal
           year. This escalation may be paid to the individuals in the form of
           the Company's common stock, with the share values discounted at a
           rate of 50% of the average closing bid price of the stock for the
           five trading days after the close of the fiscal year.

                      The contracts also include a provision which essentially
           grants each of the individuals a stock bonus equal to the amount
           necessary to assure that they each remain 5% shareholders after
           giving effect to all shares issued during the year. The agreements
           also provide that the individuals may receive discretionary bonuses
           as determined by the Company's Board of Directors.

                             Included in the results of operations is $635,282
                 and $-0- for the nine months ended September 30, 2000 and 1999,
                 respectively, for unpaid compensation due the officers under
                 the terms of these contracts.


                                      F-18
<PAGE>

NOTE 11 -  COMMITMENTS AND CONTINGENCIES.  (Continued)

           (b)        Employment Contracts: (Continued)

                      In July 2000, the Company entered into an employment
           contract with an individual to become the Company's Chief Financial
           Officer. 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.

                      In addition, the Company will offer the individual a stock
           bonus plan, whereby a number of shares of its common stock equal to
           2.5% of the total shares issued and outstanding as of the date of the
           agreement shall be reserved by the Company, to be issued to the
           employee over a two year vesting period.

NOTE 12 -  INCOME TAXES.

                      The Company and its wholly owned subsidiaries file a
           consolidated federal income tax return. As of December 31, 1999, the
           Company and its subsidiaries have a net operating loss carryforward
           of approximately $19,500,000 available to reduce future taxable
           income through the year 2019. 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 uncertainity about
           its ability to utilize it in future periods.

NOTE 13 -  STOCKHOLDERS' EQUITY.

           (a)        Preferred Stock:

                      During the period ended September 30, 2000 the Company
           issued two shares of its convertible preferred stock in conjuction
           with two acquisitions during the period. In acquiring a 65% interest
           in Surfside, the Company issued one share of its preferred stock with
           a par value of $700,000. In connection with the acquisition of land
           and buildings, the Company issued one share of its preferred stock
           with a par value of $1,021,596.

                                      F-19
<PAGE>



NOTE 13 -        STOCKHOLDERS' EQUITY.  (Continued)

           (b)        Common Stock:

                      In conjunction with employee contracts that are in place
           with four key executives, 3,135,288 shares of common stock were
           issued pursuant to a stock bonus plan in effect. These shares were
           issued to satisfy a liability that was charged to operations at
           December 31, 1999.

                      In April 2000 the Company entered into a private placement
           agreement with Ronco Funding, Inc. whereby the Company issued
           1,787,143 shares of its common stock for $889,471.

                      In connection with the acquisition of a 40% interest in
           First Mortgage Securities, Inc. the Company issued 400,000 shares of
           its common stock.

                      In April 2000 a holder of common stock purchase warrants
           exercised the warrants for $20,000 and received 100,000 shares of the
           Company's common stock.

                      Pursuant to the plan of bankruptcy the Company issued a
           total of 2,618,269 shares of its common stock in satisfaction of the
           corresponding pre-petition liabilities.

                      In August 2000, the Company issued 300,000 shares of its
           common stock to acquire the remaining 35% minority interest in
           Inventek, Inc.

                      In conjunction with a settlement with the Company's former
           General Counsel, the Company issued 12,000 shares of its common
           stock.

           (c)        Warrants:

                      In connection with the acquisition of Surfside as
           discussed above, the Company issued 1,000,000 common stock purchase
           warrants, exercisable for a five-year period expiring on January 14,
           2005. The warrants have an exercise price of $.15.

                      In conjunction with the acquisition of aforementioned land
           and buildings, the Company issued 750,000 common stock purchase
           warrants, exercisable in blocks of 250,000 each with exercise prices
           ranging from $.15 to $.50 respectively. The warrants expire on June
           13, 2005.

                      In conjunction with the acquisition of a 40% interest in
           First Mortgage Securities, Inc. as discussed above, the Company
           issued 400,000 common stock purchases warrants exercisable for a
           two-year period expiring on April 7, 2002. The warrants have an
           exercise price of $.67.

                                      F-20
<PAGE>

NOTE 13 -  STOCKHOLDERS' EQUITY.  (Continued)

           (c)        Warrants: (Continued)

                      In April 2000 in conjunction with a private placement
           discussed above the Company issued 1,787,143 common stock purchase
           warrants exercisable for a two-year period expiring on April 11,
           2002. The warrants have an exercise price of $1.67.

                      In connection with the acquisition of the remaining 35%
           interest in Inventek, the Company issued 30,000 common stock purchase
           warrants exercisable for a two-year period. The warrants have an
           exercise price of 120% of the average closing price at the date of
           the grant.

                      In conjunction with the settlement with the Company's
           General Counsel, the Company issued 52,500 common stock purchase
           warrants exercisable for a three-year period. The recipient has
           agreed to hold one-half of the warrants until December 31, 2000 and
           the balance of warrants until August 1, 2001. The warrants have an
           exercise price of $.39.


                                      F-21

<PAGE>


ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

FORWARD LOOKING STATEMENTS

Certain of the matters discussed in this Form 10-QSB may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. As such, these forward-looking statements may
involve known and unknown risks and uncertainties and other factors that may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements.

GENERAL BUSINESS

CFI Mortgage Inc. (the "Company") headquartered in Clearwater, Florida is a
broad, technology-based consumer finance and business software company serving
the national and international markets. CFI's goal is to become a diversified
e-commerce financial services company with a 50-state lending capability. The
company's strategy is to introduce a solution into the financial services
marketplace, offering it as the most efficient and flexible web-enabled mortgage
solution that supports all borrowing channels, consumer direct, retail and
wholesale.

Financial Services

The Company through its wholly owned subsidiary First United MortgageBanc, Inc
("FUMB") provides mortgages and mortgage-related services to individuals
directly and indirectly through mortgage brokers and mortgage lenders. The
Company originates, processes, and underwrites residential mortgage loans that
are sold on either an individual or bulk basis to institutional investors. The
Company originates and purchases loans originated that do not conform to agency
guidelines (non-conforming loans). Non-conforming loans typically fail to meet
agency guidelines due to credit impairment, higher loan-to-value ratios and
debt-to-income ratios, and are priced to compensate for the additional credit
risk.

On June 13, 2000 the Company acquired two commercial office buildings from
Flamingo Financial Services, Inc., in exchange for one share of its convertible
preferred stock and stock purchase warrants exercisable for the purchase of
750,000 shares of its common stock. The buildings have been appraised at a value
of $2,550,000 with the underlying mortgage on the properties having an
outstanding balance of $1,528,404. The Company treated the difference between
the appraised value of the assets acquired and the liabilities assumed as the
value of the preferred stock. The transaction resulted in goodwill in the amount
of $117,200. This goodwill which is directly attributable to the purchase of the
buildings, has been transferred along with the assets to the Company's wholly
owned subsidiary "FUMB" for the purposes of securing credit facilities,
licensing and investor approvals.

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 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 the initial
250,000 shares, $.35 for the next 250,000 shares and $.50 for the next 250,000
shares, for a period ending five years after the issue date. The agreement calls
for a potential adjustment to the purchase price, based on earnings from "FUMB"
over the eighteen-month period following the closing of the transaction. This
adjustment will be satisfied by an issuance of a second share of the Company's
preferred stock.

                                      F-22
<PAGE>

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 warrants to acquire 400,000 shares of the Company's common
stock at an exercise price of $.67 per share. First Mortgage Securities, Inc.,
is a mortgage lender operating primarily in the niche mobile home financing
market. The Company intends to pursue a strategic relationship with First
Mortgage Securities, Inc., to market its niche programs nationwide.

In September 2000, First United MortgageBanc, Inc. negotiated a $15,000,000
revolving warehouse line of credit with First Collaterial Services, Inc. This
line bears interest at prime plus one, and is collateralized by mortgage loan
receivables. First Collaterial Services, Inc. has agreed to increase the
warehouse line by $5,000,000 per quarter, providing First United MortgageBanc,
Inc. continues to generate a positive net income, and does not exceed a leverage
ratio of 35:1. This warehouse line will allow First United MortgageBanc, Inc. to
continue to expand its existing operations, and produce significant revenue
growth and profitability in the next quarter and beyond.

Software

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. 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. On August 4, 2000
the Company acquired the remaining 35% interest in Inventek, Inc. that it did
not own, in exchange for 300,000 shares of the Company's common stock and 30,000
common stock purchase warrants at 120% of the Company's closing price on the day
of closing. The Company also agreed to contribute $250,000 as additional paid-in
capital, at various dates through June 1, 2000. As of September 30, 2000, the
Company has contributed $229,000 of the total to be contributed.

The Company, through its now wholly owned subsidiary Surfside Software Systems
is in the business of providing PC-based, DOS and WINDOWS solutions, under the
name TranWare(TM) to the taxi, courier, para-transit, shuttle and limousine
industries. TranWare consists of the following products: dispatch management,
scheduling and reservations, account billing/accounts receivable, driver
cashiering/shifting, insurance claims management and vehicle maintenance. It
interfaces with a number of different wireless technologies as well as
stand-alone financial products. Surfside provides the base products,
customization, product support and product training.

Substantially all Surfside Software customers subscribe to Company's service and
support programs, which provide ongoing product and, where applicable, updates.
The Company's cost structure is relatively fixed and the cost of generating, in
aggregate, does not vary significantly with changes in revenue. As a result, the
Company typically generates significantly greater profit margins from
incremental sales once fixed costs are covered.

The third quarter reflected a turning point for Surfside Software Systems in
that it marks the final stage of development of the core Windows(R) technology
based TranWare applications. The first of these products, which was released to
the market on July 25, 2000, was TranWare WinLimo(TM). WinLimo is a completely
new ground transportation management software system that provides for order
entry & scheduling, dispatching, billing, information tracking, accounting &
reporting functions. The design includes a sophisticated relational database
structure that will be the basis for future transportation systems such as those
for the taxi, courier, para-transit (non-emergency medical), trucking and
service industries.

It also marked a transition in the marketplace from MS-DOS(R) based business
solutions to Windows based solutions. The TranWare DOS transportation software
suite has been in use

                                      F-23
<PAGE>

throughout the US and Canada for over 5 years and has been the primary source of
revenue for Surfside since it's incorporation in 1994. The most important aspect
of this product line is the industry knowledge gained during the thousands of
man-hours designing, installing and modifying the system while working with our
clients. This is truly a system designed in the field with real-world input.
Even though Windows based operating systems and end user applications have been
visible in the marketplace for a few years, vertical business market software
systems such as TranWare have still been operating on MS-DOS and Unix(R) based
computers.

It is anticipated that in the fourth-quarter the Company, through its wholly
owned subsidiary, Monetech, Inc. will finalize its acquisition of RJ Systems,
Inc., the creators of OrganizeIt!, PublishIt! and the Genesis technology tools
for rapid application development. The acquisition includes all of the
proprietary products of RJ Systems Inc.

On September 27, 2000, Surfside executives commenced discussions with Tom
Crowley of North American Mobile Systems, Inc., located in the New York City
area, the opportunities for a joint venture between North American Mobile and
Surfside to purchase an advanced order processing, dispatch and billing system
that addresses the needs of large-scale premium transportation service fleets in
large metropolitan areas. North American Mobile services the voice and data
radio communications infrastructure over half the fleets in the New York area.
Four fleets in NYC have already discussed their desire to purchase such a system
with the proposed new venture. These systems are completely client-server based
and installation revenue will range from $100,000 to $150,000 each. An
additional opportunity exists for the ongoing processing of transportation
vouchers for the fleets on behalf of their corporate accounts. This processing
service provides for ongoing service revenue beyond the initial software sale.

A training center has been constructed at the Corporate Office that includes
high-end computer workstations, a high-resolution projection system and
multimedia capabilities. This center will be used to train installation &
training personnel, sales representatives and existing clients who desire
advanced product training.

BANKRUPTCY PROCEEDING

On March 10, 1999, CFI Mortgage Inc. ("CFI") commenced a voluntary petition for
relief under Chapter 11 of Title 11 of the United States Bankruptcy Code in the
Southern District of Florida. On July 6, 1999, the bankruptcy court confirmed a
Plan of Reorganization pursuant to which CFI was discharged from any debt that
arose before the date of confirmation. As a result of the confirmation of the
Plan, CFI is no longer threatened by any litigation, claims, and assessments,
which may have existed as of December 31, 1998.

The Company's Reorganization Plan provided for an infusion of $800,000 by a
lender, which was secured by CFI's assets. The Company received $311,920, net of
expenses of $106,900, of funding under the Plan. The lender had the option of
converting the loan to common stock of CFI at a rate of 2% of the Company's
shares outstanding per $80,000 funded to the Company after the effective date of
the Plan. Each general creditor received one share of common stock for each
dollar of debt in the reorganized CFI.

The preferred stockholders of Series "A" and "B" convertible preferred stock
received 2,000,000 shares of common stock in exchange for the preferred stock in
the reorganized CFI. The preferred stockholders of Series "C" convertible
preferred stock have received 2,500,000 shares of common stock in exchange for
the preferred stock in the reorganized CFI.

The Company's subsidiary, Direct Mortgage Partners, Inc. (DMP) was not a party
to the Petition for Relief under Chapter 11. Only debts that were guaranteed by
CFI and two other creditors shall be satisfied by issuance of common stock for
each dollar of debt in the reorganized CFI. On June 9, 2000, Direct Mortgage
Partners, Inc. ("DMP"), a wholly owned subsidiary of the Company, made an
assignment for the benefit of creditors for the purpose of liquidating DMP. On
June 29,

                                      F-24
<PAGE>

2000, articles of dissolution were filed with the Delaware Secretary of State.
As a result of the assignment and subsequent dissolution, the Company has
recognized forgiveness of debt in the amount of $1,168,314 as of September 30,
2000.

The effective date of the Plan was on August 2, 1999. The only additional
liabilities the Company could incur would be if the Court approved the issuance
of additional common stock to creditors with disputes. In the event that the
Company lost some or all of the claims objections the existing shareholders
would be further diluted to the degree that the award to the creditor exceeded
the amount scheduled on the Company's Bankruptcy filings. The overage to these
creditors would be paid in the Company's Common Stock.

As described more fully in the notes to the audited financial statements
included in the Company's Form 10- KSB for the period ended December 31, 1999,
the Plan of Reorganization 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 nine months ended September 30, 2000, the Company issued
2,400,000 shares of its common stock in satisfaction of the claims, from the two
financials institutions that resulted in the recognition of forgiveness of debt
amounting to $3,100,000. Additionally, the Company issued 68,415 shares of its
common stock in satisfaction of $68,415 of liabilities.

EVENTS LEADING TO THE CHAPTER 11 PETITION

Beginning in September 1998, as a result of a number of factors, cash prices in
the sub-prime mortgage market significantly deteriorated and in some cases
investor yield requirements increased some 200 basis points. This in turn
significantly devalued the Company's loans held for sale and subsequent
revenues.

The Company previously had a warehouse line of $15 million with Bank One, Texas,
NA., which was discontinued as of September 30, 1998. The Company's other
warehouse line, which was with Nikko Financial Services, was terminated
effective November 30, 1998. As of September 30, 1998, the Company was in
violation of the net worth covenant of this agreement. In addition, the Company
previously had a purchase facility agreement with Fidelity Bank and Trust
aggregating $25 million. As of September 30, 1998 the use of that facility was
terminated. Upon termination of the warehouse line with Nikko, further advances
for new loan funding could only be under a repurchase agreement which provided
Nikko with the ability to evaluate whether or not it would enter into any new
transactions with the Company. The Company no longer had a committed warehouse
facility. Given that Nikko could decline the Company's request to fund loans
after November 30, 1998, the Company was not able to make loan-funding
commitments beyond November 30, 1998.

As of March 31, 1998 and again as of June 30, 1998, the Company did not meet the
required minimum standards for continued inclusion in the NASDAQ Small-Cap
Market in that its net tangible assets had fallen below $2,000,000 and so the
Company received a formal notice of de-listing from NASDAQ. On July 31, 1998 the
Company appealed the notice of de-listing at an oral hearing and awaited a final
decision from NASDAQ. On November 17, 1998 NASDAQ informed the Company by letter
that a determination had been made to de-list the Company's securities from the
NASDAQ Stock Market effective with the close of business on November 17, 1998.
The Company has since traded on the Bulletin Market under the symbol "CFIM OB".

The Company attempted a non-bankruptcy workout with its creditors. The Company
received a commitment from an investor to re-capitalize the Company with up to
$2 million if the Company could restructure its then-existing liabilities.
Accordingly, the Company presented a voluntary, non-bankruptcy plan of
reorganization to all its creditors (and those of its subsidiaries) wherein all
creditors were offered 1 share of the Company's common stock for each dollar
owed.

                                      F-25
<PAGE>

The success of that reorganization plan was dependent on full acceptance by all
of the Company's creditors and the consent of its underwriters to issue the
related common shares. All creditors did not accept the Company's common shares
in lieu of payment, and the underwriters did not consent to the issuance of the
underlying shares, which resulted in the investor not agreeing to re-capitalize
the Company.

COMPARISON OF QUARTERS ENDED SEPTEMBER 30, 2000 AND 1999

With the loss of the Company's credit facilities, the Company was unable to fund
loans after November 30, 1998, and subsequently discontinued its
mortgage-banking operations. On March 10, 1999, CFI Mortgage Inc. ("CFI")
commenced a voluntary petition for relief under Chapter 11 of Title 11 of the
United States Code. As such, the Company did not have any operating subsidiaries
during the quarter ended September 30, 1999 and subsequently did not record any
revenues. As such, the following comparisons reflect the consolidated operations
of Surfside Software Systems and three months of operations of First United
MortgageBanc, Inc., for the current quarter and no operating subsidiaries for
the quarter ended September 30, 1999.

REVENUES

For the three months ended September 30, 2000 the Company had total revenues
from operations of $1,090,188 compared to $0.00 for the three months ended
September 30, 1999. The revenues produced in the current quarter are
attributable to the first full quarter of operations for First United
MortgageBanc, Inc., and the continual development and marketing of Surfside
Software's core Windows technology based TranWare applications. The first of
these products, which was released to the market on July 25, 2000, was TranWare
WinLimo which was received with much excitement. The continued release of these
products is expected to positively impact revenues in future quarters. First
United MortgageBanc, Inc. showed significant revenue and profitability in its
first full quarter of operations, and management anticipates a significant
contribution to revenue growth in the next quarter and thereafter.

EXPENSES

The Company recorded total operating expenses of $922,428 for the three months
ended September 30, 2000 compared to total operating expenses of $295,928 for
the three months ended September 30, 1999. Selling expenses increased by
$242,168 to $253,910 for the three months ended September 30, 2000 compared to
$11,742 for the three months ended September 30, 1999. General and
administrative expenses increased $349,658 to $624,187 for the quarter ended
September 30, 2000 compared to $274,529 in the quarter ended September 30, 1999.
Included in this amount are salaries, which increased to $134,579 for the
quarter ended September 30, 2000, due to additional staffing of all the
companies. Amortization and depreciation expense increased by $75,006 to $76,546
in the current quarter ended September 30, 2000, compared to $1,540 for the
quarter ended September 30, 1999. Professional fees increased by $140,427 for
the quarter ended September 30, 2000 primarily due to accounting fees, and legal
fees related to finalizing the bankruptcy.

NET INCOME (LOSS)

This quarter represents the emergence of the Company from unprofitability to
profitability. For the quarter ended September 30, 2000 the Company generated
income from operations of $167,760, compared to a loss from operations of
$295,928 in the quarter ended September 30, 1999. This marks the first quarter
in two and one-half years in which the Company has shown a net profit from
operations. The turnaround of the Company, which began in January 2000, is
attributable to strong revenue growth generated by First United MortgageBanc,
Inc., and the continual development and marketing of Surfside Software Systems
core Windows technology based TranWare.

                                      F-26
<PAGE>

The net income available to common stockholders for the quarter ended September
30, 2000 is $197,928, which included an extraordinary gain of $30,168, compared
to a net loss of $352,388, which included a preferred stock dividend of $56,460
for the quarter ended September 30, 1999.

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

With the loss of the Company's credit facilities the Company was unable fund
loans after November 30, 1998, and subsequently discontinued its
mortgage-banking operations. On March 10, 1999, CFI Mortgage Inc. ("CFI")
commenced a voluntary petition for relief under Chapter 11 of Title 11 of the
United States Code. As such the Company did not have any operating subsidiaries
during the nine months ended September 30, 1999 and subsequently did not record
any revenues. As such, the following comparisons reflect the consolidated
operations of Surfside Software Systems and First United MortgageBanc, Inc., for
the current period, and no operating subsidiaries for the nine months ended
September 30, 1999.

REVENUES

For the nine months ended September 30, 2000 the Company had total revenues from
operations of $1,526,193 compared to $1,358 for the nine months ended September
30, 1999. The increase in revenues is attributable to the first full quarter of
operations for First United MortgageBanc, Inc., and the continual development
and marketing of Surfside Software Systems core Windows technology based
TranWare applications, including TranWare WinLimo. The release of the remainder
of the TranWare products is expected to follow the trend of TranWare WinLimo,
and produce significantly increased revenues in future quarters. First United
MortgageBanc, Inc. showed significant revenue and profitability in its first
full quarter of operations, and management anticipates a significant
contribution to revenue growth in future quarters.

EXPENSES

The Company recorded total operating expenses of $2,438,510 for the nine months
ended September 30, 2000 compared to total expenses of $492,330 for the nine
months ended September 30, 1999. The largest component increase was in general
and administrative expenses, which increased $1,462,240 to $1,927,715 for the
nine months ended September 30, 2000 compared to $465,468 in the nine-month
period, ended September 30, 1999. Included in this amount is accrued
compensation to officers of $635,282 for the nine months ended September 30,
2000, which represent the compensatory element of stock and cash bonuses
pursuant to employment agreements entered into subsequent to the effective date
of the Plan, compared to $0.00 for the nine month period ended September 30,
1999. Also, amortization and depreciation expense increased to $175,397 for the
nine-month period ended September 30, 2000 compared to $4,620 for the nine
months ended September 30, 1999.

NET INCOME (LOSS)

The Company generated a loss from operations of $912,317 in the nine-month
period ended September 30, 2000 as compared to a loss from operations of
$490,972 in the nine-month period ended September 30, 1999. Included in this
amount is accrued compensation of officers of $635,282 which represent the
compensatory element of stock and cash bonuses pursuant to employment agreements
entered into subsequent to the effective date of the Plan, and amortization and
depreciation expense of $175,397. Without the compensatory stock and cash
bonuses, amortization and depreciation, loss from operations was $101,683, which
is primarily due to the loss from operations attributable to the prior quarters.

The net income available to common stockholders for the nine months ended
September 30, 2000 is $3,095,759, which includes an extraordinary gain of
$4,402,147, compared to a net loss

                                      F-27
<PAGE>

of $627,072 after preferred stock dividends of $136,100 for the nine months
ended September 30, 1999.

LIQUIDITY AND CAPITAL RESOURCES

The Company has been dependent on stock sales or third party borrowings to
sustain its operations. On April 11, 2000 the Company sold its securities
through a private placement to Ronco II. Ronco II invested $500,400 and received
1,787,143 shares of common stock of CFI, plus 1,787,143 warrants to purchase one
share of CFI common stock at $1.67 per share. The Company has relied upon
Section 4(2) for an exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, as amended.

The Company believes that the funds to be generated by the Company's operations
will provide the Company with sufficient funds to finance its operations.
However, if additional funds were 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. Additional
financing may not be available or, it may not be obtainable on terms favorable
to the Company.

RISK FACTORS

FINANCIAL SERVICES:

SEASONALITY

The mortgage banking industry is subject to seasonal trends. These trends
reflect the general pattern of re-sales of homes, which sales typically peak
during the spring and summer seasons and decline from January through March. In
addition, the primary home market in Florida tends to increase during the fourth
quarter, while the second home market increases from October through April.
Refinancing tends to be less seasonal and more closely related to changes in
interest rates. The mortgage servicing business is generally not subject to
seasonal trends, except to the extent that growth of a mortgage-servicing
portfolio is generally higher in periods of greater mortgage loan originations.

COMPETITION

The mortgage banking industry is highly competitive. The Company competes with
financial institutions, mainly mortgage companies, commercial banks and savings
and loan associations and, to a certain extent, credit unions and insurance
companies, depending upon the type of mortgage loan product offered. The Company
competes principally by purchasing or originating a variety of types of mortgage
loans, emphasizing the quality of its service and pricing the loans at
competitive rates. Many of the Company's competitors have financial resources
substantially greater than that of the Company. Many of the nation's largest
mortgage companies and commercial banks have a significant number of branch
offices in areas in which the Company's correspondents and wholesale and retail
branches operate. Increased competition for mortgage loans from larger lenders
may result in a decrease in the volume of loans originated and purchased by the
Company, thereby possibly reducing the Company's revenues. The top three
competitors in the market are a) The Associates, b) Household Financial, c)
Saxon Mortgage.

REGULATION

The operations of the Company are subject to extensive regulation by federal and
state governmental authorities and are subject to various laws and judicial and
administrative decisions that, among other things, regulate credit activities,
require disclosures to customers, govern secured transactions and establish
collection, repossession and claims handling procedures and other trade
practices. The Company is subject to the rules and regulations of the Federal
Housing

                                      F-28
<PAGE>

Administration ("FHA"), Federal National Mortgage Association ("FNMA") and the
Department of Veteran Affairs (the "VA") and state regulatory authorities with
respect to originating, processing, underwriting, selling, securitizing and
servicing mortgage loans.

In addition, there are other federal and state statutes and regulations, as well
as judicial decisions, affecting the Company's operations. Those rules and
regulations, among other things, impose licensing obligations on the Company,
establish eligibility criteria for mortgage loans, prohibit discrimination and
establish underwriting guidelines which include provisions for inspections and
appraisals, require credit reports on prospective borrowers and fix maximum loan
amounts, and with respect to the VA loans, fix maximum interest rates. Moreover,
lenders such as the Company are required to submit annually to the FHA, FNMA and
VA audited financial statements, and each regulatory entity has its own
financial requirements. The Company's affairs also are subject to examination by
the FHA, FNMA and VA at all times to assure compliance with all applicable
regulations, policies and procedures. Mortgage origination activities are
subject to, among other regulatory requirements, the Equal Credit Opportunity
Act, the Federal Truth-in-Lending Act, the Home Mortgage Disclosure Act and the
Real Estate Settlement and Procedures Act ("RESPA") and the regulations
promulgated there under which prohibit discrimination and require the disclosure
of certain basic information to mortgagors concerning credit terms and
settlement costs. Many of the aforementioned regulatory requirements are
designed to protect the interests of consumers, while others protect the owners
or insurers of mortgage loans. Failure to comply with these requirements can
lead to loss of approved status, termination of servicing contracts without
compensation to the servicer, demands for indemnification or loan repurchases,
class action lawsuits and administrative enforcement actions.

There are various state and local laws and regulations affecting the Company's
operations. The Company is in possession of all licenses required by the State
of Florida to conduct its business operations and for the states were it
transacts business. Conventional mortgage operations also may be subject to
state usury statutes. FHA and VA mortgage loans are exempt from the effect of
such statutes.

ENVIRONMENTAL MATTERS

To date, the Company has not been required to perform any investigation or
remediation activities, nor has it been subject to any environmental claims.
There can be no assurance, however, that this will remain the case in the
future. In the ordinary course of its business, the Company from time to time
forecloses on the properties securing loans. Although the Company primarily
lends to owners of residential properties, there is a risk that the Company
could be required to investigate and clean up hazardous or toxic substances or
chemical releases at such properties after acquisition by the Company, and may
be held liable to a governmental entity or to third parties for property damage,
personal injury and investigation and clean up costs incurred by such parties in
connection with the contamination. In addition, the owner or former owners of a
contaminated site may be subject to common law claims by third parties based on
damages and costs resulting from environmental contamination emanating from such
property.

SOFTWARE RISK FACTORS:

MARKET CHANGES

The market for the Company's software products and services is characterized by
technological advances and evolving standards. In addition, changes in the
transportation requirements and new product introductions could render the
Company's existing products unmarketable. The Company's future success depends
upon its ability to enhance current products in a timely fashion and to develop
and introduce new products that keep pace with technological developments and
changes in the transportation industry. Further, the Company's future success
depends on ground fleet transportation companies to adopt new technologies for
acceptance in this evolving market.

                                      F-29
<PAGE>

NEED FOR ADDITIONAL FINANCING

The Company believes that the funds to be generated by the Company's operations
will provide the Company with sufficient funds to finance its operations.
However, if additional funds were 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. Additional
financing may not be available or, it may not be obtainable on terms favorable
to the Company.

GROWTH

The growth in the size and complexity of the Company and the expansion of its
product lines and its customer base have and are expected to continue to place a
significant strain on all aspects of the Company's business. The Company will be
required to upgrade or implement operational and financial systems, procedures
and controls. The future success will depend on its ability to expand its
support and infrastructure commensurate with its expanding base of products and
on its ability to attract, hire and retain skilled employees.

KEY EMPLOYEES AND SOFTWARE ENGINEERS

The Company believes that its future success will depend to a significant extent
upon the contributions of executive officers and key sales, engineering,
marketing and technical personnel. The Company does not have "key person" life
insurance on any of its employees. Competition for highly skilled personnel,
particularly qualified development engineers and systems implementation experts
are intense. The Company has, at times, experienced difficulty in locating
personnel with requisite levels of expertise and experience

SALES AND IMPLEMENTATION CYCLES

The license of the Company's software generally requires the Company to educate
prospective customers on the use and benefits of the Company's products. In
addition, the purchase of the Company's products involves a significant
commitment by prospective customers and can be associated with substantial time
in workflow, processing or the configuration of hardware. The license of the
Company's software products can often require a level or executive decision by
prospective customers. The period between initial indications of interest by a
customer in the Company's product and the ultimate sale and implementation of
the Company's product to the customer can be lengthy (often ranging from three
months to six months) and is subject to a number of significant delays over
which the Company has little or no control.

COMPETITION

The market for the Company's products is intensely competitive and ever
changing. A number of companies offer competitive products addressing some of
the Company's target markets. A number of prospective and existing customers of
the Company have the capability to provide alternative solutions to the
Company's products and may, therefore, be viewed as competing with the Company.
Some of the Company's competitors have significantly greater financial,
technical and sales resources than the Company.

GROUND FLEET TRANSPORTATION INDUSTRY

Substantially all of the Company's revenues are derived from licenses and
services, and its future success is dependent on increased sales to the ground
fleet transportation industry. Demand for the Company's products and services
can be disproportionately affected by instability or downturns in the
transportation industry, which may cause existing or potential customers to

                                      F-30
<PAGE>

delay, cancel or reduce planned expenditures for technology, including those
offered by the Company.

LIABILITY RISKS; SOFTWARE DEFECTS

The Company's software products are complex and sophisticated and could, from
time to time, contain designer software errors that could be difficult to detect
and correct. The implementation of the Company's products may involve a
significant amount of customer-specific customization and may involve
integration with systems developed by third parties. Such errors could give rise
to warranty or liability of the Company and cause delays in product introduction
and require design modifications, which could result in loss of or the delay in
marketing of the Company's products or loss of existing customers

DEPENDENCE UPON PROPRIETARY TECHNOLOGY; INTELLECTUAL PROPERTY RIGHTS

The Company's success and ability to compete are dependent in part upon its
technology. The Company relies primarily on a combination of copyright,
trademark laws, confidentiality procedures and contractual provisions to protect
its proprietary rights. Despite the Company's efforts to protect its rights,
other parties may attempt to reverse engineer, copy or engage in unauthorized
use of the Company's proprietary information. Technology or proprietary
information incorporated in the Company's products can be licensed from third
parties, generally on a non-exclusive basis. The failure of the third-party
licensors to maintain or update their products could result in delays in the'
Company's ability to ship certain of its products. While it may be necessary in
the future to obtain rights to third party technology, there can be no assurance
that the Company will be able to do so.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As a result of the confirmation of the bankruptcy plan, the Company is no longer
threatened with any litigation, claims and assessments, which may have existed
as a result of the Bankruptcy Filing.

ITEM 2. CHANGES IN SECURITIES

The preferred stockholder of Series "A" and "B" convertible preferred stock
received 2,000,000 shares of common stock in exchange for the preferred stock in
the reorganized CFI.

During the year ended December 31, 1999, 75 shares of preferred stock were
converted into 525,521 shares of common stock and accordingly additional paid-in
capital decreased by $5,255.

On November 29, 1999, Ronco Funding, Inc., had funded debentures in an amount of
$311,000 net of expenses of $106,900. The 15% convertible debentures were
converted into 2,004,986 shares of the Company's common stock.

During the Chapter 11 Bankruptcy Proceeding in 1999, certain non-management
employees were issued 750,000 warrants for the purchase of one share of common
stock of CFI at $.39 per share. The price represented 125 percent of the bid
price of CFI stock on the effective date of the bankruptcy plan, August 2, 1999.

During the third quarter of 1999, after the bankruptcy confirmation, CFI was
short of cash for operational expenses, and accordingly, entered into two loans.
One loan was from Footbridge LTD Trust in the amount of $100,000 on a balloon
note at 10% interest, which has been repaid. As part of the consideration for
that loan, the lender was granted 100,000 warrants to purchase one share of
common stock of CFI at $.20 per share, which represented 110% of the bid price
of

                                      F-31
<PAGE>

CFI stock on date of the loan agreement. Also, as part of that transaction, a
finders fee of $10,000 was paid together with 10,000 warrants to purchase one
share of CFI common stock at $.20 per share.

Additional financing was provided by an affiliate by providing a line-of-credit
of up to $150,000 with interest charged @ 9% per annum. As an inducement to make
this loan, a shareholder of the affiliate was granted 150,000 warrants for the
purchase of one share of CFI common stock at $.25 per share, which represented
105% of the bid price as of the date of the loan. This loan has not yet been
repaid by CFI.

After the confirmation of the bankruptcy but before the end of the year, the
Company sold through a private placement of securities to one individual. He
invested $300,000 and received 2,000,000 shares of common stock of CFI, plus
150,000 warrants to purchase one share of CFI common stock at $.25 per share,
which represents the 125% of the bid price on the date of the investment,
November 8, 1999. The Company has relied upon Section 4(2) for an exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended.

As described more fully in the notes to the audited financial statements
included in the Company's Form 10-KSB for the period ended December 31, 1999,
certain liabilities which were attributable to the Company's wholly owned
subsidiary, DMP, were not subject to compromise under the Company's confirmed
plan of reorganization. On June 9, 2000, Direct Mortgage Partners, Inc. ("DMP"),
a wholly owned subsidiary of the Company, made an assignment for the benefit of
creditors for the purpose of liquidating DMP. On June 29, 2000, articles of
dissolution were filed with the Delaware Secretary of State. As a result of the
assignment and subsequent dissolution, the Company has recognized forgiveness of
debt in the amount of $1,168,314 as of September 30, 2000.

As described more fully in the notes to the audited financial statements
included in the Company's Form 10-KSB for the period ended December 31, 1999,
the Plan of Reorganization 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. As of September 30, 2000, the Company has issued 2,400,000 shares of
its common stock in satisfaction of the claims from the two financials
institutions, which resulted in the recognition of forgiveness of debt amounting
to $3,100,000. Additionally, the Company issued 68,415 shares of its common
stock in satisfaction of $68,415 of liabilities. Pursuant to the plan of
bankruptcy, the Company issued a total of 2,570,000 shares of its common stock
in satisfaction of the corresponding pre-petition liabilities.

On April 11, 2000 the Company sold through a private placement of its securities
to Ronco II. Ronco II invested $500,400 and received 1,787,143 shares of common
stock of CFI, plus 1,787,143 warrants to purchase one share of CFI common stock
at $1.67 per share. The Company has relied upon Section 4(2) for an exemption
from registration afforded by Section 4(2) of the Securities Act of 1933, as
amended.

The following table sets forth the range of high and low closing prices per
share of the Common stock during the period since December 31, 1998.

1999                                  High         Low

First Quarter                      $   0.34      $  0.07
Second Quarter                     $   0.34      $  0.06
Third Quarter                      $   0.42      $  0.17
Fourth Quarter                     $   0.68      $  0.18

                                      F-32
<PAGE>

2000                                  High         Low

First Quarter                      $   1.60      $  0.312
Second Quarter                     $   1.65      $  0.343
Third Quarter                      $   0.563     $  0.344

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable

ITEM 5. OTHER INFORMATION - SUBSEQUENT EVENTS

Not Applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Not Applicable

                                      F-33
<PAGE>

SIGNATURE

In accordance with the requirements of the Securities and Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                     CFI MORTGAGE INC.
                                       (Registrant)



CFI MORTGAGE INC.
        (Registrant)
Date: November 14, 2000              /s/ Stephen E. Williams
                                     -----------------------
                                     Stephen E. Williams
                                    (President, CEO)

Date: November 14, 2000              /s/ Daniel M. Brown
                                     -------------------
                                     Daniel M. Brown
                                    (Chief Financial Officer)