UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

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

For the fiscal year ended February29, 2004

Commission file number: 0-3579974

| Delaware      (State of incorporation) | 13-3579974      (I.R.S. Employer Identification No.) |
|----------------------------------------|------------------------------------------------------|

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Securities registered pursuant toSection 12(g) of the Act:

Common Stock, $.001 par value

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

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, tothe best of registrant's knowledge in definitive proxy or information statements incorporated by referencein Part III of this Form 10-K or any amendment to this Form 10-K. (x)

| Aggregate market value    of the voting stock held by non-affiliates of the    registrant as of May 20, 2004 |   | $2,807,467 |
|--------------------------------------------------------------------------------------------------------------|--------|------------|
| Number of shares outstanding    of the registrant's Common Stock    as of May 20, 2004                   |   | 1,775,053  |

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Report,to the extent not set forth herein, is incorporated by reference from the Registrant's definitive proxystatement relating to the annual meeting of stockholders to be held in July 2003, which definitive proxystatement will be filed with the Securities and Exchange Commission within 120 days after the closeof the year ended February 28, 2003.

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# TABLE OF CONTENTS

- PART I
-    - ITEM 1. BUSINESS
  - ITEM 2. PROPERTIES
  - ITEM 3. LEGAL PROCEEDINGS
  - ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS AND OTHER INFORMATION 
-  
- PART II
-    - ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
  - ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
  - ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  - ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
  - ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  - ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  - ITEM 9A. CONTROLS AND PROCEDURES 
-  
- PART III
-    - ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  - ITEM 11. EXECUTIVE COMPENSATION
  - ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  - ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  - ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES 
-  
- PART IV
-    - ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K 
-  
- SIGNATURES

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# PART I

## ITEM 1. BUSINESS

### General

MFC DEVELOPMENT CORP. (the "Company" or "MFC") was incorporated in the State of Delawareon May 18, 1990 under the name of PSI Food Services Corp., which had been a wholly-owned subsidiaryof FRMO Corp., formerly FRM Nexus, Inc., a Delaware corporation ("FRM"), since November 1993. All ofFRM's assets and liabilities were transferred to MFC on August 31, 2000, except for $10,000. Becausesuch entities were under common control, this transaction was accounted for in a manner similar to apooling of interests on MFC's books. On January 23, 2001, all of the outstanding shares of MFC weredistributed to shareholders of FRM, which no longer owns any shares of MFC.

*Proposed Transaction*

On April  9, 2004, the Company filed a Current Report on Form 8-K	announcing the signing on March 26, 2004 of an Acquisition Agreement with	Creative Marketing Group, Inc, ("CMG") and its shareholders to acquire 100%of CMG's outstanding capital stock in exchange for shares of common stock ofMFC.  After the closing, MFC shall issue approximately 7,900,000 shares(approximately 80%) of common stock to CMG stockholders and holders of CMG debtout of approximately 10,000,000 shares of common stock which will then be issuedand outstanding.  The completion of the acquisition is subject to severalconditions including, but not limited to, the closing of a private offeringraising a minimum of $1,000,000 and a maximum of $2,500,000.  

CMG is a sales and marketingcompany which since the year 2000 has been exclusively working with a nationalbrand name in the coffee industry which has a brand name recognition in excessof 90% among consumers.  In late 2002 CMG obtained exclusive licensingagreements permitting it to use the trademark of such national brand name in theproduction and sale of coffee and coffee filters through retailers, foodservice, hospitality and in-office locations throughout the United States. CMG's relationship with this national brand name creates marketing opportunitiesto enhance the awareness and availability of such national brand name's coffeemakers and the coffee and coffee filters which CMG may produce and sell underits licenses in the United States.

Completion of the transactiondescribed is subject to the satisfaction of a number of conditions and there canbe no assurance that all of the conditions will be met or that the registrantwill successfully complete the acquisition or that CMG will raise adequate fundsin the private placement.

### Business Description

MFC is engaged in the business of (i) developing real estateand (ii) providing financing and management services to medical practices. 

#### Real Estate Division

The Real Estate Division of the Company presently conductsits operations through Yolo Equities Corp. and Highlands Pollution Control Corp, wholly-owned subsidiarieswhich own the interests described below in parcels of real estate. For the fiscal year ended February29, 2004, the total revenues derived from the real estate division were $619,114, constituting30%of the total revenues from continuing operations of MFC. A brief description of each parcel follows:

##### Goshen,New York

The transactions related to the sale of this property were completed in the fiscalyear ended February 28, 2002, resulting in the realization of $745,000 of deferred income related tothe original sale of the property in a prior fiscal year.

##### East Granby,Connecticut

The Company owned a partially built two-story office building located at 2 GatewayBoulevard in East Granby, Connecticut which was carried at the value of $900,000 on February 28, 1995.In the fiscal year ended February 29, 1996, the Company spent approximately $1,300,000 in developing the siteand improving a portion of the building. In February 1996, the property was sold to Gateway Granby,LLC. ("Gateway"), a limited liability company of which certain members are shareholders of MFC, for$4,800,000, of which $3,853,268 has been paid and $946,732  is due to the Company as of February29, 2004, pursuant to a purchase money second mortgage. The gain on the sale of this property was recognizedon the accrual method in prior years, except for a reserve of $850,000 which was recognized in January2003 upon the release of the Company from a contingent liability for certain rental payments.

##### Hunter,New York

MFC's wholly-owned subsidiary, Yolo Equities Corp. owns the fee interest in propertiesin Hunter, New York, along with co-investors. The co-investors are entitled to receive 35%of the cash proceeds of the sales of Hunter Properties made after June 30, 2000, after deducting thenet costs of carrying the properties after June 30, 2000 and the costs of the sales (the "net proceeds").Yolo Equities Corp. is entitled to receive 65% of the said net proceeds. The properties consist of acreagein an area known as Hunter Highlands, which is adjacent to the Hunter Mountain Ski Slopes in the Townof Hunter, Greene County, New York. The undeveloped portion of the acreage, which Yolo Equities Corp.plans to sell or develop, is available for single family residences, townhouses, condominium units and a hotelsite. There is already constructed on the property (i) a waste water treatment plant owned by HighlandsPollution Control Corp. (a wholly-owned subsidiary of the Yolo Equities Corp.),(ii) a Clubhouse with swimming pool and six tennis courts and (iii) a small office buildingwhich was renovated and converted into three townhouse units. One of thetownhouse units was sold in February 2004, the remaining two units are currentlyunder contract for sale. Adjoining the site are 200 condominiumunits owned by unrelated persons.

The waste water treatment plant was upgraded in the fiscal year ended February 28,2003, under an agreement with the City of New York. Under terms of the agreement, the City of New Yorkis reimbursing the Company for all costs incurred with the upgrade of the facility. See Note 4 of Notesto Consolidated Financial Statements.

The Company will seek to complete a sale of the Clubhouse in the fiscal year endedFebruary 28, 2005.

The hotel site consists of 10 plus acres contiguous to the ski slopes at Hunter Mountain.Yolo Equities Corp. has received approval from the Planning Board of the Town of Hunter for site approvalof a first phase development of additional condominium units with eventual construction of a hotel andfurther condominium units in subsequent phases. The Company plans to participate with other developersin financing and constructing improvements on the site or sell its interest ifthe sales price is acceptable.

This will then leave Yolo Equities Corp. with about 70 acres of undeveloped land,also contiguous to the Hunter Mountain ski slopes, for which there are no present plans for development.The future development of this acreage and the subsequent phases at the hotel site will require theCompany to double the capacity of the waste water treatment plant, for which State permits already exist.The City of New York will pay for the upgrade in technology (but not the expansion of capacity) of thisfacility because of the Federal requirement to incorporate the latest technology in order to improvethe quality of the water derived from the City's Catskill Mountain Watershed Area (in which Hunter islocated).

##### OtherProperties

The Company, alone or with co-investors and joint ventures,may acquire otherlands for development of residential, commercial and office structures, when management identifies opportunitiesfor enhancement of shareholder values.

#### Medical Division

The Medical Division consists of (i) the three wholly-owned Limited Liability Companies(Nexus Garden City, LLC, FRM Court Street, LLC and Nexus Borough Park, LLC) and a 25% and 33% ownedinterest in two other Limited Liability Companies, all of which act as service organizations for providersof medical services ("Medical Management Services business") and (ii) a wholly-owned subsidiary of the Company, Medical Financial Corp., whichin the past, purchased unpaid medical insurance claims, paying cash to the medical provider in return for a negotiatedfee (the "Medical Finance business"). In the fiscal year ended February 29, 2004, MFC experienced asignificant increase inthe amount of time that the medical insurance claims were outstanding, whichresulted in a negative impact on its cash flow.

On February 4, 2004, in response to the change incollections, the Company decided to restructure the Medical Division.  The planof restructuring calls for the Medical Finance business to discontinue thepurchase of insurance claims from medical practices, and to focus futureoperations on collections and other services.  In addition, the Company willsell the assets of the Medical Management Services business.  As a result ofthis decision, the operations of the Medical Management Services business havebeen reclassified as discontinued operations, and prior periods have beenrestated to reflect this classification.    

In the fiscal year ended February 29, 2004, the total revenues of the Medical Division were $1,442,982,constituting 70% of total revenues from continuing operations of the Company. For its clients, this Division delivers managementservices and increased liquidity, which is normally unavailable to medical groups from traditional sources.The management services include inputting the data on the customers' receivables into the Company'scomputer system, processing the data and presenting the customers' bills to the insurance company incompliance with regulations to facilitate payment, following up with collection efforts if the billsare not paid promptly, furnishing weekly or other periodic status reports of the customers' receivablesand other information relating to their medical practices.

The operations of the Medical Division are being supported by theCompany's investment in new technology. This technology, which includes document imaging equipment and software, the internal development of a more efficient collections program and the purchase of newcomputers needed to run these programs. The investment in this technology has already decreased thetime required to perform collection tasks to a fraction of the time required under the old systems.The Company's labor intensive services are now more efficient due to these capital expenditures.

### Marketing

The Company's marketing in its real estate activities is limited to working withreal estate brokers to sell the properties held for sale in Hunter, N.Y.

The Medical Division markets its services to medical groups through its own individualemployees and consultants by direct contact with potential customers recommended by existing customersand those who contact MFC after reading newspaper advertisements or receiving its brochure by directmail solicitation. MFC designs its own brochure for such solicitations. MFC designed and obtained thenames for two websites, "medicalfinancial.com" and "mdhelp.com".

### Competition

#### Real Estate Division

The Company's presently owned real estate held for developmentor sale is locatedin Hunter, New York. The real estate market for second homes in this resort communityis presently experiencingimproved demand. The Company will be competing with many owners and developers in the locale in connectionwith the development and sale of its properties for residential use.

#### Medical Division

MFC competes with a wide variety of management and financial service companies, includingpublic companies, banks, and factoring companies.The Company is very small in relation to such competitors. However the Company's services are also designedto serve a niche market and in its focus on collecting certain medical insurance claims of medical groups, the competition is limited to only a few companies.

### Trademarks

None.

### Employees

As of February 29, 2004, the Company had 28 employees. None of the Company's employeesare represented by a labor union. MFC considers its relationship with its employees to be good.

### Regulatory Laws

The Company is in compliance with all environmental laws relating to hazardous substancesin real property. Future compliance with environmental laws is not expected to have a material effecton its business.

## ITEM 2. PROPERTIES

In addition to the real property held for development or sale as set forth in Item1 above, MFC lease its offices in New Rochelle, New York, under a lease expiring on February 28, 2007.All of the space leased by the Company is leased from an unaffiliated third party.

## ITEM 3. LEGAL PROCEEDINGS

MFC is not presently a party to any material litigation.

## ITEM 4. SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS AND OTHER INFORMATION

None, other than the election of directors on July 17, 2003.

### Other Information

#### Cautionary Statement

In connection with the "safe harbor" provisions of the Private Securities LitigationReform Act of 1995, the Company is hereby filing cautionary statements identifying important risk factorsthat could cause the Company's actual results to differ materially from those projected in forward lookingstatements of the Company made by or on behalf of the Company.

Such statements may relate, but are not limited, to projections of revenues, earnings,capital expenditures, plans for growth and future operations, competition as well as assumptions relatingto the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, manyof which cannot be predicted or quantified.

When the Company uses the words "estimates," "expects," "anticipates," "believes,""plans," "intends," and variations of such words or similar expressions, they are intended to identifyforward-looking statements that involve risks and uncertainties. Future events and actual results coulddiffer materially from those underlying the forward-looking statements. The factors that could causeactual results to differ materially from those suggested by any such statements include, but are notlimited to, those discussed or identified from time to time in the Company's public filings, includinggeneral economic and market conditions, changes in domestic laws, regulations and taxes, changes incompetition and pricing environments, regional or general changes in real estate values.

Undue reliance should not be placed on these forward-looking statements, which areapplicable only as of the date they are made. The Company undertakes no obligation to revise or updatethese forward-looking statements to reflect events or circumstances that arise after that date or toreflect the occurrence of anticipated events.

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# PART II

## ITEM 5. MARKET FOR REGISTRANT'SCOMMON EQUITY AND RELATED STOCKHOLDER MATTERS

### Registration and Market Prices of CommonStock

The Form 10 Registration of the common stock of MFC Development Corp. pursuant toSection 12(g) of the Securities Exchange Act of 1934 as finally amended on January 17, 2001 was effectiveas of November 30, 2000 and MFC has been a reporting company since that date, filing its first quarterlystatement for the nine months ended November 30, 2000, on January 16, 2001.

The Company's common stock was distributed on January 23, 2001 in a spin-off fromFRM. Shareholders' basis in the Company's shares is equal to the market value when distributed, whichwas $1.00 per share based on its trading on the NASDAQ Bulletin Board under the symbol MFCD. The followingtable sets forth the range of high and low bid quotations of the Company's common stock for the periodsset forth below, as reported by the National Quotation Bureau, Inc. Such quotations represent inter-dealerquotations, without adjustment for retail markets, markdowns or commissions, and do not necessarilyrepresent actual transactions.

|                   |                  | Common Stock |
|-------------------|-----------------------|--------------|
| **Fiscal Period** |                  | High Bid     |   | Low Bid |
|                   |                  |         |   |   |
| **2003**          |                  |         |   |   |
| Quarter 1         | (03/01/02 - 05/31/02) | $2.19        |   | $0.70 |
| Quarter 2         | (06/01/02 - 08/31/02) | $2.18        |   | $0.35 |
| Quarter 3         | (09/01/02 - 11/30/02) | $1.85        |   | $0.44 |
| Quarter 4         | (12/01/02 - 02/28/03) | $1.85        |   | $1.40 |
|                   |                  |         |   |   |
| **2004**          |                  |         |   |   |
| Quarter 1         | (03/01/03 - 05/31/03) | $1.85        |   | $1.55 |
| Quarter 2         | (06/01/03 - 08/31/03) | $1.90        |   | $1.31 |
| Quarter 3         | (09/01/03 - 11/30/03) | $1.85        |   | $1.35 |
| Quarter 4         | (12/01/03 - 02/29/04) | $1.30        |   | $0.60 |

The last trade on May20, 2004 was $2.40.

### Dividends

No cash dividend has been paid by MFC since its inception. The Company has no presentintention of paying any cash dividends on its common stock.

### Holders

As of May 1, 2004, there were approximately 1,000 holders of record of MFC commonstock representing about 2,400 beneficial owners of its shares. There are no options or warrants topurchase common stock of the Company outstanding except for options to purchase a total of 6,000 sharesheld by Allan Kornfeld, former Chairman of the Company and 4,500 shares held each by David Michael,a former Director and AndersSterner, presently a Director of the Company. The Company does not know of any shares of common stock of MFC thatare held by any director, officer or holder of as much as 5% of the outstanding stock for sale pursuantto a filing under Rule 144 of the Securities Act. The Company has not agreed to register any commonstock for sale under the Securities Act by any shareholder or the Company, the offering of which couldhave a material effect on the market price of the Company's common equity.

## ITEM 6. SELECTED CONSOLIDATED FINANCIALDATA

    Fiscal Year EndedFebruary 29, February 28, February 28, February 28, February 29,2004 2003 2002 2001 2000**Income Statement Data:**         Total revenue $   2,062,096   $   2,977,770   $   2,733,510   $   1,433,109   $   2,262,396 Costs and expenses      2,853,916        2,382,915        1,986,218        2,257,887        3,179,783          Income (loss) from operations        (791,820)          594,855           747,292         (824,778)        (917,387)Other (expenses) net of other income         (90,592)          (31,774)          (51,652)        (221,468)          (28,096)         Income (loss) from continuing         operations before provision for         income taxes       (882,412)          563,081           695,640      (1,046,246)        (945,483)Provision (benefit) for income taxes             7,042           (75,876)            13,606             10,936             14,328          Income (loss) from continuing			operations       (889,454)          638,957           682,034      (1,057,182)        (959,811)Income (loss) from discontinued			operations, net         of taxes (including impairment loss of			$229,000         in 2004 and gain on sale of subsidiary			of $381,182         in 2001 and $96,301 in 2000)       (543,570)          326,128           126,351           306,887           267,531          Net income (loss) $ (1,433,024)  $      965,085   $      808,385   $    (750,295)  $    (692,280)         Earnings (loss) per common share:                  Income (loss) from continuing			operations $          (0.50)  $            0.36   $            0.38   $          (0.59)  $          (0.53)Income from discontinued operations             (0.31)                0.18                 0.07                 0.17                 0.15 Basic and diluted earnings (loss)         per common share $          (0.81)  $            0.54   $            0.45   $          (0.42)  $          (0.38)         Number of shares used in computation of         basic and diluted earnings per share      1,775,053        1,787,350        1,792,662        1,807,261        1,816,462          As ofFebruary 29, February 28, February 28, February 28, February 29,2004 2003 2002 2001 2000**Balance Sheet Data:**         Working Capital $   1,707,230   $   3,542,728   $   3,852,763   $   2,454,741   $   2,851,037          Total Assets $   5,903,032   $   7,075,843   $   6,277,489   $   7,222,100   $   7,376,210          Long-term debt $      103,452   $      271,617   $      192,449   $      263,644   $        24,655          Common Shareholders' equity $   4,207,090   $   5,640,114   $   4,702,368   $   3,907,282   $   4,685,912          Book value per share $            2.37   $            3.18   $            2.63   $            2.17   $            2.58          Common shares outstanding      1,775,053        1,775,053        1,790,000        1,800,000        1,816,462 
    	(a) During fiscal year ended February 29, 2000, the  Company disposed of its interest in Wendclark Corp.
    (b) During the year ended February 28, 2001, the  Company disposed of its interest in Wendcello Corp.

## ITEM 7. MANAGEMENT'S DISCUSSIONAND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All statements contained herein that are not historical facts, including but not limited to, statements regardingfuture operations, financial condition and liquidity, expenditures to develop real estate owned by the Company, future borrowing,capital requirements, and the Company's future development plans, are based on current expectations. These statements are forward-looking in nature and involve a number of risks and uncertainties. Actual results may differ materially. Among the factors thatcould cause actual results to differ materially are the following: changesaffecting the business of the Company's medical service organization and medical provider clients,a legislative change in insurance regulations affecting the future collections of medical receivables, changes in the real estateand financial markets, adverse arbitration or court decisions on collectibilityof purchased receivables, environmental action by governments affectingdevelopment of real estate, and other risk factors described herein and in theCompany's reports filed and to be filed from time to time with the Commission. The discussion and analysis below is based on the Company's Consolidated Financial Statementsand related Notes thereto included herein and incorporated herein by reference.

### Overview

MFC presently generates revenues from two business segments: real estate and medical. The real estate segmentconsists of parcels of real estate in Hunter, New York held for future developmentor sale, in which co-investors also have interests, andof a mortgage note receivable on a property that was previously sold. Revenues in the real estate division vary substantially fromperiod to period depending on when a particular transaction closes and depending on whether the closed transaction is recognizedfor accounting purposes as a sale, or is reflected as a financing, or is deferred to a future period.

In February 2003, the Company was released from a rental obligationto a related party arising fromthe sale of real estate in a prior period. The obligation was to a limitedliability company, 24% owned by Lester Tanner's daughter. Lester Tanner is ashareholder, director and president of the Company. As a result of the termination of the contingent obligation,the Company recorded a gain of $850,000 during the year ended February 28, 2003.

In August 2001, the Company entered into an agreement with a debtor regarding anoutstanding mortgage receivable and debenture (together the "Goshen Receivables") on property locatedin Goshen, New York. Under the terms of the agreement, the debtor satisfied the Goshen Receivables bypayments of principal and accrued interest of $167,500 in August 2001 and $1,507,500 in November 2001.As a result of this agreement, the Company realized $745,000 of deferred income related to the originalsale of the property.

The medical segment is conducted through Medical Financial Corp.,a wholly owned subsidiary, which purchases insurance claims receivables from medical practices,paying cash to the medical provider in return for a negotiated fee, and providesother collection services to those practices; and (ii) three other subsidiarieswhich were formed to provide additionalmanagement services to certain medical practices. On February 4, 2004, theCompany decided to restructure the medical financing segment. The plan ofrestructuring calls for (i) the purchase of insurance claims receivables frommedical practices to be discontinued, (ii) the sale of the assets ofthe three subsidiaries that were formed to provide additional managementservices to certain medical practices, and (iii) focus the operations of themedical segment on collections and other services. As a result of this decision,management services has been reclassified as discontinued operations and priorperiods have been restated.

*Proposed Transaction*

On April  9, 2004, the Company filed a Current Report on Form 8-K	announcing the signing on March 26, 2004 of an Acquisition Agreement with	Creative Marketing Group, Inc, ("CMG") and its shareholders to acquire 100%of CMG's outstanding capital stock in exchange for shares of common stock ofMFC.  After the closing, MFC shall issue approximately 7,900,000 shares(approximately 80%) of common stock to CMG stockholders and holders of CMG debtout of approximately 10,000,000 shares of common stock which will then be issuedand outstanding.  The completion of the acquisition is subject to severalconditions including, but not limited to, the closing of a private offeringraising a minimum of $1,000,000 and a maximum of $2,500,000.  

CMG is a sales and marketingcompany which since the year 2000 has been exclusively working with a nationalbrand name in the coffee industry which has a brand name recognition in excessof 90% among consumers.  In late 2002 CMG obtained exclusive licensingagreements permitting it to use the trademark of such national brand name in theproduction and sale of coffee and coffee filters through retailers, foodservice, hospitality and in-office locations throughout the United States. CMG's relationship with this national brand name creates marketing opportunitiesto enhance the awareness and availability of such national brand name's coffeemakers and the coffee and coffee filters which CMG may produce and sell underits licenses in the United States.

Completion of the transactiondescribed is subject to the satisfaction of a number of conditions and there canbe no assurance that all of the conditions will be met or that the registrantwill successfully complete the acquisition or that CMG will raise adequate fundsin the private placement.

**Critical Accounting Policies**

Management's discussion and analysis of its financial position and results of operations are based upon the Company'sconsolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the UnitedStates of America. The preparation of these financial statements requires management to make estimates and judgments that affectthe reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities.Actual results could differ from those estimates. Management believes that the critical accounting policies and areas that requirethe most significant judgments and estimates to be used in the preparation of the consolidated financial statements are allowancefor doubtful accounts and the valuation allowance against its deferred tax asset,and revenue recognition.

**Allowance for Doubtful Accounts**

*Mortgage and note receivable:*The Company evaluates the credit positions on its notes receivable and thevalue of the related collateral on an ongoing basis. The Company estimates that all of its notes receivable are fully collectibleand the value of the collateral is in excess of the related receivables. The Company continually evaluates its notes receivablethat are past due as to the collectibility of principal and interest. The Company considers the financial condition of the debtor,the outlook of the debtor's industry, decrease in the ratio of collateral values to loans, and any prior write-downs on loans. Theabove considerations are all used in determining whether the Company should suspend recording interest income on any notes receivableor provide for any loss reserves.

*Finance receivables:* Management's periodic evaluation of the adequacy of the allowancefor loan losses is based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situationsthat may affect the customer's ability to repay, the estimated value of any underlying collateral, the outlook of the debtor's industry,and current economic conditions. When the Company estimates that it may be probable that a specific customer account may be uncollectible,that balance is included in the reserve calculation. Actual results could differ from these estimates under different assumptions.

*Deferred tax assets:* The Company records a valuation allowance to reduce the carrying value of its deferredtax assets to an amount that is more likely than not to be realized. While the Company has considered future taxable income andprudent and feasible tax planning strategies in assessing the need for the valuation allowance, should the Company determine thatit would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the valuation allowancewould be charged to income in the period in which such determination was made. A reduction in the valuation allowance and correspondingcredit to income may be required if the likelihood of realizing existing deferred tax assets were to increase.

**Revenue Recognition**

*Real Estate:* The full accrual method is used on the sale of real estateif the profit is determinable, the Company is not obligated to perform significant activities afterthe sale to earn the profit and there is no continuing involvement with the property. If the buyer'sinitial and continuing investments are inadequate to demonstrate a commitment to pay for the property,the installment method is used, resulting in the deferral of income. If there is continuing involvementwith the property by the Company, the financing method is used.

*Purchase and Collection of Medical Insurance ClaimsReceivables:* A fee ischarged to medical providers upon the purchase of their accounts receivable by the Company. The feeis for the up-front payment that the Company makes upon purchase of the receivables and for collectionservices rendered to collect the receivables. This fee income is deferred and recognized over the contractualcollection period in proportion to the costs of collection. The deferred fee income is netted againstfinance receivables. The Company is not entitled to interest on unpaid principal balances.

### Results of Operations

The following table summarizes the Company's changes in revenue from continuingoperations (in thousands) for the periods indicated:

|                                                         |  Year ended                                     |   |  Year ended                                                |
|---------------------------------------------------------|-----------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                         | **February 29,**                                          |   | **February 28,**                                                     |
|                                                         |                                                      |   |                                                                 |   | **Change** |   |   |   |   |   | **Change** |
|                                                         | **2004**                                                  |   | **2003**                                                             |   | **$** |   |  %  |   | **2003** |   | **2002** |   | **$** |   |  %  |
| **Revenues:**                                           |                                                      |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Gain on sale of real estate                      |  $         - |   |  $    850                                        |   |  $ (850) |   |   |   |   |  $    850 |   |  $    815 |   |  $    35 |   |   |   |
|   Other real estate                                |        450                  |   |             - |   |      450 |   |   |   |   |             - |   |          50 |   |       (50) |   |   |   |
|   Rental income                                    |        103                  |   |        103                             |   |           - |   |   |   |   |        103 |   |          99 |   |          4 |   |   |   |
|   Interest from mortgages                          |          66       |   |          84                  |   |       (18) |   |   |   |   |          84 |   |        152 |   |       (68) |   |   |   |
|   Total real estate                                |        619                  |   |     1,037                                             |   |     (418) |   |      (40) |  %  |   |     1,037 |   |     1,116 |   |       (79) |   |        (7) |  %  |
|                                                         |                                                      |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Income from the purchase and                     |                                                      |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     collections of medical receivables   |                                                      |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Earned purchase discounts            |        796                  |   |     1,305                                             |   |     (509) |   |   |   |   |     1,305 |   |     1,315 |   |       (10) |   |   |   |
|     Other collection fees           |                                                      |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       and reimbursements  |        647                  |   |        636                             |   |        11 |   |   |   |   |        636 |   |        302 |   |      334 |   |   |   |
|   Total medical                                    |     1,443                                  |   |     1,941                                             |   |     (498) |   |      (26) |  %  |   |     1,941 |   |     1,617 |   |      324 |   |        20 |  %  |
|                                                         |                                                      |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |                                                      |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total revenues                                   |  $ 2,062                                             |   |  $ 2,978                                                        |   |  $ (916) |   |      (31) |  %  |   |  $ 2,978 |   |  $ 2,733 |   |  $  245 |   |          9 |  %  |

The Company's revenues from continuing operations for the year endedFebruary 29, 2004("2004") were $2,062,000, a decrease of $916,000 or 31% as compared to theyear ended February 28, 2003 ("2003"). The change was a result of decreasesin both the medical and real estate divisions. The Company's revenues fromcontinuing operations for the year endedFebruary 28, 2003 ("2003") were $2,978,000, an increase of $245,000 or9% as compared to the yearended February 28, 2002 ("2002"). The increase was a result of an increase in the medical division, offsetby a decrease in the real estate division.

Revenue in the real estate division decreased by $418,000, to $619,000, in 2004. The decrease in2004 was due to a decrease in gain on sale of real estate and interest frommortgages, offset by an increase in other real estate revenue. The decrease ingain on sale of real estate in 2004 reflects the 2003 recognition of $850,000 ofdeferred income attributable to the termination of a contingent obligationrelated to a sale leaseback. The decrease in interest from mortgages in 2004 wasdue to a temporary reduction of the interest rate from the Granby mortgage asconsideration for the termination of the contingent obligation related to a saleleaseback. The increase in other real estate revenue in 2004 was due an increaseof $450,000, as a result of (i) adjustments to amounts due to co-investors of $275,000,offset by $25,000 paid in settlement of a dispute with a prior co-investor, and(ii) the sale of a townhouse for $200,000 at the Hunter property inFebruary 2004.

Revenue in the real estate division decreased in 2003 by $79,000, to $1,037,000.The decrease was due to (i) a $68,000 decrease in interest income from the Goshen mortgage, (ii) lackof real estate sales in 2003 as compared to 2002, when the Company sold the land for eight un-builtcondominium units for $50,000, offset by (iii) an increase of gain on sale of real estate of $35,000in 2003. The increase reflects the 2003 recognition of $850,000 of deferred income attributable to thetermination of a contingent obligation related to a sale leaseback, as compared to the 2002 realizationof $745,000 of deferred income related to the settlement of an outstanding mortgage.

Revenue in the medical division decreased by $498,000, to $1,443,000, in 2004. The decrease in2004 was due to decreases in the amount of insurance claims purchased, resulting in a$509,000 decrease in fees, offset by an increase of $11,000 in income from additional collection services.The decrease in earned fees is a result of the Company's restructuring inFebruary 2004 and the elimination throughout the year of poorly collectingclients, which was used as a way  to be more selective in the billpurchasing process due to new State insurance department regulations that makecollections more difficult. The increase in the additional collection services in2004 was due to more successful collections during the first two quarters ofthe fiscal year, offset by reductions during the remainder of 2004. Thereductions in the later part of 2004 were due to the Company being lesssuccessful in its collection efforts as a result of increased efforts byinsurance companies to delay and deny medical bills. These additional servicesalso generate interest income received from insurance companies for delayedpayments on improperly denied and delayed receivables. 

Revenue in the medical divisionincreased by $324,000, to $1,941,000, in 2003. The increasein 2003 was primarily dueto additional collection services that began being provided to new and existing clients. These additionalservices also generate interest income received from insurance companies for delayed payments on improperlydenied and delayed receivables.

The following table summarizes the Company's changes in costs and expensesfrom continuing operations (in thousands) for the periods indicated:

|                                      |  Year ended                    |   |  Year ended                               |
|--------------------------------------|------------------------------------------|--------|-----------------------------------------------------|
|                                      | **February 29,**                         |   | **February 28,**                                    |
|                                      |                                     |   |                                                |   | **Change** |   |   |   |   |   | **Change** |
|                                      | **2004**                                 |   | **2003**                                            |   | **$** |   |  %  |   | **2003** |   | **2002** |   | **$** |   |  %  |
| **Costs and expenses:**              |                                     |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Real estate                   |  $    387            |   |  $    204                       |   |  $  183 |   |        90 |  %  |   |  $    204 |   |  $    254 |   |  $   (50) |   |      (20) |  %  |
|   Medical receivables           |     1,763                 |   |     1,719                            |   |        44 |   |          3 |  %  |   |     1,719 |   |     1,357 |   |      362 |   |        27 |  %  |
|   Bad debt                      |        191 |   |          15 |   |      176 |   |   1,173 |  %  |   |          15 |   |          19 |   |         (4) |   |      (21) |  %  |
|   Corporate expenses            |        392 |   |        356            |   |        36 |   |        10 |  %  |   |        356 |   |        299 |   |        57 |   |        19 |  %  |
|   Depreciation and amortization |        121 |   |          89 |   |        32 |   |        36 |  %  |   |          89 |   |          57 |   |        32 |   |        56 |  %  |
|   Total costs and expenses      |  $ 2,854                            |   |  $ 2,383                                       |   |  $  471 |   |        20 |  %  |   |  $ 2,383 |   |  $ 1,986 |   |  $  397 |   |        20 |  %  |

Costs and expenses in the realestate division increased in 2004 by $183,000 to $387,000. The increase wasprimarily due to the $182,000 cost of real estate sold due in 2004 compared tonone being sold in 2003. Costs and expenses in the real estate division decreasedin 2003 by $50,000 to $204,000. The decrease was due to a decreasein the amount of properties sold in 2003, which results in a decrease in the cost of sales, offset byan annual salary increase.

The $44,000 increase in medical receivable expenses in 2004 was primarily dueto (i) an increase of  $68,000 in the costs of filingarbitrations against insurance companies on denied and unpaid medical bills,which was a result of an increase in the amount of arbitrations that were closedin 2004 as compared to 2003 and (ii) an increase of $14,000 in computer related expenses, due to a reduction inthe allocation of capitalized costs, offset by a decrease in postage costs of $69,000.The decrease in postage expenses in 2004 was due to a less costly method ofmailing medical bills and the related packages to the insurance carriers and adecrease in the quantity of mailings due to the reduction in the amount of billspurchased.

The $362,000 increase in medical receivable expenses in 2003 was primarily due to (i)increases in employment costs, including annual salary increases, the expansionof the sales and marketing department and new employees needed to provide theadditional collection services that the Company began providing, (ii) othercosts that are related to the additional collection services and (iii) newbanking fees that are related to client services.

The $176,000 increase in bad debt expense in 2004 is due to increases of bad debt reserves.The Company may incur a medical receivable bad debt loss when the portion of amedical claim collected does not exceed the advance (including the fee charged)given to the client. The increase in bad debt expense is based on anincrease in adverse arbitration decisions from the hearings that were decidedduring 2004. An increase in the amount of closedarbitration cases has provided management with a larger base of information to better estimate the reserve for bad debts. Management's decision to increasethe bad debt reserve was based on the overall decrease in the collections ratefrom the arbitrations that have been closed in the last half of 2004. Managementbelieves that it will be increasingly more difficult to collect on outstandingreceivables, and has initiated a new program that it believes could increase thecollections rate. Management used this information when it made the decision inFebruary 2004 to eliminate the purchase of additional receivables and change the focus of the operations of the medical segment to collections and otherservices. Management had also taken other measures during 2004 to reduce its baddebts, such as eliminating poorly collecting clients and  reducing theupfront advance percentage that it pays when receivables are purchased.Management will monitor the results of these efforts as to the effect oncollection rates, and whether the reserve for bad debts is adequate based onactual collections.

The $4,000 decrease in bad debt expense in 2003 was due theCompany becoming more selective in the bill-purchasing process, which results inreduced bad debt losses.

The $36,000 increase in corporate expenses in 2004 was due to (i) an increase of $17,000in accounting fees due to a billing adjustment for the prior year's annualaudit, (ii) an increase of $12,000 in directors' fees due to additional meetings, (iii) a $25,000 reallocation of administrative salaries from the real estatedivision, and (iv) anincrease in other various expenses, offset by a decrease in director and officerliability insurance of $34,000.

The $57,000 increase in corporate expenses in 2003 was primarilydue to increases in executive salaries, accounting fees, director and officer liability insurance andshareholder reporting expenses.

The increase in depreciation and amortization of $32,000 inboth 2004 and 2003 was attributable to increased capital expenditures in the medical financing division, continuing theCompany's trend of relying on technology to perform formerly labor intensive functions.

Net interest expensein 2004 was $91,000, compared to $32,000 in 2003. The increase in 2004 wascaused by additional borrowing due to the amount of time insurance claims receivable arenow remaining outstanding as a result of new regulations thatmake the collection process more difficult. The collection delays, which are timing issues rather than credit issues, have caused the Company to increaseits borrowings to finance the additional receivables. 

Net interestexpense in 2003 was $32,000, a decrease of $20,000 from 2002. The decrease in 2003 reflects interestearned from the collection of the proceeds of the Goshen receivables in 2002 and the partial use ofthose proceeds to repay debt that was incurred to finance the purchase of additional medical claimsreceivable.

Through 2004, the Company had accumulated net operating losses ("NOLs") of $5,328,000 availableto be carried forward through February 28, 2023. In 2004, the Company did notgenerate any taxable income, as it did in 2003, and estimated that it wouldnot derive any additional minimum future tax savings in addition to the $90,000that was estimated in 2003. The Company has taken a 95% valuation allowance of$1,721,000 against the deferred tax asset of $1,811,000 that these NOLswould generate.

The benefit for income taxes of $76,000 in 2003 reflects a current year benefit of$90,000. Through 2002, the Company had accumulated net operating losses ("NOLs") of $4,600,000, availableto be carried forward through February 28, 2022. Prior to 2003, the Company had not generated taxableincome and had taken a 100% valuation allowance against the deferred tax asset of $1,571,000 that theseNOLs would generate. In 2003, the Company generated taxable income and estimated that it would deriveminimum future tax savings of $90,000 from these NOLs, and recorded a valuation allowance of$1,471,000 against the remainder of the deferred tax asset.   

The following table summarizes the Company's changes indiscontinued operations (in thousands) for the periods indicated:

|                                            |  Year ended                                                |   |  Year ended                                                |
|--------------------------------------------|----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                            | **February 29,**                                                     |   | **February 28,**                                                     |
|                                            |                                                                 |   |                                                                 |   | **Change** |   |   |   |   |   | **Change** |
|                                            | **2004**                                                             |   | **2003**                                                             |   | **$** |   |  %  |   | **2003** |   | **2002** |   | **$** |   |  %  |
| **Discontinued operations:**               |                                                                 |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Medical management service fees     |  $ 1,354                                                        |   |  $ 2,282                                                        |   |  $ (928) |   |      (41) |  %  |   |  $ 2,282 |   |  $ 1,433 |   |  $  849 |   |        59 |  %  |
|                                            |                                                                 |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Medical management services         |     1,198                                             |   |     1,902                                             |   |     (704) |   |      (37) |  %  |   |     1,902 |   |     1,261 |   |      641 |   |        51 |  %  |
|   Bad debt                            |        348                             |   |             - |   |      348 |   |           - |  %  |   |             - |   |             - |   |           - |   |           - |  %  |
|   Impairment loss                     |        229                             |   |             - |   |      229 |   |           - |  %  |   |             - |   |             - |   |           - |   |           - |  %  |
|   Depreciation and amortization       |        113                             |   |          69                  |   |        44 |   |        64 |  %  |   |          69 |   |          47 |   |        22 |   |        47 |  %  |
|   Total costs and expenses            |     1,888                                             |   |     1,971                                             |   |       (83) |   |        (4) |  %  |   |     1,971 |   |     1,308 |   |      663 |   |        51 |  %  |
|                                            |                                                                 |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Income (loss) from operations       |      (534)                                       |   |        311                             |   |     (845) |   |   |   |   |        311 |   |        125 |   |      186 |   |   |   |
|   Other income (expense)              |          (9)                 |   |          15                  |   |       (24) |   |   |   |   |          15 |   |            1 |   |        14 |   |   |   |
|   Income (loss) before income taxes   |      (543)                                       |   |        326                             |   |     (869) |   |   |   |   |        326 |   |        126 |   |      200 |   |   |   |
|   Income taxes                        |             - |   |             - |   |           - |   |   |   |   |             - |   |             - |   |           - |   |   |   |
|   Income (loss) from                  |                                                                 |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     discontinued operations |  $  (543)                                                  |   |  $    326                                        |   |  $ (869) |   |   |   |   |  $    326 |   |  $    126 |   |  $  200 |   |   |   |

The decrease in management service fees of $928,000 in 2004 was a result of the decrease in management services that the Company provided to one of the two finance clients itmanages. The decrease in management fees from that client is related to a decrease in the size ofits medical practice. The Companybills for its services based on the amount of expenses that it incurs on behalf of those practices. If those practices decreasetheir size, the Company will not incur as much expense, resulting in a decrease in the amount of service fees. These fees are netof billing adjustments. Management service fees are billed monthly according to the cost of services rendered to the client. Ifthe assets of the management client, which is also a finance client, are not enough to satisfy the billed fees, an allowance forbilling adjustments is recorded to reduce the Company's net receivables to an amount that is equal to the assets of the client thatare available for payment.

The increase in management service fees of $849,000 in 2003, was a result ofthe increase in management services that the Company provides to two of its finance clients. In November2002, the Company began operating a second MRI facility, providing managementservices to a finance client's radiology practices.  In November 2002, theCompany also acquired a 25% equity interest in a third facility that providesmanagement services to the same client. Management fees were also generated fromthe management of a finance client's physical therapy practice through October2002. These fees are net of billing adjustments.

The $704,000 decrease in medical management expensesin 2004 was due to a net decrease  inoperating expenses from managing  a radiologist's practices and (ii) areduction in operating expenses from a former client's office that isnow closed. A decrease in operating expenses occurs when there is a decrease in amanagement client's radiology practice. The reduction in operating expenses isrelated to the reduction in the size of the radiologist's practice. As the sizeof the radiologist's practice decreases, expenses also decrease.

The 51% increase in medical management expenses in 2003 were related to the 59% increasein revenues for the same period. The Company incurred additional expenses due to growth in the managementclient's radiology practices. As expenses increase, the Company may bill more for the services it provides.

The bad debt expense of $348,000 in 2004 reflects increases of bad debt reserves. The Company may incur a medical management bad debt loss whenthe assets of the management client, which is also a finance client, arepotentially insufficient to satisfy the billed fees from prior periods. Sincethe management clients are also finance clients, the bad debt reserve is aresult of the overall decrease in the collections rate from the arbitrationsthat have been closed in the last half of 2004. The Company increased the bad debtreserve based on the information that it currently has, because it nowbelieves receivables available to pay managementfees will be lower. The final bad debt expense will ultimately be determined after allreceivables are litigated.

The impairment loss of $229,000 in 2004 is a result ofmanagement's estimate as to the excess of the carrying value of the net assetsof the medical management service subsidiaries over the estimated proceeds fromtheir ultimate sale.

The increase in depreciation expense of $44,000 in 2004 and$22,000 are both a result of the opening of an additional MRI facility inNovember 2002 and the continuing upgrades of the MRI machines that the Companyowns and utilizes in providing its management services.

For the reasons described above, the Company recorded a netlossof $1,433,000 in 2004, a decrease of $2,398,000 from the net income of $965,000 in 2003.For the same reasons, net income increased by $157,000 in 2003 from $808,000 in2002.

### Liquidity and Capital Resources

The Company's two business activities during theyear ended February 29, 2004resulted in a decrease of cash in the amount of $230,000. The changes in regulationsthat caused the increase in the length of the collection cycle of insurance claims resulted in an increase in the amount of cashneeded to purchase medical insurance claims receivable. As a result of the increase in the collection cycle, the finance clientsthat are also management clients had less funds available to pay for management service fees, which then increased the managementfee receivable collection cycle. On February 4, 2004, as a result of theincreased collection cycle and the related use of cash, the Company decided torestructure the Medical Division. 

As part of the restructuring, theCompany decided to offer for sale the two MRI facilities that the Company ownsand operates, discontinuing the medical management service business. For new prospective clients, the emphasis willbe on less cash-intensive services, such as billing,collections and other management services. The Company is not seeking any newaccounts receivable finance clients and is in the process of eliminating thepurchase of additional medical insurance claims. The funds for its needs are expected to be provided from existing cashand proceeds fromthe collection of outstanding receivables. If those sources are insufficient,additional funds may be provided from asset-based borrowing facilities, refinancing of assets under capital leases,issuance of preferred stock, and the sale of real estate assets.

The real estate division is not expected to be a significant user of cash flow fromoperations due to the elimination of carrying costs on the real estate that was sold during prior periods. The Company's real estateassets in Hunter, New York are owned free and clear of mortgages, except for the construction loan thatwas used to finance the currentproperty renovation, which is now complete. Further development of this property, at any significant cost, is expected to be funded by the issuance ofSeries B Bonds, other asset-based financing, the sale of the renovated property or the sale of other property in Hunter.

The Company believes that its present cash resources and the cash available from financing activities will besufficient on a short-term basis and over the next 12 months to fund itsexisting medical financing business, its company-wide working capital needs, and its expected investments in property and equipment. The Companyexpects that the reduction in both its client base and the advances it makes toits existing customers in the medical division will enable funds to be provided internally and from its financing activities.

The Company's significant sources of financing are fromSeries A and Series B bonds and construction loan financing. Both Series A andSeries B bonds are issued for 18 month terms and may be redeemed with 60 dayswritten notice in maximum increments of $50,000. Due to this redemption option,these bonds have been classified as current debt. As provided for in the debt instruments of the Series A and Bbonds, the Company has extended maturity dates as evidenced by formalcommitments. The Company may also refinance amounts that may be requested bybondholders for early redemptions through the issuance of new bonds. The Company also intends to use proceeds fromthe projected sale of real estate to repay or prepay debts. The constructionloan is secured by the two remaining townhouses at the Hunter, New Yorkproperty. Both such townhouse are under contract for sale and a portion of the proceeds ofthe first one thosesales, if and when the sale closes, will be used to pay the remaining balance ofthe construction loan.

Cash used by operations in 2004 was $1,150,000, as compared to $39,000 beingprovided in 2003. The $1,189,000 increasein cash used by operations in 2004 was due to (i) a change in net income to loss, after adjustments for non-cash items of depreciation,real estate gains, provision for bad debts and deferred tax benefits, the net of these items totaling $1,414,000,and (ii) fluctuations in operating assets and liabilities of $30,000, primarilycaused by timing differences. These increases in the useof cash were offset by (i) an increase in collections from the sale of realestate of $200,000, (ii) a $62,000 reduction in the amount of cash used for realestate held for development or sale, and (iii) fluctuations in net assets ofdiscontinued operations $122,000.

Cash provided by investing activities was $788,000 in 2004 as compared with $961,000 being used in 2003. Thechange in cash from being used in 2003 to being provided in 2004 of $1,749,000 was primarilydue to $1,746,000 net increase in proceeds from the collection of financereceivables. The increase in funds from the collection of receivables of$896,000 in 2004 compared to $847,000 being used in 2003 to purchasereceivables was due to the decrease in receivable purchases in 2004 as compared to the increase in purchases that occurred in 2003.The decrease in receivable purchases in 2004 is a result of the Company'seliminating poorly collecting clients and plan to reduce and eliminate thepurchase of receivables as part of its plan of restructuring that wasimplemented in February 2004.

Net cash provided by financing activities was $132,000 in 2004 as compared with the $371,000provided in 2003. The$239,000 decrease in cash being provided in 2004 was primarily due to $132,000 of net borrowing in 2004, as compared to $398,000 ofnet borrowingin 2003. The proceeds from the additional borrowings in 2004 were used to finance insurance claims receivable, which are outstanding for a longer period of time as a result of new regulations that create timing issues and make the collectionprocess more difficult.

The table below summarizes aggregate maturities of future minimum note and leasepayments under non-cancelable operating and capital leases as of February 29, 2004.

|                                     |   |                                                                                              |   |  Less than                                                                              |   | 1-3                                                                                                          |   |  4-5                                                                                                                                     |   |  After 5                                                                                                                                 |
|-------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|  Contractual Obligations  |   |  Total                                                                                  |   |  1 Year                                                                                 |   |  Years                                                                                             |   |  Years                                                                                                                                   |   |  Years                                                                                                                                   |
|                                     |   |                                                                                              |   |                                                                                              |   |                                                                                                         |   |                                                                                                                                               |   |                                                                                                                                               |
|  Notes Payable            |   |  $        1,076,698                                       |   |  $           982,446                       |   |  $             83,376                       |   |  $             10,876                                                             |   |  $                      -            |
|  Operating Leases         |   |               246,481            |   |                 85,681 |   |               160,800                       |   |                          - |   |                          - |
|  Capital Leases           |   |                 31,571 |   |                 28,008 |   |                   3,563 |   |                          - |   |                          - |
|                                     |   |                                                                                              |   |                                                                                              |   |                                                                                                         |   |                                                                                                                                               |   |                                                                                                                                               |
|  Total                    |   |  $        1,354,750                                       |   |  $        1,096,135                                       |   |  $           247,739                                  |   |  $             10,876                                                             |   |  $                      -            |

## ITEM 7A. QUANTITATIVEAND QUALITATIVE DISCLOSURES OF MARKET RISK

At February 29, 2004, the Company's debt that is sensitive to changes ininterest rates includes (i) Series A bonds of $750,000 maturing throughSeptember 2005, (ii) Series B bonds of $200,000 maturing through March 2005, and(iii) the construction loan of $112,000 maturing the earlier of the sale of therelated real estate or July 2008. Interest on both of the Series A and Series Bbonds is calculated at a rate of prime plus 3% but not less than 9% per annumnor more than 15% per annum. The rate of interest will be adjusted at the end ofeach calendar quarter. Interest on the construction loan is based at a rate ofprime plus 1.5% but not less than 6.25% per annum nor more than 14% per annum.An interest rate increase would have a negative impact to the extent that (i)the prime rate rises to above 6% and the Company maintains a balance in eitherof the Series A or Series B bonds and (ii) the prime rate rises above 4.75% andthe real estate held for sale that is collateral for the construction loan isnot sold. As of February 29, 2004, an increase in the prime rate to 7% wouldhave a maximum negative impact of approximately $12,000 per annum and eachadditional 1% increase in the prime rate would have a maximum negative impact ofapproximately $11,000 per annum. As of February 28, 2003, an increase in theprime rate to 7% would have had a negative impact of approximately $15,000 andeach additional 1% increase in the prime rate would have had a negative impactof approximately $13,000.

An interest rate change would not impact the Company's cashflows on the fixed rate bank loan, promissory note, capital lease obligations,or the mortgage receivable.

The Company's is also exposed to interest rate risk relatedto its receivables as a consequence of having fixed interest rate receivables. TheCompany is exposed to interest rate risk arising from changes in the level of interest rates. It isanticipated that the fair market value of receivables with a fixed interest rate will increase as interestrates fall and the fair market value will decrease as interest rates rise.

## ITEM 8. FINANCIALSTATEMENTS AND SUPPLEMENTARY DATA

The financial statements required by this Item 8 are set forth in Item 15 of thisForm 10-K. All information which has been omitted is either inapplicable or not required.

## ITEM 9. CHANGES IN AND DISAGREEMENTSWITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

**ITEM 9A. CONTROLS AND PROCEDURES**

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosedin the Company's Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specifiedin the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including itsChief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Indesigning and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matterhow well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designedto do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controlsand procedures.

During the 90-day period prior to the date of this report, an evaluation was performed under the supervision and with the participationof our Company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of thedesign and operation of our disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and theChief Financial Officer concluded that our disclosure controls and procedures were effective. Subsequent to the date of this evaluation,there have been no significant changes in the Company's internal controls or in other factors that could significantly affect thesecontrols, and no corrective actions taken with regard to significant deficiencies or material weaknesses in such controls.

 

----

# PART III

## ITEM 10. DIRECTORS AND EXECUTIVEOFFICERS OF THE REGISTRANT

The information required by this Item is set forth in the Company's definitive proxystatement, which will be filed with the Securities and Exchange Commission within 120 days of February29, 2004. Such information is incorporated herein by reference and made a part hereof.

## ITEM 11. EXECUTIVECOMPENSATION

The information required by this Item is set forth in the Company's definitive proxystatement, which will be filed with the Securities and Exchange Commission within 120 days of February29, 2004. Such information is incorporated herein by reference and made a part hereof.

**Code of Ethics**

The Company has adopted a written Code of Ethics that appliesto all of its directors, officers and employees.  It is available on theCompany's website at www.mfcdevelopment.com and shareholders may obtain a papercopy by writing to the Secretary at the address set forth on page 1.  Anyamendment to the Code of Ethics, or waiver thereof, will be disclosed on thewebsite promptly after its date.

## ITEM 12. SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is set forth in the Company's definitive proxystatement, which will be filed with the Securities and Exchange Commission within 120 days of February29, 2004. Such information is incorporated herein by reference and made a part hereof.

## ITEM 13. CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is set forth in the Company's definitive proxystatement, which will be filed with the Securities and Exchange Commission within 120 days of February29, 2004. Such information is incorporated herein by reference and made a part hereof.

## ITEM 14.PRINCIPAL ACCOUNTANTS FEES AND SERVICES

The information required by this Item is set forth in the Company's definitive proxystatement, which will be filed with the Securities and Exchange Commission within 120 days of February29, 2004. Such information is incorporated herein by reference and made a part hereof.

----

# PART IV

## ITEM 15. EXHIBITS, FINANCIAL STATEMENTSCHEDULES, AND REPORTS ON FORM 8-K

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

1. Consolidated Financial Statements

As of February 29, 2004 and February 28, 2003 and for the fiscal years ended	February 29, 2004, February    28, 2003 and 2002.
- Report of Holtz Rubenstein & Co., LLP
- Consolidated Balance Sheets
- Consolidated Statements of Operations
- Consolidated Statement of Stockholders' Equity
- Consolidated Statements of Cash Flows
- Notes to Consolidated Financial Statements

2. Financial Statement Schedules
- Schedule II - Valuation and Qualifying Accounts
- Schedule III - Real Estate and Accumulated Depreciation
- Schedule IV - Mortgage Loans on Real Estate

The data required by all other schedules is either included in the consolidated financial statements    or is not required.

3. Reports Filed on Form 8-K:
On July 29, 2003, the Company filed a Current Report on Form 8-K	relating to the announcement of the commencement of discussions with a	privately held company seeking to enter into a Letter of Intent whereby it	would become a subsidiary of the Company.
 
On August 28, 2003, the Company filed a Current Report on Form 8-K	relating to the announcement of the signing of a Letter of Intent with a	privately held company whereby it would become a subsidiary of the Company.
 
On February 23, 2004, the Company filed a Current Report on Form 8-K	relating to the announcement of the Company agreeing to commence	negotiations with Creative Marketing Group, Inc. ("CMG") to acquire 100% of	that corporation's outstanding capital stock in exchange for shares of	common stock of the Company after which the shareholders of CMG will have a	majority ownership.
 
On April  9, 2004, the Company filed a Current Report on Form 8-K	relating to the announcement of the signing of an Acquisition Agreement with	CMG to acquire 100% of CMG's outstanding capital stock in exchange for	shares of common stock of the Company, after which the shareholders of CMG	will have a majority ownership.

----

### Report of Independent Registered Public Accounting Firm

The Board of Directors and ShareholdersMFC Development Corp., Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of MFC Development Corp.,Inc. and its subsidiaries as of February 29, 2004 and February 28, 2003 and the related consolidated statements ofoperations, stockholders' equity and cash flows for the three years ended February 29, 2004. Our auditsalso included the consolidated financial statement schedules listed in the Index at Item 15(a) for thethree years ended February 29, 2004. These consolidated financial statements and consolidated financialstatement schedules are the responsibility of the Company's management. Our responsibility is to expressan opinion on these consolidated financial statements and consolidated financial statement schedulesbased on our audits.

We conducted our audits in accordance with the standards ofthe Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statement presentation. We believe thatour audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly,in all material respects, the consolidated financial position of MFC Development Corp., Inc. and itssubsidiaries at February 29, 2004 and February 28, 2003 and the consolidated results of their operations and theircash flows for the three years ended February 29, 2004 in conformity with accounting principles generallyaccepted in the United States of America. Also, in our opinion, the related consolidated financial statementschedules for the three years ended February 29, 2004, when considered in relation to the basic financialstatements taken as a whole, present fairly, in all material respects, the information set forth therein.

|                                      |
|-------------------------------------------|
| /s/  HOLTZ RUBENSTEIN & CO., LLP |
| Melville, New York      May 14, 2004      |

----

MFC Development Corp. and Subsidiaries

### Consolidated BalanceSheets

|                                                       |   | **February 29,**                                                                                      |   | **February 28,**                                                                                  |
|-------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|
|                                                       |   | **2004**                                                                                              |   | **2003**                                                                                          |
|                                                       |   |                                                                                                  |   |                                                                                              |
| **Assets**                                            |   |                                                                                                  |   |                                                                                              |
| Current assets:                                       |   |                                                                                                  |   |                                                                                              |
|   Cash and cash equivalents                      |   | ** $             12,992**            |   |  $           242,608                       |
|   Finance receivables, net                       |   | **           1,453,048**                            |   |            2,540,340                            |
|   Other current assets                           |   | **                60,415** |   |                 79,055 |
|   Assets of discontinued operations              |   | **           1,625,502**                            |   |            1,844,837                            |
| Total current assets                                  |   | **           3,151,957**                            |   |            4,706,840                            |
|                                                       |   |                                                                                                  |   |                                                                                              |
| Property and equipment:                               |   |                                                                                                  |   |                                                                                              |
|   Property and equipment, at cost                |   | **              784,164**            |   |               668,423            |
|   Less accumulated depreciation and amortization |   | **              434,523**            |   |               313,083            |
|                                                       |   | **              349,641**            |   |               355,340            |
|                                                       |   |                                                                                                  |   |                                                                                              |
| Other assets:                                         |   |                                                                                                  |   |                                                                                              |
|   Real estate held for development or sale       |   | **           1,334,384**                            |   |               951,358            |
|   Mortgage and note receivable - related party   |   | **              946,732**            |   |               946,732            |
|   Deferred tax asset, net                        |   | **                90,000** |   |                 90,000 |
|   Other                                          |   | **                30,318** |   |                 25,573 |
| Total other assets                                    |   | **           2,401,434**                            |   |            2,013,663                            |
|                                                       |   |                                                                                                  |   |                                                                                              |
| Total assets                                          |   | ** $        5,903,032**                                       |   |  $        7,075,843                                       |
|                                                       |   |                                                                                                  |   |                                                                                              |
|                                                                                       |   | **February 29,**                                                                                                                                       |   | **February 28,**                                                                                                                                   |
|---------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                       |   | **2004**                                                                                                                                               |   | **2003**                                                                                                                                           |
| **Liabilities and Stockholders' Equity**                                              |   |                                                                                                                                                   |   |                                                                                                                                               |
| Current liabilities:                                                                  |   |                                                                                                                                                   |   |                                                                                                                                               |
|   Accounts payable and accrued expenses                                          |   | ** $           313,102**                                                                        |   |  $           285,400                                                                        |
|   Current portion of notes payable, including amounts payable to related         |   |                                                                                                                                                   |   |                                                                                                                                               |
|    parties of $50,000 at February 29, 2004 and $25,000 at February 28, 2003 |   | **           1,008,173**                                                                             |   |               650,525                                                             |
|   Income taxes payable                                                           |   | **                  3,355**                                       |   |                   3,507                                       |
|   Liabilities of discontinued operations                                         |   | **              120,097**                                                             |   |               224,680                                                             |
| Total current liabilities                                                             |   | **           1,444,727**                                                                             |   |            1,164,112                                                                             |
|                                                                                       |   |                                                                                                                                                   |   |                                                                                                                                               |
| Other liabilities:                                                                    |   |                                                                                                                                                   |   |                                                                                                                                               |
|   Notes payable                                                                  |   | **                97,452**                                                  |   |               243,117                                                             |
|   Due to co-investors                                                            |   | **              147,763**                                                             |   |                          - |
|   Other                                                                          |   | **                  6,000**                                       |   |                 28,500                                                  |
| Total other liabilities                                                               |   | **              251,215**                                                             |   |               271,617                                                             |
|                                                                                       |   |                                                                                                                                                   |   |                                                                                                                                               |
| Commitments and contingencies                                                         |   |                                                                                                                                                   |   |                                                                                                                                               |
|                                                                                       |   |                                                                                                                                                   |   |                                                                                                                                               |
| Stockholders' equity:                                                                 |   |                                                                                                                                                   |   |                                                                                                                                               |
|   Preferred stock - $.001 par value;                                             |   |                                                                                                                                                   |   |                                                                                                                                               |
|     Authorized - 2,000,000 shares;                                     |   |                                                                                                                                                   |   |                                                                                                                                               |
|     Issued and outstanding - 0 shares                                  |   | **                         -** |   |                          - |
|   Common stock - $.001 par value;                                                |   |                                                                                                                                                   |   |                                                                                                                                               |
|     Authorized - 40,000,000 shares;                                    |   |                                                                                                                                                   |   |                                                                                                                                               |
|     Issued and outstanding -  1,800,000 shares                    |   | **                  1,800**                                       |   |                   1,800                                       |
|   Capital in excess of par value                                                 |   | **           5,968,420**                                                                             |   |            5,968,420                                                                             |
|   Accumulated deficit                                                            |   | **         (1,722,492)**                                                                                       |   |             (289,468)                                                                       |
|                                                                                       |   | **           4,247,728**                                                                             |   |            5,680,752                                                                             |
|   Less treasury stock, at cost - 24,947 shares                                   |   | **              (40,638)**                                                            |   |               (40,638)                                                            |
|   Total stockholders' equity                                                     |   | **           4,207,090**                                                                             |   |            5,640,114                                                                             |
|                                                                                       |   |                                                                                                                                                   |   |                                                                                                                                               |
| Total liabilities and stockholders' equity                                            |   | ** $        5,903,032**                                                                                        |   |  $        7,075,843                                                                                        |
|                                                                                       |   |                                                                                                                                                   |   |                                                                                                                                               |

*See accompanying notes.*

----

MFC Development Corp. and Subsidiaries

### Consolidated Statementsof Operations

|                                                                                       |   | **February 29,**                                                                                                                                       |   | **February 28,**                                                                                                                                   |
|---------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                       |   | **2004**                                                                                                                                               |   | **2003**                                                                                                                                           |
| **Liabilities and Stockholders' Equity**                                              |   |                                                                                                                                                   |   |                                                                                                                                               |
| Current liabilities:                                                                  |   |                                                                                                                                                   |   |                                                                                                                                               |
|   Accounts payable and accrued expenses                                          |   | ** $           313,102**                                                                        |   |  $           285,400                                                                        |
|   Current portion of notes payable, including amounts payable to related         |   |                                                                                                                                                   |   |                                                                                                                                               |
|    parties of $50,000 at February 29, 2004 and $25,000 at February 28, 2003 |   | **           1,008,173**                                                                             |   |               650,525                                                             |
|   Income taxes payable                                                           |   | **                  3,355**                                       |   |                   3,507                                       |
|   Liabilities of discontinued operations                                         |   | **              120,097**                                                             |   |               224,680                                                             |
| Total current liabilities                                                             |   | **           1,444,727**                                                                             |   |            1,164,112                                                                             |
|                                                                                       |   |                                                                                                                                                   |   |                                                                                                                                               |
| Other liabilities:                                                                    |   |                                                                                                                                                   |   |                                                                                                                                               |
|   Notes payable                                                                  |   | **                97,452**                                                  |   |               243,117                                                             |
|   Due to co-investors                                                            |   | **              147,763**                                                             |   |                          - |
|   Other                                                                          |   | **                  6,000**                                       |   |                 28,500                                                  |
| Total other liabilities                                                               |   | **              251,215**                                                             |   |               271,617                                                             |
|                                                                                       |   |                                                                                                                                                   |   |                                                                                                                                               |
| Commitments and contingencies                                                         |   |                                                                                                                                                   |   |                                                                                                                                               |
|                                                                                       |   |                                                                                                                                                   |   |                                                                                                                                               |
| Stockholders' equity:                                                                 |   |                                                                                                                                                   |   |                                                                                                                                               |
|   Preferred stock - $.001 par value;                                             |   |                                                                                                                                                   |   |                                                                                                                                               |
|     Authorized - 2,000,000 shares;                                     |   |                                                                                                                                                   |   |                                                                                                                                               |
|     Issued and outstanding - 0 shares                                  |   | **                         -** |   |                          - |
|   Common stock - $.001 par value;                                                |   |                                                                                                                                                   |   |                                                                                                                                               |
|     Authorized - 40,000,000 shares;                                    |   |                                                                                                                                                   |   |                                                                                                                                               |
|     Issued and outstanding -  1,800,000 shares                    |   | **                  1,800**                                       |   |                   1,800                                       |
|   Capital in excess of par value                                                 |   | **           5,968,420**                                                                             |   |            5,968,420                                                                             |
|   Accumulated deficit                                                            |   | **         (1,722,492)**                                                                                       |   |             (289,468)                                                                       |
|                                                                                       |   | **           4,247,728**                                                                             |   |            5,680,752                                                                             |
|   Less treasury stock, at cost - 24,947 shares                                   |   | **              (40,638)**                                                            |   |               (40,638)                                                            |
|   Total stockholders' equity                                                     |   | **           4,207,090**                                                                             |   |            5,640,114                                                                             |
|                                                                                       |   |                                                                                                                                                   |   |                                                                                                                                               |
| Total liabilities and stockholders' equity                                            |   | ** $        5,903,032**                                                                                        |   |  $        7,075,843                                                                                        |
|                                                                                       |   |                                                                                                                                                   |   |                                                                                                                                               |

*See accompanying notes.*

----

MFC Development Corp. and Subsidiaries

### Consolidated Statementof Stockholders' Equity

|                                |                                                                                                   |                                                                     |        |                                                                                                               |            |                                                                                                                           |               |                                                                     |                                                                                       |   | **Total**                                                                                                          |   | **Compre-**                                               |
|--------------------------------|--------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|-------------|--------------------------------------------------------------------------------------------------------------------|-----------------|--------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|
|                                |                                                                                                   |                                                                     |        | **Additional**                                                                                                     |            |                                                                                                                           |               |                                                                     |                                                                                       |   | **Stock-**                                                                                                         |   | **hensive**                                               |
|                                | **Common Stock**                                                                                       |                                                                     | **Paid-In** |                                                                                                               | **Accumulated** |                                                                                                                           | **Treasury Stock** |                                                                     | **holders'**                                                                               |   | Income                                                                                                             |
|                                | **Shares**                                                                                             | **Amount**                                                               |        | **Capital**                                                                                                        |            | **Deficit**                                                                                                                    |               | **Shares**                                                               | **Amount**                                                                                 |   | **Equity**                                                                                                         |   | **(Loss)**                                                |
|                                |                                                                                                   |                                                                     |        |                                                                                                               |            |                                                                                                                           |               |                                                                     |                                                                                       |   |                                                                                                               |   |                                                      |
| Balance, February 28, 2001     |   1,800,000                                                                                       |  $ 1,800                                                            |        |  $ 5,968,420                                                                                                  |            |  $ (2,062,938)                                                                                                            |               |             -     |  $            -                |   |  $ 3,907,282                                                                                                  |   |                                                      |
| Purchase of treasury stock     |                  -     |             -     |        |                    -     |            |                      -     |               |   10,000                                                            |     (13,299)                                                                |   |        (13,299)                                                                      |   |                                                      |
| Net income                     | **                 -** | **            -** |        | **                   -** |            |          808,385                                                                       |               |             -     |                -     |   |        808,385                                                                       |   |  $        808,385 |
| Comprehensive income           | **                 -** | **            -** |        | **                   -** |            |                      -     |               |             -     |                -     |   |                    -     |   |  $        808,385 |
| Balance, February 28, 2002     |   1,800,000                                                                                       |     1,800                                                 |        |     5,968,420                                                                                       |            |     (1,254,553)                                                                                                 |               |   10,000                                                            |     (13,299)                                                                |   |     4,702,368                                                                                       |   |                                                      |
| Purchase of treasury stock     |                  -     |             -     |        |                    -     |            |                      -     |               |   14,947                                                            |     (27,339)                                                                |   |        (27,339)                                                                      |   |                                                      |
| Net income                     |                  -     |             -     |        |                    -     |            |          965,085                                                                       |               |             -     |                -     |   |        965,085                                                                       |   |  $        965,085 |
| Comprehensive income           |                  -     |             -     |        |                    -     |            |                      -     |               |             -     |                -     |   |                    -     |   |  $        965,085 |
| **Balance, February 28, 2003** | **  1,800,000**                                                                                   | **    1,800**                                             |        | **    5,968,420**                                                                                   |            | **       (289,468)**                                                                             |               | **  24,947**                                                        | **    (40,638)**                                                            |   | **    5,640,114**                                                                                   |   |                                                      |
| **Net loss**                   | **                 -** | **            -** |        | **                   -** |            | **    (1,433,024)**                                                                                             |               | **            -** | **               -** |   | **  (1,433,024)**                                                                                             |   | ** $   (1,433,024)**                       |
| **Comprehensive loss**         | **                 -** | **            -** |        | **                   -** |            | **                     -** |               | **            -** | **               -** |   | **                   -** |   | ** $   (1,433,024)**                       |
| **Balance, February 29, 2004** | **  1,800,000**                                                                                   | ** $ 1,800**                                                        |        | ** $ 5,968,420**                                                                                              |            | ** $ (1,722,492)**                                                                                                        |               | **  24,947**                                                        | ** $ (40,638)**                                                                       |   | ** $ 4,207,090**                                                                                              |   |                                                      |
|                                |                                                                                                   |                                                                     |        |                                                                                                               |            |                                                                                                                           |               |                                                                     |                                                                                       |   |                                                                                                               |   |                                                      |

*See accompanying notes.*

----

MFC Development Corp. and Subsidiaries

### Consolidated Statementsof Cash Flows

|                                                                      | **Year Ended**                                                                                                                       |   | **Year Ended**                                                                                                                   |   | **Year Ended**                                                                                                                   |
|----------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|
|                                                                      | **February 28,**                                                                                                                     |   | **February 28,**                                                                                                                 |   | **February 28,**                                                                                                                 |
|                                                                      | **2003**                                                                                                                             |   | **2003**                                                                                                                         |   | **2002**                                                                                                                         |
| **Cash flows from operating activities**                             |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| Net (loss) income                                                    | ** $   (1,433,024)**                                                                                                  |   |  $        965,085                                                                        |   |  $        808,385                                                                        |
| Adjustments to reconcile net income (loss) to net cash               |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| (used in) provided by operating activities:                          |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| Depreciation and amortization                                        | **           121,440**                                                             |   |              88,840                                                  |   |              56,730                                                  |
| Gain on sale of real estate held for development or sale             | **           (17,741)**                                                            |   |                       - |   |            (16,376)                                                            |
| Gain on sale of real estate sold in prior year                       | **                      -** |   |          (850,000)                                                                       |   |          (815,288)                                                                       |
| Gain on adjustments of amounts due to co-investors                   | **         (274,647)**                                                                       |   |                       - |   |                       - |
| Provision for bad debts                                              | **           191,147**                                                             |   |              14,722                                                  |   |              19,190                                                  |
| Deferred tax benefit                                                 | **                      -** |   |            (90,000)                                                            |   |                       - |
| Changes in operating assets and liabilities:                         |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| Collections from sale of real estate held for development or sale    | **           200,000**                                                             |   |                       - |   |              50,000                                                  |
| Additions to real estate held for development or sale                | **           (70,375)**                                                            |   |          (132,031)                                                                       |   |            (75,184)                                                            |
| Prepaid expenses, miscellaneous receivables and other assets         | **             13,895**                                                  |   |            (43,648)                                                            |   |            331,751                                                             |
| Net assets of discontinued operations                                | **           114,752**                                                             |   |              (6,723)                                                 |   |          (964,350)                                                                       |
| Accounts payable, accrued expenses and taxes                         | **             27,550**                                                  |   |            109,572                                                             |   |          (188,614)                                                                       |
| Other liabilities                                                    | **           (22,500)**                                                            |   |            (16,500)                                                            |   |              23,993                                                  |
| Net cash (used in) provided by operating activities                  | **      (1,149,503)**                                                                                       |   |              39,317                                                  |   |          (769,763)                                                                       |
|                                                                      |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| **Cash flows from investing activities**                             |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| Capital expenditures and intangible assets                           | **         (108,277)**                                                                       |   |          (143,442)                                                                       |   |          (106,534)                                                                       |
| Finance receivables                                                  | **           896,145**                                                             |   |          (846,794)                                                                       |   |            198,030                                                             |
| Principal payments on notes receivable, related party                | **                      -** |   |              29,060                                                  |   |         1,342,518                                                                             |
| Net cash provided by (used in) provided by investing activities      | **           787,868**                                                             |   |          (961,176)                                                                       |   |         1,434,014                                                                             |
|                                                                      |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| **Cash flows from financing activities**                             |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| Proceeds of notes payable, including amounts from related parties of |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
|   $25,000 in 2004, $50,000 in 2003 and $150,000 in 2002         | **           400,000**                                                             |   |            699,168                                                             |   |            150,000                                                             |
| Principal payments on notes payable including $270,000 to a related  |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
|   party in 2003 and $538,000 in 2002                            | **         (267,981)**                                                                       |   |          (300,481)                                                                       |   |          (161,098)                                                                       |
| Purchase of treasury stock                                           | **                      -** |   |            (27,339)                                                            |   |            (13,299)                                                            |
| Net cash provided by (used in) financing activities                  | **           132,019**                                                             |   |            371,348                                                             |   |            (24,397)                                                            |
|                                                                      |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| Net increase (decrease) increase in cash and cash equivalents        | **         (229,616)**                                                                       |   |          (550,511)                                                                       |   |            639,854                                                             |
| Cash and cash equivalents, beginning of year                         | **           242,608**                                                             |   |            793,119                                                             |   |            153,265                                                             |
|                                                                      |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| Cash and cash equivalents, end of year                               | ** $          12,992**                                                             |   |  $        242,608                                                                        |   |  $        793,119                                                                        |
|                                                                      |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| **Additional cash flow information**                                 |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| Interest paid                                                        | ** $          90,592**                                                             |   |  $          35,179                                                             |   |  $          54,478                                                             |
| Income taxes paid                                                    | ** $            6,611**                                                  |   |  $          13,058                                                             |   |  $          18,097                                                             |
|                                                                      |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| **Non-cash investing and financing activities**                      |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |
| Assets acquired under capital leases                                 | ** $            7,464**                                                  |   |  $          19,486                                                             |   |  $          59,012                                                             |
| Disbursement of construction loan                                    | ** $          72,500**                                                             |   |  $        145,000                                                                        |   |  $                   -            |
|                                                                      |                                                                                                                                 |   |                                                                                                                             |   |                                                                                                                             |

*See accompanying notes.*

----

MFC Development Corp. and Subsidiaries

### Notes to ConsolidatedFinancial Statements

#### 1. Organizationof the Company

The consolidated financial statements consist of MFC Development Corp. (the "Company"or "MFC") and its wholly-owned subsidiaries. MFC was a wholly-owned subsidiary of FRMO Corp., formerlyFRM Nexus, Inc. ("FRM or Nexus"). All of FRM's assets and liabilities were transferred to MFC on August31, 2000, except for $10,000. Because such entities are under common control, this transaction has beenaccounted for in a manner similar to a pooling of interests on MFC's books.

The Company was incorporated on May 18, 1990 under the laws of the State of Delawareas PSI Food Services, Inc. On August 9, 2000, the Company changed its name to MFC Development Corp.and increased authorized capital stock from 2,000,000 shares common stock, par value $.10 per shareto 2,000,000 shares preferred stock, par value $.001 per share and 40,000,000 shares common stock, parvalue $.001 per share. The Board of Directors is authorized to provide at anytime for the issuance ofMFC preferred stock with the rights, preferences and limitations as established by the Board. Stockholders'equity for prior periods was restated to reflect this change.

#### 2. Basis of Presentation

##### BusinessActivities of the Company

The Company operates in two distinct industries consisting of real estate and medicalfinancing.

The real estate business is conducted by the Company through various subsidiaries.It owns real estate in New York, which is currently held for development or sale, and holds a mortgageon a real estate parcel in Connecticut.

The medical financing business is conducted through Medical Financial Corp.,a wholly owned subsidiary, which (i) purchases insurance claims receivables from medical practices and providescertain services to those practices; and (ii) three other subsidiaries were formed to provide additionalmanagement services to certain medical practices. On February 4, 2004, theCompany decided to restructure the medical financing segment. The plan ofrestructuring calls for (i) the purchase of insurance claims receivables frommedical practices to be discontinued, (ii) the sale of the assets ofthe three subsidiaries that were formed to provide additional managementservices to certain medical practices, and (iii) focus the operations of themedical segment on collections and other services. As a result of this decision,management services has been reclassified as discontinued operations and priorperiods have been restated.

In addition to the two operating divisions of the Company, a new division, Capco,was formed during 2000. Capco, which had never conducted the business for which it was formed,was also discontinued on February 4, 2004. 

##### Principlesof Consolidation

The consolidated financial statements include the accounts of the Company and allof its subsidiaries (hereinafter also referred to as the "Company"). All significant intercompany accountsand transactions have been eliminated in consolidation.

#### 3. Significant AccountingPolicies

##### RevenueRecognition

*Real Estate*

The full accrual method is used on the sale of real estateif the profit is determinable, the Company is not obligated to perform significant activities afterthe sale to earn the profit and there is no continuing involvement with the property. If the buyer'sinitial and continuing investments are inadequate to demonstrate a commitment to pay for the property,the installment method is used, resulting in the deferral of income. If there is continuing involvementwith the property by the Company, the financing method is used.

*Purchase and Collection of Medical Insurance Claims Receivables*

Medical Financial Corp., a wholly owned subsidiary of theCompany purchases insurance claims receivable from medical practices andprovides collection services to those practices. The Company charges a fee(purchase discount) upon the purchase of those receivables, which compensatesthe Company for the advance payment that is paid to the client and for thecollection services rendered to collect the receivables. The Company alsocharges additional fees for other services, such as a percentage of collectionswhen the receivables need to be litigated when the insurance companiesimproperly delay payment or deny claims. The insurance companies also payinterest on late payments, and reimbursements for litigation filing fees andattorney's fees on cases that they lost. The Company also charges its clientsinterest if the advance payment and purchase discount ("Funding Balance") on purchased receivableshave not been fully collected after the contractual collection period,usually 180 days.

*Purchase Discount.* The purchase discount is deferredand recognized over the contractual collection period in proportion to the costsof collection. The deferred income is netted against finance receivables (seenote 5). The Company is not entitled to interest on unpaid Funding Balanceswithin the contractual collection period. Through June 1, 2001, income wasrecognized on a pro-rata basis as the related net collectible value of thereceivables were collected. The Company incurs most of its expenses at thebeginning of the contractual collection period, while collections varythroughout the period. Effective June 1, 2001, the Company determined thatincome would be more accurately reflected if the related costs of collectionwere used as a basis for determining the timing of revenue recognition over thecontractual period since the Company is entitled to this fee whether or not thereceivables are collected. The total amount of revenue during the contractualperiod remains the same under both methods. As a result of the modification asto the timing of revenue recognition, an additional $120,000 was included inrevenue during the year ended February 28, 2002.

*Other Collection Fees.* The Company charges some of itsclients an additional collection fee on the proceeds from collections on casesthat required a legal action to receive payment. No revenue is recorded onunresolved cases, which represent a gain contingency. Revenue is recorded whenthe proceeds from collections are received by the Company.

*Interest Income.* Interest is charged to clients at apredetermined rate on Funding Balances that have not been fully collected afterthe contractual collection period. Interest income is recorded monthly based onthe unpaid Funding Balance from the prior month. Interest income from insurancecompanies is only recorded when cases are won by the Company. No revenue isrecorded on unresolved cases, which represent a gain contingency. Interestincome from insurance companies is recorded when the amount is determinable,which is the earlier of notification that a case was lost by the insurancecompanies or when the interest payment is paid if there is no advancenotification.

*Reimbursed Expenses.* The Company is reimbursed byinsurance companies for statutory legal fees and the cost of filing on caseswhen the insurance companies have lost legal actions. The Company is reimbursedby its clients for the costs of postage and lock box charges that are incurredon the clients' behalf. Income from reimbursed expenses from insurance companiesis recorded when the amount is determinable. Income from reimbursed expensesfrom clients is recorded when the amounts are known and if management estimatesthat the amounts are collectible.

##### Receivables

###### Mortgages andNotes Receivable

Mortgages and notes receivable result from the sale of real estate. These receivablesbear interest and are recorded at face value, less unamortized discount.

*Impairment Assessment* The Company evaluates the credit positions on itsnotes receivable and the value of the related collateral on an ongoing basis. The Company estimatesthat all of its notes receivable are fully collectible and the collateral is in excess of the relatedreceivables. The Company continually evaluates its notes receivable that are past due as to the collectibilityof principal and interest. The Company considers the financial condition of the debtor, the outlookof the debtor's industry, decrease in the ratio of collateral values to loans and any prior write downson loans. The above considerations are all used in determining whether the Company should suspend recordinginterest income on any notes receivable or provide for any loss reserves.

###### FinanceReceivables

The Company purchases the net collectible value of medical insurance claims on alimited recourse basis. Net collectible value is the amount that the insurance companies will pay basedon established fee schedules used by insurance companies. The net collectible value is often less thanthe face value of the claim due to the difference in billing rates between the established fee schedulesand what the medical practice ordinarily would bill for a particular procedure. The Company is onlyresponsible to collect the fee scheduled amount. If any amounts are collected in excess of the purchasedamount and the Company's fee, that amount will be applied to the client's loan balance. Finance receivablesare reported at their outstanding unpaid principal balances, reduced by any charge-off or valuationallowance and net of unearned revenues. The recourse basis is limited to the extent any receivablespurchased by the Company are disputed. Such receivables are deemed to be invalid and are substitutedor repaid at the end of the contractual period. The Company is still entitled to the collection of itsfees from customers regardless of whether or not the underlying accounts receivable are collectible.Performance of these receivables are personally guaranteed by the owner of the practice and/or the principalsof the related management companies.

The Company purchases the receivables and has the right to return the "invalid receivables."By contractual definition, these are receivables that have not been recovered from insurance companiesbecause of denials, requests for additional information not readily available, or a matter under investigationwithin 180 days of the purchase date. 

In addition to the right to return the invalid receivables to the Seller, the Companyhas the right to offset any of its obligations to the Seller by any invalid receivables. As a resultof the right of return and right of offset features, the Company believes that a valuation allowancegenerally is not required for these receivables.

*Impairment Assessment.* Management's periodic evaluation of the adequacyof the allowance for loan losses is based on the Company's past loan loss experience, known and inherentrisks in the portfolio, adverse situations that may affect the customer's ability to repay, the estimatedvalue of any underlying collateral and current economic conditions.

##### Depreciationand Amortization

Depreciation of property and equipment is provided by application of the straight-linemethod over estimated useful lives as follows:

| Furniture and fixtures                         | 7 years   |
|------------------------------------------------|-----------|
| Computer, medical and transportation equipment | 3-5 years |

Amortization of leasehold improvements is provided by the application of the straight-linemethod over the shorter of their estimated useful lives or the terms of the related leases and rangefrom three to six years.

##### Real EstateHeld for Development or Sale

Properties are carried at the lower of acquisition cost or market, less the coststo sell. The methods for valuing property and mortgages where current appraisals are unobtainable arebased on management's best judgments regarding the economy and market trends. As a result, estimatesmay change based on ongoing evaluation of future economic and market trends. Such judgments are basedon management's knowledge of real estate markets in general and of sale or rental prices of comparableproperties in particular.

##### Leases

Leases which transfer substantially all of the risk and benefits of ownership areclassified as capital leases, and assets and liabilities are recorded at amounts equal to the lesserof the present value of the minimum lease payments or the fair value of the leased properties at thebeginning of the respective lease terms. Such assets are amortized in the same manner as owned assetsare depreciated. Interest expenses relating to the lease liabilities are recorded to effect constantrates of interest over the terms of the leases. Leases which do not meet such criteria are classifiedas operating leases and the related rentals are charged to expense as incurred.

##### IncomeTaxes

Deferred income taxes are recognized for all temporary differences between the taxand financial reporting bases of the Company's assets and liabilities based on enacted tax laws andstatutory tax rates applicable to the periods in which the differences are expected to affect taxableincome.

##### Earningsper Share

Earnings per common share for each of the three years ended February 29, 2004, iscalculated by dividing net income by weighted average common shares outstanding during the period. Theeffect of outstanding stock options on earnings per share does not have a material effect in calculationof earnings per share during any of the periods presented.

##### Cash andCash Equivalents

For purposes of the consolidated statements of cash flows, the Company considersall highly liquid, short-term investments with an original maturity of three months or less to be cashequivalents.

##### Concentrationof Risk

Financial instruments which potentially subject the Companyto concentrations of credit risk consist principally of cash, money marketmutual funds, commercial paper and trade and notes receivable.

Finance receivables arise from the purchase from medical providers in the New YorkCity area of their insurance claims from various insurance companies. February29, 2004, fees earned from three medical providers were 23%, 20% and 18% ofearned fees. For the year ended February 28,2003, fees earned from five medical providers were 20%, 18%, 12%, 11% and 10% of earned fees. For theyear ended February 28, 2002, fees earned from four medical providers were 18%, 16%, 14% and 12% ofearned fees. As of February 29, 2004, claims receivable fromone insurance company comprised 23%of total finance receivables. As of February 28, 2003, claimsreceivable from two insurance companies comprised 13% and 15% of total financereceivables.

All note receivables are from the sale of real estate in New York and Connecticut(see Note 4).

##### AdvertisingCosts

The Company expenses the cost of advertising as incurred. For the years endedFebruary 29, 2004, February28, 2003 and 2002, advertising expense totaled approximately $1,000, $4,000, and $1,000.

##### Fair Valueof Financial Instruments

The following disclosure of the estimated fair value of financial instruments ismade in accordance with the requirements of Statement of Financial Accounting Standards No. 107, "Disclosuresabout Fair Value of Financial Instruments". The estimated fair values of financial instruments havebeen determined by the Company using available market information and appropriate valuation methodologies.Considerable judgment is required in interpreting market data to develop the estimates of fair value.Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Companycould realize in a sale.

The carrying amounts and estimated fair values of financial instruments approximatedtheir carrying values for all periods presented.

##### Use ofEstimates

The preparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those estimates.

##### Stock Based Compensation

##### As allowed by SFAS 123, "Accounting for Stock-Based Compensation," the Company haselected to continue to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issuedto Employees" (APB 25), in accounting for its stock option grants to board members. Under APB 25, theCompany does not recognize compensation expense upon the issuance of its stock options because the optionterms are fixed and the exercise price equals the market price of the underlying stock on the grantdate. The Company has determined that utilizing the fair value method of SFAS 123 would have an immaterialeffect on its results of operations for all periods presented.

##### Effectsof New Accounting Pronouncements

Effective January 1, 2003, the Company adopted SFAS No. 146,"Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146addresses financial accounting and reporting for costs associated with exit ordisposal activities and nullifies Emerging Issues Task Force ("EITF") IssueNo. 94-3, "Liability Recognition for Certain Employee Termination Benefits andOther Costs to Exit an Activity (including Certain Costs Incurred in aRestructuring)". SFAS No. 146 requires that a liability for a cost associatedwith an exit or disposal plan be recognized when the liability is incurred.Under SFAS No. 146, an exit or disposal plan exists when the following criteriaare met:  

> 
Management, having the authority to approve the action,	commits to a plan of termination. 

The plan identifies the number of employees to be	terminated, their job classifications or functions and their locations, and	the expected completion date. 

The plan establishes the terms of the benefit	arrangement, including the benefits that employees will receive upon	termination (including but not limited to cash payments), in sufficient	detail to enable employees to determine the type and amount of benefits they	will receive if they are involuntarily terminated. 

Actions required to complete the plan indicate that it is	unlikely that significant changes to the plan will be made or that the plan	will be withdrawn. 

SFAS No. 146 establishes that fair value is the objective forinitial measurement of the liability. In cases where employees are required torender service beyond a minimum retention period until they are terminated inorder to receive termination benefits, a liability for termination benefits isrecognized ratably over the future service period. Under EITF Issue No. 94-3, aliability for the entire amount of the exit cost was recognized at the date thatthe entity met the four criteria described above. 

Effective March 1, 2003, the Company adopted the recognitionand measurement provisions of Financial Accounting Standards Board ("FASB")Interpretation No. 45 ("Interpretation 45"), "Guarantor's Accounting andDisclosure Requirements for Guarantees, Including Indirect Guarantees ofIndebtedness of Others". This interpretation elaborates on the disclosures to bemade by a guarantor in interim and annual financial statements about theobligations under certain guarantees. Interpretation 45 also clarifies that aguarantor is required to recognize, at the inception of a guarantee, a liabilityfor the fair value of the obligation undertaken in issuing the guarantee. Theinitial recognition and initial measurement provisions of this interpretationare applicable on a prospective basis to guarantees issued or modified afterDecember 31, 2002. The Company does not currently provide significant guaranteeson a routine basis. As a result, this interpretation has not had a materialimpact on our financial statements. 

In December 2003, the FASB issued FASB InterpretationNo. 46 (revised December 2003) ("Interpretation 46"), "Consolidation of VariableInterest Entities". Application of this interpretation is required in theCompany's financial statements for the year ended February 29, 2004. Interpretation 46 addresses the consolidation ofbusiness enterprises to which the usual condition (ownership of a majorityvoting interest) of consolidation does not apply. This interpretation focuses oncontrolling financial interests that may be achieved through arrangements thatdo not involve voting interests. It concludes that in the absence of clearcontrol through voting interests, a company's exposure (variable interest) tothe economic risks and potential rewards from the variable interest entity'sassets and activities are the best evidence of control. If an enterprise holds amajority of the variable interests of an entity, it would be considered theprimary beneficiary. The primary beneficiary is required to include assets,liabilities and the results of operations of the variable interest entity in itsfinancial statements. The Company determined that it does not have anyarrangements or relationships with special-purpose entities. 

#### 4. Real Estate Activities

##### Mortgageand Note Receivable - Related Party

Mortgage and note receivable, arising from the sale of real estate, consists of thefollowing:

|                                                        |  February 29,                                                         |   |  February 28,                                                     |
|--------------------------------------------------------|---------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|
|                                                        |  2004                                                                 |   |  2003                                                             |
|                                                        |                                                                            |   |                                                                        |
|  Granby, Connecticut (Real Estate Operator)  | ** $           946,732** |   |  $           946,732 |

This mortgage calls for monthly payments of interest only at the rate of 7% per annumthrough March 1, 2006. Beginning on April 1, 2006, payments will include principal and interest at therate of 9% per annum. The mortgage is collateralized by the underlying real estate and matures as follows:

|  Year ending February 28,  |                                                                                                                                               |
|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|  2005                      |  $                      -            |
|  2006                      |                          - |
|  2007                      |                 31,549                                                  |
|  2008                      |                 37,508                                                  |
|  2009                      |                 41,026                                                  |
|  Thereafter                |               836,649                                                             |
|                                      |  $           946,732                                                                        |

As of February 29, 2004 and February 28, 2003, this mortgage receivable was performing.

The Granby note receivable is being used as collateral for certain debt. Co-investorswill share in the positive cash flow from the collections of this note, after deducting costs and expensesof carrying and developing the Granby property.

The owner of the property is a limited liability company, 24%owned by Lester Tanner's daughter. Lester Tanner is a shareholder, director andpresident of the Company. Interest income from this note for the years endedFebruary 29, 2004, February 28, 2003 and 2002 was $66,000, $84,000 and $89,000.

##### Real EstateHeld for Development or Sale

The following properties are included in real estate held for development and sale:

The Hunter property is located at the base of Hunter Mountain in Greene County, NewYork. This property includes approximately 65 acres of undeveloped land, a hotel site, a clubhouse witha recreational facility, the remaining two unsold units of three townhouses thatwere converted from an office building during fiscal 2004 and 2003,and a sewage treatment plant that serves the development. This property was acquired through foreclosureand was written down to its fair market value. The net proceeds of any sales of this property will beallocated 65% to the Company and 35% to co-investors, after deducting the cost of carrying all of theHunter properties. This property is being used as collateral for a construction loan and a line of credit.

In October 2002, the Company commenced construction at its Hunter, New York propertyof the renovation of a vacant office building into three townhouse units. A construction loan in theamount of $290,000 was obtained, which is secured by the Hunter property. Oneof the completed units was sold in February 2004 for $200,000, of which $170,000of the proceeds was used to reduce the construction loan. The balance of theconstruction loan at February 29, 2004 was $112,000. The Company is capitalizinginterest and loan acquisition costs during the construction period. For the years endedFebruary 29, 2004 and February 28,2003, $16,000 and $9,000 of interest and loan acquisition costs were capitalized. 

Waste Water Treatment Plant

Highlands Pollution Control Corp. (HPCC), a subsidiary of the Company, owns a wastewater treatmentfacility at the Hunter property, which is located in the New York City ("NYC") watershed area. NYC hasmodified the environmental regulations for the watershed area to ensure clean drinking water is availableto its residents. NYC entered into an agreement with HPCC to bring the facility in compliance with thenew regulations. Under the terms of the agreement, NYC has agreed to reimburse HPCC for all costs incurredwith the upgrade of the facility and a portion of the additional costs incurredto operate the upgraded facility. During the years ended February 29, 2004, February 28, 2003and 2002, HPCC hasincurred costs and has been reimbursed by NYC for amounts approximating$394,000, $1,448,000 and $116,000.The costs and reimbursements have been netted in the accompanying balance sheet. 

Due to Co-investors

Amounts payable to co-investors on property that has not yet been soldare included in real estate held for developmentor sale, as reductions to the asset. Amounts payable to co-investors on property that has previously been sold, and is subjectto the final collection of a mortgage note receivable, are recorded as liabilities.

##### Sale ofReal Estate, Granby, Connecticut

The Company had sold an office building in East Granby, Connecticut during fiscal1996 and leased back a portion of the space, which was then subleased to a third party through August31, 2002. The Company remained obligated on its leaseback for a 42 month period from September 1, 2002through February 28, 2006 (the Vacancy Period) for monthly rentals of $31,062. As a result, $850,000of the gain recorded on the sale in 1996, representing the present value of the monthly rental for 42months, was deferred. In fiscal 1998, Northwest Management Corp. ("NWM"), a shareholder of the Companysigned an agreement to indemnify the Company for any payments made during the Vacancy Period in considerationfor keeping any rentals from a new sublease which might be obtained during the Vacancy Period in excessof $31,062 per month. The president of NWM, Lester Tanner, also a shareholder, director and presidentof the Company, has the power to vote NWM shares, which are owned by his two children. From September1, 2002 through January 31, 2003 the Company paid the monthly rentals for the vacant space of $31,062,all of which were reimbursed to the Company by NWM pursuant to its indemnity agreement.

On February 1, 2003, the Company was released from its obligation under the 1996leaseback, when NWM provided a substitute lease for the Vacancy Period at $31,062 per month, which wasaccepted by the owner of the property. The owner of the property is a limited liability company, 24%owned by Lester Tanner's daughter. The Company agreed with the owner to reduce, from 9% per annum to7% per annum, the interest rate on the second mortgage that the Company holds on the property for theperiod from February 1, 2003 through March 1, 2006 and to defer principal payments during the same period.As a result of the termination of its leaseback, the Company recorded a gain of  $850,000 in thefiscal year ending February 28, 2003.

##### Sale ofReal Estate, Goshen, New York

During fiscal years 1997 and 1996, the Company sold real estate in Goshen, New Yorkfor $2,499,350. This transaction and the related note receivable was with Windemere Pines at Goshen,Inc. ("Windemere"), a part of the Windemere Group of construction companies, in which Jed Schutz isan officer, director and shareholder. Mr. Schutz is also a shareholder of MFC and FRM and was a directorof FRM until May 1999.

The consideration received on this sale did not satisfy the initial investment criteriato use the full accrual method of profit recognition. The sale was accounted for using the installmentmethod, resulting in the deferral of income until the initial and continuing investment criteria issufficient (see Note 3). The installment method was used since recovery of the cost of the propertyis reasonably assured if the buyer defaults on the mortgage receivable.

In August 2001, the Company entered into an agreement with Windemere regarding themortgage receivable and debenture on the property located in Goshen, New York (together the "GoshenReceivables"). Under the terms of the agreement, Windemere satisfied the Goshen Receivables by paymentsof $167,500 on August 16, 2001 and $1,507,500 on November 14, 2001, which included principal and accruedinterest, resulting in the realization of $745,000 of deferred income related to the original sale ofthe property.

Interest income from this transaction (principal amount of note receivable was $2,310,000)was $63,075 for the year ended February 28, 2002. The terms of the note calledfor an annual payment of interest of $30,000. The payment for fiscal 2000 was not paid, which resultedin the suspension of accruing interest from December 1, 1999 through May 31, 2001. There was no allowancefor loss because the market value of the collateral, less costs to sell, was greater than the carryingamounts of the related notes receivable and accrued interest receivable.

OtherReal Estate Revenue

Other real estate revenue for the years ended February 29,2004, February 28, 2003 and 2002 are as follows:

|                                                                     |  Year ended                                          |   |  Year ended                                                                                                                  |   |  Year ended                                                                                                                  |
|---------------------------------------------------------------------|----------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------|
|                                                                     |  February 29,                                        |   |  February 28,                                                                                                                |   |  February 28,                                                                                                                |
|                                                                     |  2004                                                |   |  2003                                                                                                                        |   |  2002                                                                                                                        |
|                                                                     |                                                           |   |                                                                                                                                   |   |                                                                                                                                   |
|  Gross sales of real estate held for development or sale  | ** $      200,000**              |   |  $                    -            |   |  $          50,000                                                                   |
|  Net gain on adjustment to co-investors              | **        			249,647** |   |                        - |   |                        - |
|                                                                     |                                                           |   |                                                                                                                                   |   |                                                                                                                                   |
|  Total other real estate revenue                          | ** $     			449,647**            |   |  $                    -            |   |  $          50,000                                                                   |

The net proceeds of any sales of the Hunter, New York property willbe allocated 65% to the Company and 35% to co-investors, after deducting the cost of carrying all of the Hunter properties. Uponpayment in full of the Granby mortgage note, co-investors will share in the positive cash flow from the collections of the note,after deducting costs and expenses of carrying and developing the related property.During fiscal 2004, the Company paid $25,000 in settlement of a dispute with aprior co-investor and the Company reevaluated balances owed to the currentco-investors as a result of the current development at the Hunter property.Accordingly, amounts payable to all co-investors were adjusted, resulting in anet gain of $249,647.

In May 2001, the land for four unbuilt condominium unitsin Hunter, New York was sold to a related party, Eastern Mountain Properties, LLC, which is 45% ownedby Dr. Anne-Renne Testa, who is the wife of Lester Tanner, a director, president and shareholder ofthe Company. The parcel of land was sold for $50,000, which approximated the fair market value of theproperty, based on a bid for the same amount from an unrelated party, which was acceptable to the Company,but was later withdrawn. The Company realized a gain of $16,000 from the sale ofthis property.

#### 5. Finance Receivables, Net

Medical Financial Corp., a wholly owned subsidiary of theCompany purchases insurance claims receivable from medical practices andprovides collection services to those practices. The Company charges a fee(purchase discount) upon the purchase of those receivables, which compensatesthe Company for the advance payment that is paid to the client and for thecollection services rendered to collect the receivables. The Company alsocharges additional fees for other services, such as a percentage of collectionswhen the receivables need to be litigated when the insurance companiesimproperly delay payment or deny claims. The insurance companies also payinterest on late payments, and reimbursements for litigation filing fees andattorney's fees on cases that they lost. The Company also charges its clientsinterest if the advance payment and purchase discount on purchased receivablesare not collected or offset in full after the contractual collection period,usually 180 days.

Net finance receivables consist of the following:

|                                         | **February 29,**                                                                             |   | **February 28,**                                                                         |
|-----------------------------------------|----------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|
|                                         | **2004**                                                                                     |   | **2003**                                                                                 |
|  Gross finance receivables    | ** $          2,783,846**                  |   |  $          4,902,950                  |
|  Allowance for credit losses  | **              (455,432)** |   |               (264,285) |
|  Deferred finance income      | **              (101,290)** |   |               (223,390) |
|                                         | **             2,227,124**       |   |              4,415,275       |
|  Due to finance customers     | **              (774,076)** |   |            (1,874,935)                 |
|  Net finance receivables      | ** $          1,453,048**                  |   |  $          2,540,340                  |

Due to finance customers represents the amount of the unpaid receivables less theadvance payment and fee that the Company charges. The Company is liable for this amount only if (i)it is collected or (ii) if an insurance carrier suffers a financial inability to pay.

The Company may incur a finance receivable bad debt loss whenthe portion of a medical claim collected does not exceed the advance (includingthe fee charged) given to the client. The increase in bad debt expense thatoccurred during the year ended February 29, 2004 is based on an increasein adverse arbitration decisions from the hearings that were decided on duringthe last several months. An increase in the amount of closed arbitration caseshas provided management with a larger base of information to better estimatethe reserve for bad debts. Management's decision to increase the bad debtreserve was based on the overall decrease in the collections rate from thearbitrations that have been closed in the last few months. Management believesthat it will be increasingly more difficult to collect on outstandingreceivables, and has initiated a new program that it believes could increase thecollections rate. Management has also taken other measures to reduce its baddebts, such as eliminating poorly collecting clients and  reducing theupfront advance percentage that it makes when receivables are purchased.Management will monitor the results of these efforts as to the effect oncollection rates, and whether the reserve for bad debts is adequate based onactual collections.

From the date the Company purchases insurance claimsreceivable from medical practices and the advance payment is made to the client,the Company has 180 days to collect or determine that the bills were invalid ascontractually defined. If the Company collects the advance payment and fee, alladditional amounts, if any, that are collected are given to the client. While bycontract, the Company considers these receivables invalid, in reality, forreasons outside of the Company's control, such as the customer being able toprovide additional information to overturn a denial, the receivables will getpaid and are then not uncollectible. The collections from these written-offreceivables are the same collections that may be used as an offset to otherobligations that the Company may have with the client. Recoveries from thesewritten-off receivables are paid to the customer or used as an offset, whennecessary. As of February 29, 2004, there wereapproximately $3,995,000 of receivables thatwere outside of the contractual collection period, written-off, but are stillcollectible and historically, collected in significant amounts and were used tooffset other obligations from the client to the Company. The write-offs andrecoveries are a balance sheet item only, and do not affect the incomestatement. The income statement would only be affected if any part of theadvance payment or fee was not collected in the 180 day period. For thatsituation, a reserve has been established.

Certain of these receivables are collateral for a line of credit.

Detail of income from the purchase and collection of medicalreceivables and medical receivable costs and expenses were as follows:

|                                                             |  Year ended                                                                          |   |  Year ended                                                                                      |   |  Year ended                                                                      |
|-------------------------------------------------------------|------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|
|                                                             |  February 29,                                                                        |   |  February 28,                                                                                    |   |  February 28,                                                                    |
|                                                             |  2004                                                                                |   |  2003                                                                                            |   |  2002                                                                            |
|                                                             |                                                                                           |   |                                                                                                       |   |                                                                                       |
|  Revenues                                         |                                                                                           |   |                                                                                                       |   |                                                                                       |
|  Purchase discounts                               | ** $        674,285**                                  |   |  $     1,304,648                                                                  |   |  $     1,081,055                                                  |
|  Earned (deferred) purchase discounts             |                                                                                           |   |                                                                                                       |   |                                                                                       |
|     from current and prior months       | **           122,100**                       |   |                   841 |   |            233,505                       |
|  Earned purchase discounts                        | **           796,385**                       |   |         1,305,489                                                       |   |         1,314,560                                       |
|  Other collection fees                            | **           111,485**                       |   |              97,057                            |   |              13,604            |
|  Interest income from insurance companies         | **           268,010**                       |   |            245,104                                       |   |            104,610                       |
|  Interest income from clients                     | **             15,105**            |   |              32,408                            |   |              32,262            |
|  Closing fees                                     | **               4,000** |   |                6,500                 |   |                9,350 |
|                                                             |                                                                                           |   |                                                                                                       |   |                                                                                       |
|  Total income from the purchase and               |                                                                                           |   |                                                                                                       |   |                                                                                       |
|     collections of medical receivables  | ** $     1,194,985**                                                  |   |  $     1,686,558                                                                  |   |  $     1,474,386                                                  |
|                                                             |                                                                                           |   |                                                                                                       |   |                                                                                       |
|  Reimbursed expenses                              |                                                                                           |   |                                                                                                       |   |                                                                                       |
|  Reimbursed attorney and filing fees              | ** $        186,469**                                  |   |  $        139,444                                                  |   |  $          48,018                       |
|  Reimbursed expenses - postage                    | **             30,317**            |   |              80,032                            |   |              92,466            |
|  Reimbursed expenses - bank lock box fees         | **             31,211**            |   |              34,774                            |   |                1,917 |
|                                                             |                                                                                           |   |                                                                                                       |   |                                                                                       |
|  Total reimbursed expenses                        | ** $        247,997**                                  |   |  $        254,250                                                  |   |  $        142,401                                  |
|                                                             |                                                                                           |   |                                                                                                       |   |                                                                                       |
|                                                             |                                                                                           |   |                                                                                                       |   |                                                                                       |
|  Costs and expenses                               |                                                                                           |   |                                                                                                       |   |                                                                                       |
|  Employment costs                                 | ** $     1,238,840**                                                  |   |  $     1,246,733                                                                  |   |  $     1,029,234                                                  |
|  Occupancy costs                                  | **             82,233**            |   |              80,115                            |   |              81,976            |
|  Litigation filing fees                           | **           127,418**                       |   |              58,622                            |   |              15,560            |
|  Lock box and other bank fees                     | **             75,377**            |   |              77,446                            |   |                7,853 |
|  Technology support                               | **             28,565**            |   |              15,008                            |   |              21,517            |
|  Accounting and legal                             | **             14,000**            |   |              13,739                            |   |              14,570            |
|  Office supplies and equipment rental             | **             42,199**            |   |              34,479                            |   |              33,774            |
|  Postage                                          | **             40,005**            |   |            108,782                                       |   |              83,168            |
|  Telephone                                        | **             37,557**            |   |              37,743                            |   |              32,836            |
|  Other costs                                      | **             76,543**            |   |              46,902                            |   |              36,966            |
|                                                             |                                                                                           |   |                                                                                                       |   |                                                                                       |
|  Total medical receivable expenses                | ** $     1,762,737**                                                  |   |  $     1,719,569                                                                  |   |  $     1,357,454                                                  |

#### 6. Property andEquipment

Property and equipment consists of the following:

|                                                  |  February 29,                                                                               |   |  February 28,                                                                           |
|------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|
|                                                            |  2004                                                                                       |   |  2003                                                                                   |
|  Leasehold improvements                          | ** $             56,386**            |   |  $             56,386            |
|  Computer equipment & software               | **              614,161**            |   |               438,513            |
|  Equipment under capital leases                  | **                85,962** |   |               145,869            |
|  Other equipment and furniture                   | **                27,655** |   |                 27,655 |
|                                                            | **              784,164**            |   |               668,423            |
|  Less accumulated depreciation and amortization  | **              434,523**            |   |               313,083            |
|  Property and equipment, net                     | ** $           349,641**                       |   |  $           355,340                       |

As of February 29, 2004 and February 28, 2003, accumulated amortization of equipment under capitalleases was $28,489 and $70,845.

For the years ended February 29, 2004, February 28, 2003 and 2002, depreciation expense, whichincludes amortization under capital leases, was $121,440, $88,440 and $56,730.

#### 7. Notes Payable

Notes payable include the following:

|                                       | **February 29,**                                                                                                  |   | **February 28,**                                                                                              |
|---------------------------------------|-------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|
|                                       | **2004**                                                                                                          |   | **2003**                                                                                                      |
|  Series A Bonds             | ** $             750,000**                       |   |  $             575,000                       |
|  Series B Bonds             | **                200,000**            |   |                   25,000 |
|  Bank loans                 | **                126,698**            |   |                 240,472            |
|  Capital lease obligations  | **                  28,927** |   |                   53,170 |
|                                       | **             1,105,625**                            |   |                 893,642            |
|  Less current maturities    | **             1,008,173**                            |   |                 650,525            |
|  Long-term debt             | ** $               97,452**            |   |  $             243,117                       |

*Series A Bonds:*In July 2002, the board of directorsauthorized the Company to issue an aggregate of $750,000 of Series A Bonds("Bonds") in $25,000 increments to finance additional growth of the medicaldivision. There were $750,000 of Bonds outstanding at February 29, 2004. Each Bondmatures eighteen months after the issue date and may be extended for additionalsix month periods by mutual consent of the Company and the individualbondholders. Interest is payable monthly, and is calculated at a rate of primeplus 3% but not less than 9% per annum nor more than 15% per annum. The rate ofinterest will be adjusted at the end of each calendar quarter. The rate ofinterest as of February 29, 2004 was 9%. Monthly interest-only payments are duethrough maturity. The Bonds may only be prepaid on 120 days prior writtennotice. The Company, at the option of the bondholders, may be required to prepayon 60 days prior written notice, up to an aggregate of $50,000 per bondholderper 60 day period. The Company may not issue more than $100,000 of Bonds to eachbondholder. A director, officer and shareholder of the Company is related to sixof the bondholders. Two other directors-shareholders, each hold a $25,000 bond, andthey are both related to two other bondholders.

The Bonds are a joint and several obligation of the Company and its subsidiary, MedicalFinancial Corp. The Bonds are collateralized by insurance claims receivable purchased by Medical FinancialCorp., which are not older than six months, equal to at least 333% of the principal sum outstandingunder the line.

*Series B Bonds:*In February 2003, the board of directors authorized the Company to issue an aggregateof $450,000 of Series B Bonds ("Bonds") in $25,000 increments to finance the development of the real estate in Hunter, New York and elsewhere,except for $25,000, which may be used by the and February ,  Company for the purchase of additional shares of its common stock and $200,000 forworking capital. There were $200,000 of Bonds outstanding at February 29, 2004, one of which was held by NWM Capital, LLC., a relatedparty that is owned by an officer, director and shareholder of the Company. Another director, officer and shareholder of the Companyis related to two of the bondholders. Each Bond matures eighteen months after the issue date and may be extended for additionalsix month periods by mutual consent of the Company and the individual bondholders. Interest is payable monthly, and is calculatedat a rate of prime plus 3% but not less than 9% per annum nor more than 15% per annum. The rate of interest will be adjusted atthe end of each calendar quarter. The rate of interest as of February 29, 2004 was 9%. Monthly interest only payments are due throughmaturity. The Bonds may only be prepaid on 120 days prior written notice. The Company, at the option of the bondholders, may berequired to prepay on 60 days prior written notice, up to an aggregate of $50,000 per bondholder per 60 day period. The Companymay not issue more than $100,000 of Bonds to each bondholder. 

The Bonds are a joint and several obligation of the Company and its subsidiary, Yolo Equities Corp. The Bondsare collateralized by the mortgage note receivable on the property located in Granby, Connecticut.

*Bank Loan - Construction:* In October 2002, the Company obtained a $290,000 construction loan to be usedfor development at its Hunter, New York property. The balance of the loan atFebruary 29, 2004 and February 28, 2003 was $111,953 and $217,500. The terms of the loan call for monthly payments of interestthrough June 1, 2003, at which time it converted into a term loan with monthly paymentsof principal and interest that will amortize the loan in 15 years. Interest is at a rate of prime plus 1.5% but not less than 6.25%per annum nor more than 14% per annum. The rate of interest and monthly payment will be adjusted once every year beginning on May1, 2004. The current rate of interest is 6.25%. This loan is secured by the Hunter property and is guaranteed by Lester Tanner,who is a director, shareholder and President of the Company. There were $2,900 of commitment fees paid in connection with this loan.

*Bank Loan - Equipment:* In September 2002, the Company obtained a $27,000 loansecured by certain existing computer equipment. This loan is for a term of 36 months with monthly paymentsof $916 for principal and interest at the rate of 14% per annum. There were no commitment fees paidin connection with this loan.

*Related Party Credit Line:* In October 2000, a $500,000 line of credit wasobtained from a related party, NWM Capital, LLC., which is owned by an officer, director and shareholderof the Company. By mutual consent of the Company and NWM, the line was terminated on August 31, 2002and the then outstanding balance of $110,000 was paid in full. The line provided for interest on outstandingbalances at a rate of 15% per annum (12% effective April 1, 2002). There were no commitment fees paidin connection with this line of credit.

Interest expense on related party borrowings for the years endedFebruary 29, 2004, February 28, 2003 and2002 was $5,250, $9,950 and $50,305.

*Capital Lease Obligations.* The Company has acquired certain equipment undervarious capital leases expiring in 2007. The leases provide for monthly payments of principal and interestof $3,280 and have been capitalized at imputed interest rates of 14.37% to 19.12%.

Aggregate maturities of the amount of notes payable and capital leases at February29, 2004 are as follows:

|                                          |                                                                                                                                                                 |   | **Capital**                                                                                                                                                          |   |                                                                                                                     |
|------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------|
|                                          | **Notes**                                                                                                                                                            |   | **Lease**                                                                                                                                                            |   |                                                                                                                     |
|  Year ending February 28,      | **Payable**                                                                                                                                                          |   | **Obligations**                                                                                                                                                      |   | **Total**                                                                                                                |
|  2005                          |  $             982,446                                                                              |   |  $               28,008                                                                   |   |  $          1,010,454                                                  |
|  2006                          |                   29,696                                                        |   |                     3,288                                             |   |                   32,984            |
|  2007                          |                   26,005                                                        |   |                        275                             |   |                   26,280            |
|  2008                          |                   27,675                                                        |   |                             - |   |                   27,675            |
|  2009                          |                   10,876                                                        |   |                                                                                                                                                                 |   |                   10,876            |
|                                          |              1,076,698                                                                                   |   |                   31,571                                                        |   |              1,108,269                                       |
|  Amount representing interest  |                             - |   |                     2,644                                             |   |                     2,644 |
|  Total (a)                     |  $          1,076,698                                                                                              |   |  $               28,927                                                                   |   |  $          1,105,625                                                  |

(a) Total capital lease obligations represent presentvalue of minimum lease payments.

#### *8. Treasury Stock*

On November 27, 2002, the Company mailed to its shareholders who own 99 or fewershares of its common stock an offer to purchase the shares at $2.00 per share before January 8, 2003.The total number of shares owned by said small shareholders is less than 5% of the Company's outstandingshares. The total amount of shares repurchased was 9,447, for a total amount of $18,894. The Companypurchased an additional 5,500 shares of common stock for $8,445 in 2003.

#### 9. Minimum OperatingLease Commitments

In April 2000, MFC signed a lease extension for its executive offices under a sevenyear lease expiring on February 28, 2007.

Subject to annual real estate adjustments, the following is a schedule of futureminimum rental payments required under the above operating leases:

|  Year ending February 28,  |                                                                                              |
|--------------------------------------|---------------------------------------------------------------------------------------------------|
|  2005                      |  $             80,400            |
|  2006                      |                 80,400 |
|  2007                      |                 80,400 |
|                                      |  $           241,200                       |

For the years ended February 29, 2004, February 28 2003 and 2002 rent expense totaled approximately $83,000for each year.

##### OtherCommitments and Contingencies

In the normal course of business, the Company becomes a party to various legal claims,actions and complaints. The Company's management does not expect that the results in any of these legalproceedings will have a material adverse effect on the Company's results of operations, financial positionor cash flows.

#### 10. Stock Options

Each non-employee director who owns less than 5% of the Company's stock is annuallygranted a five year option to purchase 1,500 shares of common stock. The exercise price of the optionsis the mean between the high and low asked price at the close of trading on the grant date. As of February29, 2004, three directors had been issued options totaling 15,000 shares, expiring through July 18,2008, at option prices ranging from $1.00 to $2.00 per share.

#### 11. Income Taxes

The provision (benefit) for income taxes from continuingoperations consist of the following:

|                            |  Year ended                                                                                                                                                                            |   |  Year ended                                                                                                                                                             |   |  Year ended                                                                                                                                                                        |
|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                            |  February 29,                                                                                                                                                                          |   |  February 28,                                                                                                                                                           |   |  February 28,                                                                                                                                                                      |
|                            |  2004                                                                                                                                                                                  |   |  2003                                                                                                                                                                   |   |  2002                                                                                                                                                                              |
|  Current:        |                                                                                                                                                                                             |   |                                                                                                                                                                              |   |                                                                                                                                                                                         |
|    Federal  | ** $                             -**            |   |  $                             - |   |  $                             -            |
|    State    | **                         7,042**                                       |   |                        14,124                                       |   |                        13,606                                                  |
|  Total current   | **                         7,042**                                       |   |                        14,124                                       |   |                        13,606                                                  |
|                            |                                                                                                                                                                                             |   |                                                                                                                                                                              |   |                                                                                                                                                                                         |
|  Deferred:       |                                                                                                                                                                                             |   |                                                                                                                                                                              |   |                                                                                                                                                                                         |
|    Federal  | **                                -** |   |                      (77,000)                                                 |   |                                 - |
|    State    | **                                -** |   |                      (13,000)                                                 |   |                                 - |
|  Total deferred  | **                                -** |   |                      (90,000)                                                 |   |                                 - |
|                            |                                                                                                                                                                                             |   |                                                                                                                                                                              |   |                                                                                                                                                                                         |
|  Total           | ** $                      7,042**                                                  |   |  $                  (75,876)                                                            |   |  $                    13,606                                                             |

After the spin-off from FRM on January 23, 2001, MFC and its subsidiariesfiled consolidated Federal tax returns. MFC andits subsidiaries file individual state tax returns. The gain on sale of real estate, resulting fromthe recognition of deferred income from the sale of the Granby, Ct property in fiscal 2003 and the settlementof the Goshen receivables in fiscal 2002 were both included in taxable income of the Company's formerparent in the years that the properties were sold.

The Company has net operating loss ("NOL") carryforwards for Federal purposes ofapproximately $5,328,000. These losses will be available for future years, expiring through February28, 2023. During fiscal 2003, the Company utilized $32,000 of its Federal NOL carryforwards. The Company,however, has taken a 95% valuation allowance against Federal NOL carryforwards due to a prior historyof operating tax losses and the uncertainty of generating enough taxable income throughout the carryforwardperiod to utilize the full amount available.

Significant components of deferred tax assets (liabilities) were as follows:

|                                      |  Year ended                                                                                                                |   |  Year ended                                                                                                            |   |  Year ended                                                                                                                                                             |
|--------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                      |  February 29,                                                                                                              |   |  February 28,                                                                                                          |   |  February 28,                                                                                                                                                           |
|                                      |  2004                                                                                                                      |   |  2003                                                                                                                  |   |  2002                                                                                                                                                                   |
|  Tax loss carryforwards    | ** $               1,811,387**                            |   |  $               1,560,591                            |   |  $               1,218,875                                                                             |
|  Less valuation allowance  | **                (1,721,387)**                           |   |                 (1,470,591)                           |   |                 (1,218,875)                                                                            |
|  Deferred tax assets       | ** $                    90,000** |   |  $                    90,000 |   |  $                             - |

The following is a reconciliation of the statutory federal and effective income tax rates for theyears ended:

|                                                         |  Year ended                                                                                                                                                                            |   |  Year ended                                                                                                                                                                        |   |  Year ended                                                                                                                                                                        |
|---------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                         |  February 29,                                                                                                                                                                          |   |  February 28,                                                                                                                                                                      |   |  February 28,                                                                                                                                                                      |
|                                                         |  2004                                                                                                                                                                                  |   |  2003                                                                                                                                                                              |   |  2002                                                                                                                                                                              |
|                                                         |  % of Pretax Income                                                                                                                                                                    |   |  % of Pretax Income                                                                                                                                                                |   |  % of Pretax Income                                                                                                                                                                |
|  Statutory federal income tax                 |                                                                                                                                                                                             |   |                                                                                                                                                                                         |   |                                                                                                                                                                                         |
|  expense rate                                 | **                         (34.0)**                                      |   |                            34.0                            |   |                            34.0                            |
|  Recognition of previously taxed              |                                                                                                                                                                                             |   |                                                                                                                                                                                         |   |                                                                                                                                                                                         |
|  deferred income                              | **                               - ** |   |                          (32.5)                                      |   |                          (34.0)                                      |
|  Other permanent timing differences           | **                               - ** |   |                              0.2                 |   |                                -  |
|  Utilization of NOL carryforwards - current   | **                               - ** |   |                            (1.7)                           |   |                                -  |
|  Utilization of NOL carryforwards - deferred  | **                               - ** |   |                          (10.1)                                      |   |                                -  |
|  Valuation allowance against                  |                                                                                                                                                                                             |   |                                                                                                                                                                                         |   |                                                                                                                                                                                         |
|  NOL carryforwards                            | **                           34.0**                            |   |                                -  |   |                                -  |
|  State taxes, less federal                    |                                                                                                                                                                                             |   |                                                                                                                                                                                         |   |                                                                                                                                                                                         |
|  tax effect                                   | **                             0.8**                 |   |                              1.6                 |   |                              1.6                 |
|                                                         | **                             0.8**                 |   |                            (8.5)                           |   |                              1.6                 |

#### 12. DiscontinuedOperations

On February 4, 2004, the Company instituted a plan torestructure the medical financing segment. The plan of restructuring calls forthe Company to sell the assets ofthe three subsidiaries that were formed to provide additional managementservices to certain medical practices. Accordingly, the operating results ofmanagement services for each of the three years ended February 29, 2004 has beenpresented as "Income (loss) from discontinued operations, net of income taxes".Net assets to be disposed of or liquidated, at their book value, have beenseparately classified in the the accompanying balance sheets at February 29,2004 and February 28, 2003. The Company recorded an impairment loss of $229,285,for the year ended February 29, 2004 in connection with the write-down of theassets that are to be disposed of. Due to operating losses, there was no incometax benefit from the write-down of assets. In addition, the Capco division, whichwas formed during 2000 and had never conducted the business for which it was formed,was also discontinued on February 4, 2004. The results of operations of theCapco division were immaterial and have been combined with the results ofoperations of the management services.

Summarized financial information for management services asdiscontinued operations for the years ended February 29, 2004, February 28, 2003and 2002 follows:

|                                                                      |  Year ended                                                                                                                                  |   |  Year ended                                                                                                                              |   |  Year ended                                                                                                                              |
|----------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                      | **February 29,**                                                                                                                                       |   | **February 28,**                                                                                                                                   |   | **February 28,**                                                                                                                                   |
|                                                                      | **2004**                                                                                                                                               |   | **2003**                                                                                                                                           |   | **2002**                                                                                                                                           |
|                                                                      |                                                                                                                                                   |   |                                                                                                                                               |   |                                                                                                                                               |
|  Medical management service fees                           | ** $        1,353,749**                                                                                        |   |  $        2,282,677                                                                                        |   |  $        1,432,984                                                                                        |
|                                                                      |                                                                                                                                                   |   |                                                                                                                                               |   |                                                                                                                                               |
|  Medical management services                               | **           1,198,223**                                                                             |   |            1,901,865                                                                             |   |            1,260,555                                                                             |
|  Bad debt                                                  | **              347,422**                                                             |   |                          - |   |                          - |
|  Impairment loss                                           | **              229,285**                                                             |   |                          - |   |                          - |
|  Depreciation and amortization                             | **              113,302**                                                             |   |                 69,470                                                  |   |                 47,531                                                  |
|                                                                      | **           1,888,232**                                                                             |   |            1,971,335                                                                             |   |            1,308,086                                                                             |
|                                                                      |                                                                                                                                                   |   |                                                                                                                                               |   |                                                                                                                                               |
|  Income (loss) from operations                             | **            (534,483)**                                                                       |   |               311,342                                                             |   |               124,898                                                             |
|  Other income (expense)                                    | **                (9,087)**                                                 |   |                 14,786                                                  |   |                   1,453                                       |
|  Income (loss) before income taxes                         | **            (543,570)**                                                                       |   |               326,128                                                             |   |               126,351                                                             |
|  Income taxes                                              | **                         -** |   |                          - |   |                          - |
|                                                                      |                                                                                                                                                   |   |                                                                                                                                               |   |                                                                                                                                               |
|  Income (loss) from discontinued operations, net of taxes  | ** $         (543,570)**                                                                                  |   |  $           326,128                                                                        |   |  $           126,351                                                                        |

The components of assets and liabilities of discontinuedoperations are as follows:

|                                                            | **February 29,**                                                                                                                                       |   | **February 28,**                                                                                             |
|------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------|
|                                                            | **2004**                                                                                                                                               |   | **2003**                                                                                                     |
|  Management fee receivables, net                 | ** $        1,157,124**                                                                                        |   |  $        1,058,188                                                  |
|  Other current assets                            | **                21,878**                                                  |   |                 59,639            |
|  Property and equipment at cost                  | **              451,131**                                                             |   |               447,686                       |
|  Less accumulated depreciation and amortization  | **            (189,399)**                                                                       |   |             (134,726)                                 |
|  Loan receivable                                 | **                83,137**                                                  |   |               237,176                       |
|  Investment in unconsolidated subsidiaries       | **                50,000**                                                  |   |               103,951                       |
|  Other assets                                    | **                51,631**                                                  |   |                 72,923            |
|  Total assets                                    | ** $        1,625,502**                                                                                        |   |  $        1,844,837                                                  |
|                                                            |                                                                                                                                                   |   |                                                                                                         |
|  Accounts payable and accrued expenses           | ** $             88,532**                                                             |   |  $             79,756                       |
|  Current portion of notes payable                | **                31,565**                                                  |   |               108,359                       |
|  Long term debt                                  | **                         -** |   |                 31,565            |
|  Minority interest in subsidiary                 | **                         -** |   |                   5,000 |
|  Total liabilities                               | ** $           120,097**                                                                        |   |  $           224,680                                  |

#### 13. Business SegmentInformation

Operating segments are managed separately and represent separate business units thatoffer different products and serve different markets. The Company's reportable segments include: (1)real estate, (2) medical financing, and (3) other, which is comprised of corporate overhead. The real estate segment operates in New Yorkand Connecticut. The medical financing segment operates in New York.

The accounting policies of the segments are the same as those described in the summaryof significant accounting policies. All inter-segment balances have been eliminated.

Business segment information follows:

|                                                                |  Real                                                                                                                                        |  Medical                                                                                    |                                                                                                                                                   |                                                                                                  |
|----------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|
|                                                                |  Estate                                                                                                                                      |  Financing                                                                                  |  Other                                                                                                                                       |  Total                                                                                      |
| **February 29, 2004**                                          |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|  Total revenue from external customers               | ** $           619,114**                                                                        | ** $        1,442,982**                                       | ** $                      -**            | ** $        2,062,096**                                       |
|  Income (loss) from operations                       | **              230,759**                                                             | **            (628,077)**                      | **            (394,502)**                                                                       | **            (791,820)**                      |
|  Other expense (income), net                         | **                  2,244**                                       | **                88,348** | **                         -** | **                90,592** |
|  Income (loss) from continuing operations            |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|    before (benefit) provision for income taxes  | **              228,515**                                                             | **            (716,425)**                      | **            (394,502)**                                                                       | **            (882,412)**                      |
|                                                                |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|  Assets - continuing                                 | **           2,333,409**                                                                             | **           1,849,315**                            | **                94,806**                                                  | **           4,277,530**                            |
|  Assets - discontinued                               | **                         -** | **           1,625,502**                            | **                         -** | **           1,625,502**                            |
|  Total assets                                        | **           2,333,409**                                                                             | **           3,474,817**                            | **                94,806**                                                  | **           5,903,032**                            |
|                                                                |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|  Capital expenditures                                | **                         -** | **              115,741**            | **                         -** | **              115,741**            |
|  Depreciation and amortization                       | **                  1,780**                                       | **              117,175**            | **                  2,485**                                       | **              121,440**            |
|                                                                |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
| **February 28, 2003**                                          |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|  Total revenue from external customers               |  $        1,036,962                                                                                            |  $        1,940,808                                           |  $                      -                |  $        2,977,770                                           |
|  Income (loss) from operations                       |               830,668                                                                 |               122,412                |             (358,225)                                                                           |               594,855                |
|  Other expense (income), net                         |                    (923)                                     |                 32,697     |                          -     |                 31,774     |
|  Income (loss) from continuing operations            |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|    before (benefit) provision for income taxes  |               831,591                                                                 |                 89,715     |             (358,225)                                                                           |               563,081                |
|                                                                |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|  Assets - continuing                                 |            2,003,751                                                                                 |            3,105,889                                |               121,366                                                                 |            5,231,006                                |
|  Assets - discontinued                               |                          -     |            1,844,837                                |                          -     |            1,844,837                                |
|  Total assets                                        |            2,003,751                                                                                 |            4,950,726                                |               121,366                                                                 |            7,075,843                                |
|                                                                |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|  Capital expenditures                                |                          -     |               160,218                |                   2,709                                           |               162,927                |
|  Depreciation and amortization                       |                   2,014                                           |                 84,105     |                   2,721                                           |                 88,840     |
|                                                                |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
| **February 28, 2002**                                          |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|  Total revenue from external customers               |  $        1,116,723                                                                                            |  $        1,616,787                                           |  $                      -                |  $        2,733,510                                           |
|  Income (loss) from operations                       |               860,092                                                                 |               188,896                |             (301,696)                                                                           |               747,292                |
|  Other expense (income), net                         |                 (2,778)                                                     |                 54,430     |                          -     |                 51,652     |
|  Income (loss) from continuing operations            |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|    before (benefit) provision for income taxes  |               862,870                                                                 |               134,466                |             (301,696)                                                                           |               695,640                |
|                                                                |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|  Assets - continuing                                 |            2,332,367                                                                                 |            2,148,503                                |                 12,868                                                      |            4,493,738                                |
|  Assets - discontinued                               |                          -     |            1,783,751                                |                          -     |            1,783,751                                |
|  Total assets                                        |            2,332,367                                                                                 |            3,932,254                                |                 12,868                                                      |            6,277,489                                |
|                                                                |                                                                                                                                                   |                                                                                                  |                                                                                                                                                   |                                                                                                  |
|  Capital expenditures                                |                   2,833                                           |               159,809                |                   2,905                                           |               165,547                |
|  Depreciation and amortization                       |                   3,057                                           |                 51,247     |                   2,426                                           |                 56,730     |

#### 14.Proposed Transaction

On April  9, 2004, the Company filed a Current Report on Form 8-K	announcing the signing on March 26, 2004 of an Acquisition Agreement with	Creative Marketing Group, Inc, ("CMG") and its shareholders to acquire 100%of CMG's outstanding capital stock in exchange for shares of common stock ofMFC.  After the closing, MFC shall issue approximately 7,900,000 shares(approximately 80%) of common stock to CMG stockholders and holders of CMG debtout of approximately 10,000,000 shares of common stock which will then be issuedand outstanding.  The completion of the acquisition is subject to severalconditions including, but not limited to, the closing of a private offeringraising a minimum of $1,000,000 and a maximum of $2,500,000.  

CMG is a sales and marketingcompany which since the year 2000 has been exclusively working with a nationalbrand name in the coffee industry which has a brand name recognition in excessof 90% among consumers.  In late 2002 CMG obtained exclusive licensingagreements permitting it to use the trademark of such national brand name in theproduction and sale of coffee and coffee filters through retailers, foodservice, hospitality and in-office locations throughout the United States. CMG's relationship with this national brand name creates marketing opportunitiesto enhance the awareness and availability of such national brand name's coffeemakers and the coffee and coffee filters which CMG may produce and sell underits licenses in the United States.

Completion of the transactiondescribed is subject to the satisfaction of a number of conditions and there canbe no assurance that all of the conditions will be met or that the registrantwill successfully complete the acquisition or that CMG will raise adequate fundsin the private placement.

 

 

 

 

----

#### 15. SupplementalFinancial Information

Selected Quarterly Financial Data(Unaudited) 

|                                                        | Quarter                                                                                   |   |                                                                                            |
|--------------------------------------------------------|-------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
|                                                        | First                                                                                     |   | Second                                                                                          |   | Third |   | Fourth |   | Total |
| **Year ended February 29, 2004**                       |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Total revenue                                          |  $      645,343                                             |   |  $       520,840                                             |   |  $       363,152 |   |  $       532,761 |   |  $    2,062,096 |
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Income (loss) from continuing operations               |            29,293                       |   |          (120,702)                                      |   |          (462,187) |   |          (335,858) |   |          (889,454) |
| Income (loss) from discontinued operations             |            48,052                       |   |             45,834                       |   |          (356,704) |   |          (280,752) |   |          (543,570) |
| Net income (loss)                                      |  $        77,345                                  |   |  $        (74,868)                                      |   |  $      (818,891) |   |  $      (616,610) |   |  $   (1,433,024) |
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Earnings (loss) per common share:                      |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Income (loss) from continuing operations               |  $            0.02            |   |  $            (0.07)                |   |  $            (0.26) |   |  $            (0.19) |   |  $            (0.50) |
| Income (loss) from discontinued operations             |                0.03 |   |                 0.03 |   |                (0.20) |   |                (0.16) |   |                (0.31) |
| Basic and diluted income (loss) per common		share      |  $            0.05            |   |  $            (0.04)                |   |  $            (0.46) |   |  $            (0.35) |   |  $            (0.81) |
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Number of shares used in computation                   |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
|   of basic and diluted earnings (loss) per		share |       1,775,053                                                  |   |        1,775,053                                                  |   |        1,775,053 |   |        1,775,053 |   |        1,775,053 |
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| **Year ended February 28, 2003**                       |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Total revenue                                          |  $      459,017                                             |   |  $       563,991                                             |   |  $       553,060 |   |  $    1,401,702 |   |  $    2,977,770 |
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Income (loss) from continuing operations               |          (70,136)                                 |   |            (68,218)                           |   |            (58,940) |   |           836,251 |   |           638,957 |
| Income (loss) from discontinued operations             |          102,003                                  |   |             96,801                       |   |             78,944 |   |             48,380 |   |           326,128 |
| Net income (loss)                                      |  $        31,867                                  |   |  $         28,583                                  |   |  $         20,004 |   |  $       884,631 |   |  $       965,085 |
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Earnings (loss) per common share:                      |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Income (loss) from continuing operations               |  $          (0.04)                      |   |  $            (0.04)                |   |  $            (0.03) |   |  $             0.47 |   |  $             0.36 |
| Income (loss) from discontinued operations             |                0.06 |   |                 0.05 |   |                 0.04 |   |                 0.03 |   |                 0.18 |
| Basic and diluted income (loss) per common		share      |  $            0.02            |   |  $             0.01            |   |  $             0.01 |   |  $             0.50 |   |  $             0.54 |
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Number of shares used in computation                   |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
|   of basic and diluted earnings (loss) per		share |       1,790,000                                                  |   |        1,790,000                                                  |   |        1,789,665 |   |        1,779,590 |   |        1,787,350 |
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| **Year ended February 28, 2002**                       |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Total revenue                                          |  $      453,219                                             |   |  $       538,219                                             |   |  $    1,231,957 |   |  $       510,115 |   |  $    2,733,510 |
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Income (loss) from continuing operations               |          (78,990)                                 |   |             20,002                       |   |           744,716 |   |              (3,694) |   |           682,034 |
| Income (loss) from discontinued operations             |            35,213                       |   |             30,867                       |   |            (16,425) |   |             76,696 |   |           126,351 |
| Net income (loss)                                      |  $      (43,777)                                            |   |  $         50,869                                  |   |  $       728,291 |   |  $         73,002 |   |  $       808,385 |
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Earnings (loss) per common share:                      |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Income (loss) from continuing operations               |  $          (0.04)                      |   |  $             0.01            |   |  $             0.42 |   |  $                 -   |   |  $            		0.38 |
| Income (loss) from discontinued operations             |                0.02 |   |                 0.02 |   |                (0.01) |   |                 0.04 |   |                 0.07 |
| Basic and diluted income (loss) per common		share      |  $          (0.02)                      |   |  $             0.03            |   |  $             0.41 |   |  $             0.04 |   |  $            		0.45 |
|                                                        |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
| Number of shares used in computation                   |                                                                                      |   |                                                                                            |   |   |   |   |   |   |
|   of basic and diluted earnings (loss) per		share |       1,797,863                                                  |   |        1,790,000                                                  |   |        1,790,000 |   |        1,790,000 |   |        1,792,662 |

----

MFC Development Corp. and Subsidiaries

### Financial StatementSchedules

#### Schedule II - Valuation and Qualifying Accounts

Year ended February 29, 2004

 

|  Column A                     |   |  Column B                                     |   |  Column C                                                                                                       |   |  Column D                                                                                                       |   |  Column E                                                                                                       |
|-----------------------------------------|--------|---------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|
|                                         |   |                                                    |   |                                                                                                                      |   |                                                                                                                      |   |                                                                                                                      |   |   |
|                                         |   |                                                    |   |  Additions                                                                                                      |   |  Additions                                                                                                      |   |                                                                                                                      |   |   |
|                                         |   |  Balance at                                   |   |  Charged to                                                                                                     |   |  Charged to                                                                                                     |   |                                                                                                                      |   |  Balance at  |
|                                         |   |  Beginning                                    |   |  Costs and                                                                                                      |   |  Other                                                                                                          |   |                                                                                                                      |   |  End of  |
|  Description                  |   |  of Period                                    |   |  Expenses                                                                                                       |   |  Accounts                                                                                                       |   |  (Deductions)                                                                                                   |   |  Period  |
|                                         |   |                                                    |   |                                                                                                                      |   |                                                                                                                      |   |                                                                                                                      |   |   |
| **February 29, 2004**                   |   |                                                    |   |                                                                                                                      |   |                                                                                                                      |   |                                                                                                                      |   |   |
|  Allowance for credit losses  |   | ** $       264,285** |   | ** $       191,147**                                                                   |   | ** $                   -** |   | ** $                   -** |   | ** $       455,432** |
|  Valuation allowance -        |   |                                                    |   |                                                                                                                      |   |                                                                                                                      |   |                                                                                                                      |   |   |
|  Deferred tax asset           |   | ** $    1,470,591**                 |   | ** $                   -** |   | ** $       250,796**                                                                   |   | ** $                   -** |   | ** $    1,721,387** |
|                                         |   |                                                    |   |                                                                                                                      |   |                                                                                                                      |   |                                                                                                                      |   |   |
| **February 28, 2003**                   |   |                                                    |   |                                                                                                                      |   |                                                                                                                      |   |                                                                                                                      |   |   |
|  Allowance for credit losses  |   |  $       252,535     |   |  $         11,750                                                            |   |  $                   -     |   |  $                   -     |   |  $       264,285 |
|  Valuation allowance -        |   |                                                    |   |                                                                                                                      |   |                                                                                                                      |   |                                                                                                                      |   |   |
|  Deferred tax asset           |   |  $    1,218,875                     |   |  $                   -     |   |  $       341,716                                                                       |   |  $        (90,000)                                                                |   |  $    1,470,591 |
|                                         |   |                                                    |   |                                                                                                                      |   |                                                                                                                      |   |                                                                                                                      |   |   |
| **February 28, 2002**                   |   |                                                    |   |                                                                                                                      |   |                                                                                                                      |   |                                                                                                                      |   |   |
|  Allowance for credit losses  |   |  $       233,345     |   |  $         19,190                                                            |   |  $                   -     |   |  $                   -     |   |  $       252,535 |
|  Valuation allowance -        |   |                                                    |   |                                                                                                                      |   |                                                                                                                      |   |                                                                                                                      |   |   |
|  Deferred tax asset           |   |  $       521,273     |   |  $                   -     |   |  $       697,602                                                                       |   |  $                   -     |   |  $    1,218,875 |

 

*Allowance for Credit Losses:*A periodicevaluation of the allowance for credit losses on finance receivables is based on the Company's pastloss experience, known and inherent risks in the portfolio, adverse situations that may affect the customer'sability to repay, the estimated value of any underlying collateral, the outlook of the debtor's industryand current economic conditions. When the Company estimates that it may be probable that a specificcustomer account may be uncollectible, that balance is included in the allowance calculation.

----

#### Schedule III - Real Estate and Accumulated Depreciation

Year ended February 29, 2004

| **Column A**       |   | **Column B**                                                                |   | **Column C**                                                                |   | **Column D**                                     |   | **Column E**                                           |   | **Column F**               |
|--------------------|--------|-----------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|--------------------------------------------------|--------|--------------------------------------------------------|--------|----------------------------|
|                    |   |                                                                        |   |                                                                        |   |                                             |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
|                    |   |                                                                        |   | **Initial Cost to Company**                                                 |   | **Cost Capitalized Subsequent to 		Acquisition** |   | **Gross Amount at which 		Carried at Close of Period** |   |                       |
|                    |   |                                                                        |   |                                                                        |   |                                             |   |
|                    |   |                                                                        |   |                                                                        |   |                                             |   |
|                    |   |                                                                        |   |                                                                        |   |                                             |   |                                                   |   |                       |   |   |   |   |   |   |   | **Accumu-** |
|                    |   |                                                                        |   |                                                                        |   | **Buildings**                                    |   |                                                   |   |                       |   |   |   | **Buildings** |   |   |   | **lated** |
|                    |   | **Encum-**                                                                  |   |                                                                        |   | **& Improve-**                               |   | **Improve-**                                           |   | **Carrying**               |   |   |   | **& Improve-** |   |   |   | **Depre-** |
| **Description**    |   | **brances**                                                                 |   | **Land**                                                                    |   | **ments**                                        |   | **ments**                                              |   | **Cost**                   |   | **Land** |   | **ments** |   | **Total** |   | **ciation** |
|                    |   |                                                                        |   |                                                                        |   |                                             |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
| Partial investment |   |                                                                        |   |                                                                        |   |                                             |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
| in condominium     |   |                                                                        |   |                                                                        |   |                                             |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
| development,       |   |                                                                        |   |                                                                        |   |                                             |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
| Hunter, NY         |   |  $            - |   |  $            - |   |  $ 467,560                                  |   |  $ 128,830                                        |   |  $   62,946 |   |  $ 495,448 |   |  $ 838,936 |   |  $ 1,334,384 |   |  $          - |
|                    |   |                                                                        |   |                                                                        |   |                                             |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
| Total              |   |  $            - |   |  $            - |   |  $ 467,560                                  |   |  $ 128,830                                        |   |  $   62,946 |   |  $ 495,448 |   |  $ 838,936 |   |  $ 1,334,384 |   |  $          - |
|                    |   |                                                                        |   |                                                                        |   |                                             |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
|                    |   |                                                                        |   |                                                                        |   |                                             |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
|                    |   |                                                                        |   |                                                                        |   |                                             |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
|                    |   | **Column G**                                                                |   | **Column H**                                                                |   | **Column I**                                     |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
|                    |   |                                                                        |   |                                                                        |   | **Line**                                         |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
|                    |   |                                                                        |   |                                                                        |   | **where**                                        |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
|                    |   | **Date of**                                                                 |   |                                                                        |   | **Depre-**                                       |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
|                    |   | **Constr-**                                                                 |   | **Date**                                                                    |   | **ciation**                                      |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
| Columns            |   | **uction**                                                                  |   | **Acquired**                                                                |   | **Computed**                                     |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
| continued          |   |                                                                        |   |                                                                        |   |                                             |   |                                                   |   |                       |   |   |   |   |   |   |   |   |
| from above         |   |  -                                                                |   | 02/29/96                                                                    |   | N/A                                              |   |                                                   |   |                       |   |   |   |   |   |   |   |   |

The following is a reconciliation of the total amount at which real estate was carried for the yearsended:

|                                | **February 29, 2004**                                                                                                          |   | **February 28, 2003**                                        |   | **February 28, 2002**                                                                                                      |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|
|                                |                                                                                                                           |   |                                                         |   |                                                                                                                       |   |   |   |   |   |   |
| Balance at beginning of period |                                                                                                                           |   | ** $      951,358**            |   |                                                                                                                       |   |  $      625,713 |   |   |   |  $      584,153 |
| Additions during period        |                                                                                                                           |   |                                                         |   |                                                                                                                       |   |   |   |   |   |   |
| Other acquisitions             | **         422,410**                                                                   |   |                                                         |   |                      - |   |   |   |                      - |   |   |
| Improvements, etc.             | **         142,875**                                                                   |   |                                                         |   |          325,645                                                                   |   |   |   |            75,183 |   |   |
| Capitalized carrying costs     | **                     -** |   | **         565,285** |   |                      - |   |          325,645 |   |                      - |   |            75,183 |
|                                |                                                                                                                           |   | **      1,516,643**                 |   |                                                                                                                       |   |          951,358 |   |   |   |          659,336 |
| Deductions during period       |                                                                                                                           |   |                                                         |   |                                                                                                                       |   |   |   |   |   |   |
| Cost of real estate sold       | **         182,259**                                                                   |   |                                                         |   |                      - |   |   |   |            33,623 |   |   |
|                                |                                                                                                                           |   | **         182,259** |   |                                                                                                                       |   |                      - |   |   |   |            33,623 |
| Balance at close of period     |                                                                                                                           |   | ** $   1,334,384**                            |   |                                                                                                                       |   |  $      951,358 |   |   |   |  $      625,713 |

The Federal Income Tax Basis of the Hunter property is $1,623,393.

----

#### Schedule IV - Mortgage Loans on Real Estate

Year ended February 29, 2004

| Column A         |   | Column B |   | Column C |   | Column D                              |   | Column E         |   | Column F        |   | Column G        |   | Column H                                                                          |
|------------------|--------|----------|--------|----------|--------|---------------------------------------|--------|------------------|--------|-----------------|--------|-----------------|--------|-----------------------------------------------------------------------------------|
|                  |   |     |   |     |   |                                  |   |             |   |            |   |            |   |                                                                              |
|                  |   |     |   |     |   |                                  |   |             |   |            |   |            |   | Principal                                                                         |
|                  |   |     |   |     |   |                                  |   |             |   |            |   |            |   | Amount of                                                                         |
|                  |   |     |   |     |   |                                  |   |             |   |            |   |            |   | Loans                                                                             |
|                  |   |     |   |     |   |                                  |   |             |   |            |   |            |   | Subject to                                                                        |
|                  |   |     |   | Final    |   | Periodic                              |   |             |   | Face            |   | Carrying        |   | Delinquent                                                                        |
|                  |   | Interest |   | Maturity |   | Monthly                               |   | Prior            |   | Amount of       |   | Amount of       |   | Principal                                                                         |
| Description      |   | Rate     |   | Date     |   | Payment                               |   | Liens            |   | Mortgages       |   | Mortgages       |   | or Interest                                                                       |
|                  |   |     |   |     |   |                                  |   |             |   |            |   |            |   |                                                                              |
| Second mortgage  |   |     |   |     |   |                                  |   |             |   |            |   |            |   |                                                                              |
| Office building, |   |     |   |     |   |                                  |   |             |   |            |   |            |   |                                                                              |
| Granby, CT       |   |     |   | 03/08/17 |   |                                  |   |  $2,298,421 |   |  $ 946,732 |   |  $ 946,732 |   |  $             - |
| through 3/1/06   |   | 7%       |   |     |   |  $     5,523 |   |             |   |            |   |            |   |                                                                              |
| 4/1/06-3/8/17    |   | 9%       |   |     |   |  $     9,863 |   |             |   |            |   |            |   |                                                                              |
|                  |   |     |   |     |   |                                  |   |             |   |            |   |            |   |                                                                              |
|                  |   |     |   |     |   |                                  |   |             |   |  $ 946,732 |   |  $ 946,732 |   |  $             - |

The following is a reconciliation of the total amount at which mortgage loans were carried for theyears ended:

|                                  | **February 29, 2004**                                                                                              |   | **February 28, 2003**                                                                                              |   | **February 28, 2002**                                                                                          |
|----------------------------------|--------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|
|                                  |                                                                                                               |   |                                                                                                               |   |                                                                                                           |   |   |   |   |   |   |
| Balance at beginning of period   |                                                                                                               |   | ** $    946,732**                                                                              |   |                                                                                                           |   |  $    975,792 |   |   |   |  $ 3,152,683 |
| Additions during period          |                                                                                                               |   |                                                                                                               |   |                                                                                                           |   |   |   |   |   |   |
| New mortgage loans               | **                   -** |   |                                                                                                               |   |                    - |   |   |   |                    - |   |   |
|                                  |                                                                                                               |   | **                   -** |   |                                                                                                           |   |                    - |   |   |   |                    - |
|                                  |                                                                                                               |   | **       946,732**                                                                   |   |                                                                                                           |   |        975,792 |   |   |   |     3,152,683 |
| Deductions during period         |                                                                                                               |   |                                                                                                               |   |                                                                                                           |   |   |   |   |   |   |
| Collection of principal          | **                   -** |   |                                                                                                               |   |          29,060                                                        |   |   |   |     1,342,518 |   |   |
| Settlement of Goshen receivables | **                   -** |   |                                                                                                               |   |                    - |   |   |   |        834,373 |   |   |
|                                  |                                                                                                               |   | **                   -** |   |                                                                                                           |   |          29,060 |   |   |   |     2,176,891 |
| Balance at close of period       |                                                                                                               |   | ** $    946,732**                                                                              |   |                                                                                                           |   |  $    946,732 |   |   |   |  $    975,792 |

----

### EXHIBIT INDEX

Exhibits.

> 
31.1 - Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 - Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 - Certification by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

The following exhibits are incorporated herein by reference to Amendment No. 3 to Form 10 dated January 17,2001.

**    Exhibit Number     Exhibit Description      3.01     Certificate of Incorporation of the Company    3.03     Amended By-Laws of the Company    5.01     Opinion of Tanner Propp, LLP    21.01     A list of subsidiaries of the Company  **

----

# SIGNATURES

Pursuant to the requirements of Section 13 or 15(d)2 of the Securities Exchange Act of 1934 as amended,the Registrant has duly cause this Report to be signed on its behalf by the undersigned, thereunto dulyauthorized, on May 27, 2004.

MFC DEVELOPMENT CORP.

|                                                                                                     |
|----------------------------------------------------------------------------------------------------------|
| /s/ VICTOR BRODSKY                                                                                       |
| Victor Brodsky*Vice President and Chief Financial Officer**(Principal Financial and Accounting Officer)* |
|                                                                                                     |

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report hasbeen signed below by the following persons on behalf of the Registrant and in the capacities indicatedon May 27, 2004.

|                                                                 |
|----------------------------------------------------------------------|
| /s/ LESTER TANNER                                                    |
| Lester Tanner*President and Director**(Principal Executive Officer)* |
|                                                                 |
| /s/ STEVEN KEVORKIAN                                                 |
| Steven Kevorkian*Director*                                           |
|                                                                 |
| /s/ VICTOR BRODSKY                                                   |
| Victor Brodsky*Director*                                             |
|                                                                 |
| /s/ ANDERS STERNER                                                   |
| Anders Sterner*Director*                                             |
|                                                                 |
| /s/ JAY HIRSCHSON                                                    |
| Jay Hirschson*Director*                                              |

----

# CERTIFICATION

Each of the undersigned hereby certifies in his capacity as an officer of MFC DevelopmentCorp. (the "Company") that the Annual Report of the Company on Form 10-K for the period ended February29, 2004 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934and that the information contained in such report fairly presents, in all material respects, the financialcondition of the Company at the end of such period and the results of operations of the Company forsuch period.

May 27, 2004

| /s/ LESTER TANNER                                    |   | /s/ VICTOR BRODSKY                                         |
|------------------------------------------------------|--------|------------------------------------------------------------|
| Lester Tanner*President and Chief Executive Officer* |   | Victor Brodsky*Vice President and Chief Financial Officer* |

 

 

 

----

# EXHIBITS

## Exhibit 31.1

### Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Lester Tanner, certify that:

-  I have reviewed this	annual report on Form 10-K of MFC Development	Corp; 
-  Based on my knowledge, this	annual report does not contain	any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of	the circumstances under which such statements were made, not misleading with respect to the period covered by this	annual	report; 
-  Based on my knowledge, the financial statements, and other	financial information included in this annual report, fairly present in all material respects the financial condition, results	of operations and cash flows of the registrant as of, and for, the periods presented in this	annual report; 
-  The registrant's other certifying officers and I are responsible	for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))	for the registrant and we have:     -  Designed such disclosure controls and procedures to ensure		that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others		within those entities, particularly during the period in which this		annual report is being prepared; and 
  -  Evaluated the effectiveness of the registrant's disclosure		controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls		and procedures, as of the end of the period covered by this report based on such evaluation; and 
  -  
Disclosed in this report any change in the registrant's			internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's			fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially			affect, the registrant's internal control over financial reporting; and 
-  The registrant's other certifying officers and I have disclosed,	based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors	(or persons performing the equivalent function):     -  all significant deficiencies in the design or operation		of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial		data and have identified for the registrant's auditors any material weaknesses in internal controls; and 
  -  any        fraud, whether or not material, that involves management or other        employees who have a significant role in the registrant's internal        controls.     May		27, 2004 			/s/ LESTER TANNER Lester Tanner*President and Chief Executive Officer*   

## Exhibit 31.2

### Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Victor Brodsky, certify that:

-  I have reviewed this	annual report on Form 10-K of MFC Development	Corp; 
-  Based on my knowledge, this quarterly report does not contain	any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of	the circumstances under which such statements were made, not misleading with respect to the period covered by this	annual	report; 
-  Based on my knowledge, the financial statements, and other	financial information included in this annual report, fairly present in all material respects the financial condition, results	of operations and cash flows of the registrant as of, and for, the periods presented in this	annual report; 
-  The registrant's other certifying officers and I are responsible	for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))	for the registrant and we have:     -  Designed such disclosure controls and procedures to ensure		that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others		within those entities, particularly during the period in which this		annual report is being prepared; and 
  -  Evaluated the effectiveness of the registrant's disclosure		controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls		and procedures, as of the end of the period covered by this report based on such evaluation; and 
  -  
Disclosed in this report any change in the registrant's			internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's			fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially			affect, the registrant's internal control over financial reporting; and 
-  The registrant's other certifying officers and I have disclosed,	based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors	(or persons performing the equivalent function):     -  all significant deficiencies in the design or operation		of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial		data and have identified for the registrant's auditors any material weaknesses in internal controls; and 
  -  any        fraud, whether or not material, that involves management or other        employees who have a significant role in the registrant's internal        controls. 

| May		27, 2004 | /s/ VICTOR BRODSKY Victor Brodsky*Vice President and Chief Financial Officer* |
|---------------|-------------------------------------------------------------------------------|

----

## Exhibit 32.1

### Certification by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of MFC Development Corporation *(the "Company")* on Form 10-K for the period endedFebruary 29, 2004 as filed with the Securities and Exchange Commission on thedate hereof (the "Report"),

We, Lester Tanner, Chief Executive Officer, and, Victor Brodsky, Chief Financial Officer of the Company,certify, pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

> 
(1)  The Report fully complies with the requirements of Section	13(a) and 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects,	the financial condition and results of operations of the Company.
			May 27, 2004 			May 27, 2004				/s/ LESTER TANNER								Lester Tanner*President and Chief Executive Officer* 				/s/ VICTOR BRODSKY								Victor Brodsky*Vice President and Chief Financial Officer*

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies this Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed bythe Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended  (the "Exchange Act"). Such certificationwill not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the ExchangeAct, except to the extent that the Company specifically incorporates it by reference.