SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A

|X|      QUARTERLY  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE  ACT OF 1934 FOR THE  QUARTERLY  PERIOD  ENDED  SEPTEMBER
         30, 2003, OR

|_|      TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____

                         Commission File Number: 0-2616

                         CONSUMERS FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

                 Pennsylvania                               23-1666392
        (State or other jurisdiction of                 (I.R.S. Employer
        incorporation or organization)                 Identification No.)

      132 Spruce Street, Cedarhurst, NY                       11516
   (Address of principal executive offices)                 (Zip Code)

                                  516-792-0900
              (Registrant's telephone number, including area code)

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

                          Yes  |_|          No |X|

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

                                                          Outstanding at
     Class of Common Stock                               December 31, 2004
     ---------------------                                -------------
       $.01 Stated Value                                    38,167,499
<PAGE>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                                TABLE OF CONTENTS

                                EXPLANATORY NOTE

This Form 10-Q/A shall amend and restate in its entirety the Form 10-Q filed by
the Company on May 24, 2004.

Number                                                                     Page
------                                                                    -----
          Part I. Financial Information

Item 1.   Condensed Consolidated Financial Statements:

  Balance Sheets - September 30, 2003 (Unaudited) and December 31, 2002     F-2

  Statements of Operations and Comprehensive Income (Loss) (Unaudited) -
   For the Nine and Three Months Ended September 30, 2003 and 2002          F-3

  Statements of Stockholders' Equity (Deficit) From December 31, 2000
   Through September 30, 2003 (Unaudited)                                   F-4

  Statements of Cash Flows (Unaudited)- For the Nine Months Ended
   September 30, 2003 and 2002                                              F-6

  Notes to Condensed Consolidated Financial Statements                      F-8

Item 2.   Management's Discussion and Analysis of Financial Condition
               and Results of Operations                                    18

Item 3.   Quantitative and Qualitative Disclosure About Market Risk         24

Item 4.   Controls and Procedures                                           24

          Part II. Other Information

Item 1.   Legal Proceedings                                                 26

Item 2.   Changes in Securities and Use of Proceeds                         26

Item 3.   Defaults upon Senior Securities                                   26

Item 4.   Submission of Matters to a Vote of Security Holders               26

Item 5.   Other Information                                                 27

Item 6.   Exhibits and Reports on Form 8-K                                  28

          Certifications Pursuant to Section 302 of Sarbanes-Oxley Act      30

          Certifications Pursuant to Section 906 of Sarbanes-Oxley Act      32


<PAGE>
                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES


                        CONSOLIDATED FINANCIAL STATEMENTS


                    September 30, 2003 and December 31, 2002

<PAGE>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                          Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                     ASSETS
                                     ------

                                                            September 30,    December 31,
                                                                2003            2002
                                                            ------------    ------------
                                                           (Unaudited and
                                                           restated - see
                                                               Note 5)

CURRENT ASSETS
<S>                                                          <C>             <C>
    Cash and cash equivalents                               $      7,840    $    165,758
    Prepaid expenses                                              13,300          30,420
                                                            ------------    ------------

         Total Current Assets                                     21,140         196,178
                                                            ------------    ------------

FIXED ASSETS, NET                                                  2,047              --
                                                            ------------    ------------

OTHER ASSETS

    Restricted cash                                              284,402         314,225
    Prepaid insurance                                             34,313          87,363
                                                            ------------    ------------

         Total Other Assets                                      318,715         401,588
                                                            ------------    ------------

         TOTAL ASSETS                                       $    341,902    $    597,766
                                                            ============    ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                 ----------------------------------------------

CURRENT LIABILITIES

    Accounts payable and accrued expenses                   $    293,265    $     54,302
    Contingent liability                                         355,676              --
    Reserve for partnership liabilities                          200,000              --
    Note payable                                                  20,000              --
    Notes payable - related parties                               28,006              --
                                                            ------------    ------------

         Total Current Liabilities                               896,947          54,302
                                                            ------------    ------------

REDEEMABLE PREFERRED STOCK

    Preferred stock, 10,000,000 shares authorized,
    68,376 and 75,326 shares issued and outstanding,
    respectively                                                 675,129         739,949
                                                            ------------    ------------

STOCKHOLDERS' EQUITY (DEFICIT)

    Common stock, $0.01 par value, 40,000,000 shares
    authorized, 17,012,731 and 5,276,781 shares issued
    and outstanding, respectively                                170,127          52,768
    Additional paid-in capital                                11,419,896       8,938,865
    Treasury stock, preferred                                    (18,070)             --
    Deferred compensation                                             --              --
    Accumulated Deficit                                      (12,802,127)     (9,188,118)
                                                            ------------    ------------

         Total Stockholders' Equity (Deficit)                 (1,230,174)       (196,485)
                                                            ------------    ------------

         TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK
         AND STOCKHOLDERS' EQUITY (DEFICIT)                 $    341,902    $    597,766
                                                            ============    ============
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                      F-2
<PAGE>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     For the Three                For the Nine
                                                     Months Ended                 Months Ended
                                                     September 30,                September 30,
                                             --------------------------    --------------------------
                                                2003           2002           2003           2002
                                             -----------    -----------    -----------    -----------
                                             (Restated -                   (Restated -
                                              See Note 5)                   See Note 5)
<S>                                          <C>            <C>            <C>            <C>
REVENUES                                     $        --    $        --    $        --    $        --

EXPENSES

      General and administrative               3,555,855        137,653      3,668,119        419,078
      Bad debt expense                            27,500             --         27,500             --
      Depreciation                                   899             --            899             --
                                             -----------    -----------    -----------    -----------

             Total Expenses                    3,584,254        137,653      3,696,518        419,078
                                             -----------    -----------    -----------    -----------

LOSS FROM OPERATIONS                          (3,584,254)      (137,653)    (3,696,518)      (419,078)
                                             -----------    -----------    -----------    -----------

OTHER EXPENSES

      Interest income                              2,431          6,320          2,461         44,295
      Interest expense                            (5,648)            --         (5,648)            --
      Net realized investment gains                   --             --             --        242,480
      Proceeds from litigation settlement         35,000        255,000         17,500        255,000
      Gain on extinguishment of debt              20,000             --         20,000             --
      Other income                                   654            222          1,447         41,192
                                             -----------    -----------    -----------    -----------

             Total Other Expenses                 52,437        261,542         35,760        582,967
                                             -----------    -----------    -----------    -----------

             Net Income (Loss)               $(3,531,817)   $   123,889    $(3,660,758)   $   163,889
                                             -----------    -----------    -----------    -----------

OTHER COMPREHENSIVE LOSS, CHANGE IN
UNREALIZED APPRECIATION OF DEBT SECURITIES            --             --             --        (54,702)
                                             -----------    -----------    -----------    -----------



             Comprehensive Income (Loss)     $(3,531,817)   $   123,889    $(3,660,758)   $   109,187
                                             ===========    ===========    ===========    ===========



BASIC LOSS PER SHARE                         $     (0.37)   $      0.03    $     (0.54)   $      0.04
                                             ===========    ===========    ===========    ===========

WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING                        9,524,750      3,574,636      6,784,643      2,909,419
                                             ===========    ===========    ===========    ===========
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                      F-3
<PAGE>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
            Consolidated Statements of Stockholders' Equity (Deficit)

<TABLE>
<CAPTION>
                                                               Common Stock             Additional      Preferred Treasury Stock
                                                       ------------    ------------      Paid-In       ---------------------------
                                                          Shares          Amount         Capital         Shares        Amount
                                                       ------------    ------------    ------------    ------------   ------------

<S>                                                       <C>          <C>             <C>                      <C>    <C>
Balance, December 31, 2000                                2,578,188    $     25,782    $  6,722,485              --   $         --

Change in unrealized appreciation of debt securities             --              --              --              --             --


Preferred stock dividends                                        --              --              --              --             --

Accretion of difference between carrying value
and mandatory redemption value of preferred stock                --              --              --              --             --

Retirement of treasury shares (common)                       (1,407)            (14)            (46)             --             --


Retirement of treasury shares (preferred)                        --              --          22,613              --             --


Net loss for the year ended Decem ber 31, 2001                   --              --              --              --             --

                                                       ------------    ------------    ------------    ------------   ------------

Balance, December 31, 2001                                2,576,781          25,768       6,745,052              --             --

Change in unrealized appreciation of
debt securities                                                  --              --              --                             --

Preferred stock dividends                                        --              --              --              --             --

Accretion of difference between carrying
value and mandatory redemption value of
preferred stock                                                  --              --              --              --             --

Issuance of common stock                                  2,700,000          27,000          81,000              --             --

Retirement of treasury shares (preferred)                        --              --       2,112,813              --             --


Net income for the year ended December 31, 2002                  --              --              --              --             --
                                                       ------------    ------------    ------------    ------------   ------------

Balance, December 31, 2002                                5,276,781    $     52,768    $  8,938,865              --   $         --
                                                       ------------    ------------    ------------    ------------   ------------

<CAPTION>

                                                                     Accumulated
                                                                       Other
                                                        Deferred    Comprehensive      Accumulated
                                                      Compensation   Income/Loss       Deficit
                                                      ------------   ------------    ------------

<S>                                                   <C>            <C>             <C>
Balance, December 31, 2000                            $         --   $     27,163    $ (7,899,588)

Change in unrealized appreciation of debt securities            --         27,539              --


Preferred stock dividends                                       --             --        (385,572)

Accretion of difference between carrying value
and mandatory redemption value of preferred stock               --             --         (18,654)

Retirement of treasury shares (common)                          --             --              --


Retirement of treasury shares (preferred)                       --             --              --


Net loss for the year ended Decem ber 31, 2001                  --             --        (600,827)

                                                      ------------   ------------    ------------

Balance, December 31, 2001                                      --         54,702      (8,904,641)

Change in unrealized appreciation of
debt securities                                                 --       (54,702)              --

Preferred stock dividends                                       --             --        (255,813)

Accretion of difference between carrying
value and mandatory redemption value of
preferred stock                                                 --             --         (84,448)

Issuance of common stock                                        --             --              --

Retirement of treasury shares (preferred)                       --             --              --


Net income for the year ended December 31, 2002                 --             --          56,784
                                                      ------------   ------------    ------------

Balance, December 31, 2002                            $         --   $         --    $ (9,188,118)
                                                      ------------   ------------    ------------
</TABLE>


  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.


                                      F-4
<PAGE>
                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
                        December 31, 2003, 2002 and 2001

<TABLE>
<CAPTION>
                                                                Common Stock           Additional       Preferred Treasury Stock
                                                        ----------------------------     Paid-In      ---------------------------
                                                            Shares          Amount       Capital        Shares            Amount
                                                        ------------    ------------   ------------   ------------    ------------
<S>                                                        <C>          <C>            <C>                  <C>       <C>
Balance, December 31, 2002                                 5,276,781    $     52,768   $  8,938,865             --    $         --

Common stock issued for services rendered                    353,000           3,530        134,780             --              --


Redemption of preferred stock                                     --              --             --         (2,600)         (6,760)

Common stock issued for services rendered                    140,000           1,400         16,800             --              --


Redemption of preferred stock                                     --              --             --           (785)         (2,041)

Common shares issued for investments to related party      1,227,273          12,273        257,727             --              --


Common shares issued  for services rendred by officers     6,000,000          60,000      1,206,000             --              --


Common shares issued as bonuses for officers               3,913,042          39,130        841,304             --              --


Common shares issued for services rendered                    92,000             920         22,080             --              --


Redemption of preferred stock                                     --              --             --         (3,565)         (9,269)

Common shares issued for services rendered                    10,635             106          2,340             --              --


Accretion of difference between carrying value and
mandatory redemption value of preferred stock                     --              --             --             --              --


Net loss for the nine months ended September 30, 2003
                                                        ------------    ------------   ------------   ------------    ------------

Balance, September 30, 2003                               17,012,731    $    170,127   $ 11,419,896         (6,950)   $    (18,070)
                                                        ============    ============   ============   ============    ============

<CAPTION>

                                                                        Accumulated
                                                                           Other
                                                            Deferred    Comprehensive    Accumulated
                                                          Compensation    Income/Loss      Deficit
                                                           ------------   ------------   ------------
<S>                                                        <C>            <C>            <C>
Balance, December 31, 2002                                 $         --   $         --   $ (9,188,118)

Common stock issued for services rendered                            --             --             --


Redemption of preferred stock                                        --             --         18,813

Common stock issued for services rendered                            --             --             --


Redemption of preferred stock                                        --             --          5,691

Common shares issued for investments to related party                --             --             --


Common shares issued  for services rendred by officers               --             --             --


Common shares issued as bonuses for officers                         --             --             --


Common shares issued for services rendered                           --             --             --


Redemption of preferred stock                                        --             --         25,841

Common shares issued for services rendered                           --             --             --


Accretion of difference between carrying value and
mandatory redemption value of preferred stock                        --             --         (3,596)


Net loss for the nine months ended September 30, 2003                                      (3,660,758)
                                                           ------------   ------------   ------------

Balance, September 30, 2003                                $         --   $         --   $(12,802,127)
                                                           ============   ============   ============
</TABLE>


  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.



                                      F-5
<PAGE>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  For the Nine
                                                                                  Months Ended
                                                                                  September 30,
                                                                          --------------------------
                                                                             2003            2002
                                                                          -----------    -----------
                                                                         (As restated
                                                                        - see Note 2)

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                       <C>            <C>
      Net income (loss)                                                   $(3,660,758)   $   163,889

      Adjustments to reconcile net loss to net cash used by operating
        activities:
      Common stock issued for services                                      2,598,390             --
      Depreciation and amortization                                               889             --
      Change in restricted cash                                                29,823             --
      Gain on sale of investments                                                  --        (56,448)
      Gain on sale of insurance licenses                                           --       (178,483)
      Redemption of preferred stock                                            50,345             --
      Accretion of preferred stock                                             (3,596)            --
      Increase (decrease) in cash attributable to changes in assets
        and liabilities:
      Change in other receivables                                                  --         21,431
      Change in prepaid expenses                                               17,120        (13,317)
      Change in other assets                                                   53,050             --
      Change in employee severance liability                                       --       (177,962)
      Change in accounts payable and accrued expenses                         238,963             --
      Increase in contingent and other liabilities                            555,676        (69,841)
      Other                                                                        --        (53,439)
                                                                          -----------    -----------

            Net Cash Used by Operating Activities                            (120,098)      (364,170)
                                                                          -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES

      Loans to majority shareholder                                                --             --
      Purchase of capital assets                                               (2,936)            --
      Cash deposited into preferred stock escrow account,
        net of withdrawal                                                          --       (331,434)
      Proceeds from sale of investments                                            --        945,181
      Proceeds from sale of insurance licenses, net of selling expenses            --         73,113
                                                                          -----------    -----------

            Net Cash Provided by Investing Activities                          (2,936)       686,860
                                                                          -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES

      Proceeds from note payable                                               20,000             --
      Proceeds from note payable - related                                     28,006             --
      Change in redeemable preferred stock                                    (64,820)            --
      Cash dividends to preferred shareholders                                     --       (335,986)
      Purchase of redeemable preferred stock                                  (18,070)    (1,660,067)
      Proceeds from issuance of common stock                                       --        108,000
                                                                          -----------    -----------

            Net Cash Used In Financing Activities                             (34,884)    (1,888,053)
                                                                          -----------    -----------

DECREASE IN CASH                                                          $  (157,918)   $(1,565,363)

CASH AT BEGINNING OF PERIOD                                               $   165,758    $ 1,802,265

CASH AT END OF PERIOD                                                     $     7,840    $   236,902
                                                                          ===========    ===========
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.


                                      F-6
<PAGE>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows
                             (Unaudited) (Continued)

                                                          For the Nine
                                                          Months Ended
                                                          September 30,
                                                 -----------------------------
                                                     2003            2002
                                                 -------------   -------------
                                                  (As restated
                                                 - see Note 2)

SUPPLIMENTAL SCHEDULE OF CASH FLOW ACTIVITIES:

Cash Paid For:

      Interest                                   $          --   $          --
      Income taxes                               $          --   $          --

Schedule of Non-Cash Financing Activities:

      Common stock issued for services           $   2,598,390   $          --


  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                      F-7
<PAGE>
                 CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARY
                 Notes to the Consolidated Financial Statements
                    September 30, 2003 and December 31, 2002

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

      The accompanying condensed consolidated financial statements have been
      prepared by the Company without audit. In the opinion of management, all
      adjustments (which include only normal recurring adjustments) necessary to
      present fairly the financial position, results of operations, and cash
      flows at September 30, 2003 and 2002, and for all periods presented
      herein, have been made.

      Certain information and footnote disclosures normally included in
      financial statements prepared in accordance with accounting principles
      generally accepted in the United States of America have been condensed or
      omitted. It is suggested that these condensed financial statements be read
      in conjunction with the financial statements and notes thereto included in
      the Company's December 31, 2002 audited financial statements. The results
      of operations for the periods ended September 30, 2003 and 2002 are not
      necessarily indicative of the operating results for the full years.

NOTE 2 - GOING CONCERN

      The accompanying consolidated financial statements have been prepared
      assuming that the Company will continue as a going concern. However, at
      September 30, 2003, the Company had a minimal cash balance of $7,840, its
      current liabilities of $896,947 exceeded its current assets by $875,807,
      the Company had an accumulated deficit of $12,802,127, and was delinquent
      in its payments on certain accounts payable. These matters raise
      substantial doubt about the Company's ability to continue as a going
      concern.

      CFC Partners is currently pursuing various business opportunities for the
      Company, including strategic alliances, as well as the merger or
      combination of existing businesses within the Company. The new management
      of the Company is initially focusing on joint ventures with, or
      acquisitions of companies in the real estate, construction management and
      medical technology sectors as well as the direct purchase of
      income-producing real estate. However, there is no assurance that the
      Company's efforts in this regard will be successful. In fact, given the
      Company's current cash position, without new revenues and/or immediate
      financing, the Company's efforts to develop the above-referenced
      businesses are not likely to succeed.

      The Company's ability to continue as a going concern is dependent on its
      success in developing new cash revenue sources or, alternatively, in
      obtaining short-term financing while its businesses are being developed.
      There are no assurances that such financing can be obtained or, if
      available, be obtained at terms acceptable to the Company. To the extent
      that such financing is equity-based, this may result in dilution to the
      existing shareholders.


                                      F-8
<PAGE>

                 CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARY
           Notes to the Consolidated Financial Statements (Continued)
                    September 30, 2003 and December 31, 2002

NOTE 2 - GOING CONCERN (Continued)

       The consolidated financial statements presented herein do not include any
       adjustments that might result from the outcome of this uncertainty.

NOTE 3 - SIGNIFICANT EVENTS

         Common Stock

         Stock Issuances to Consultants

      On July 1, 2003, the Company filed a Registration Statement with the
      Securities and Exchange Commission to register an aggregate of 353,000
      shares of its common stock issued by the Company to three consultants
      during April and June of 2003, pursuant to certain agreements entered into
      and between the Company and the prospective consultants. Each of these
      agreements terminated on December 31, 2003. In exchange for receipt of the
      shares of common stock, such consultants would provide various services to
      the Company, principally relating to the identification of suitable merger
      or acquisition partners for the Company. The cost of these services, as
      measured by the market value of the shares at time of issuance, was
      $138,310.

      On September 19, 2003, the Company filed a Registration Statement with the
      Securities and Exchange Commission to register 92,000 shares of its common
      stock issued by the Company to a consultant pursuant to a consultancy
      agreement entered into and between the Company and the consultant, Pinchus
      Gold on September 12, 2003. The agreement will terminate on December 31,
      2003. In exchange for receipt of the shares of common stock, the
      consultant provided various services to the Company, principally relating
      to the identification of suitable merger or acquisition partners for the
      Company. The cost of these services, as measured by the market value of
      the shares at time of issuance, was $21,000.

       On November 7, 2003, the Company filed a Registration Statement with the
       Securities and Exchange Commission to register 140,000 shares of its
       common stock issued by the Company to a consultant pursuant to a
       consultancy agreement entered into and between the Company and the
       consultant on July 2, 2003. The agreement will terminate on December 31,
       2003. In exchange for receipt of the shares of common stock, the
       consultant provided various services to the Company, principally relating
       to the identification of suitable merger or acquisition partners for the
       Company. The cost of these services, as measured by the market value of
       the shares at time of issuance, was approximately $18,200.


                                      F-9
<PAGE>

NOTE 3 - SIGNIFICANT EVENTS (Continued)

       Common Stock

       Stock Issuances to Officers

      On September 1, 2003, the Company entered into employment agreements with
      each of Donald J. Hommel, President and Chief Executive Officer and Jack
      I. Ehrenhaus, Chairman and Chief Operating Officer of the Company ,
      pursuant to which, each of the officers was issued 3,000,000 shares of the
      Company's common stock valued at an aggregate of $1,266,000.

      At the September 4, 2003 meeting of the Board of Directors, the Board
      approved bonuses for Donald J. Hommel, President and Chief Executive
      Officer and Jack I. Ehrenhaus, Chairman and Chief Operating Officer of the
      Company. Each of the individuals was issued 1,956,521 shares of common
      stock each valued at $440,217.

       Contingent Liability

      In September the Company, through its subsidiary, had signed a five-year
      lease for a PET center in Suffolk County, New York. Subsequent to the
      consummation of the lease, the Company defaulted on its required payments,
      and in November 2003, the lease was formally terminated. The Company
      received a letter from the landlord dated November 11, 2003 claiming that
      the Company and the subsidiary are liable to the landlord for all costs
      and expenses incurred in connection with enforcing the lease provisions as
      well as liquidated damages provided for in the lease (the present value of
      the lease payments discounted at 6%). The total of these costs and
      liquidated damages was $355,676. As of September 30, 2003, the Company had
      accrued this amount as a contingent liability.

       Vaughn Partners, LLC

      In May 2003, Vaughn Partners LLC, an Illinois limited liability company
      ("Vaughn") in which the Company owns a 37.5 % interest, acquired a garden
      apartment style real estate project in Springfield, Illinois. Of the
      remaining interest in the LLC, 37.5% is owned by Spartan Properties
      ("Spartan") and 25% by other investors. Vaughn acquired this property for
      a purchase price of $5,440,940, comprised of (i) a $4,650,000
      interest-only bank loan secured by a first mortgage lien on the property
      payable in two years at an annual interest rate of 7.25% and with monthly
      interest payments approximating $28,100; (ii) a $1,200,000 second mortgage
      on the property at an annual interest rate of 13% with principal amounts
      of $500,000 due six months from the date of acquisition and $700,000 due
      twelve months from the date of acquisition with monthly interest payments
      due on the


                                      F-10
<PAGE>

NOTE 3 - SIGNIFICANT EVENTS (Continued)

       Vaughn Partners, LLC (continued)

       outstanding balance (iii) a $100,000 interest-free loan made by a private
       investor that was due and payable on June 13, 2003 and which accrues
       interest at an annual rate of 18% beyond its due date and (iv) $200,000
       in cash contributed by third party investors to Vaughn. As a result of
       the default under the second mortgage, the second mortgagee has the right
       to, among other rights, sell the property, collect all rental income from
       the property and exclude Vaughn from the proceeds thereof. As a result of
       the default under the $100,000 loan, Vaughn is liable for accrued
       interest from June 15, 2003 at an annual rate of 18% plus all costs and
       fees incurred by the lender in collecting amounts due under the note. The
       Company is in discussions with the lender regarding repayment of this
       loan. Vaughn also obtained a $600,000 construction loan from the bank
       under similar terms as the mortgage, of which $30,357 has not been used,
       for the purpose of completing certain renovation to the property.

       Vaughn properties operated at a loss for the nine months ended September
       30, 2003. Since the Company has no basis in the partnership, there is no
       adjustment to the valuation of the equity investment.

       The Company is not directly or indirectly liable for any of the
       obligations of Vaughn, and its exposure is limited solely to its
       investment in Vaughn which is carried at zero in these consolidated
       financial statements. However, subsequent to September 30, 2003, Mr. Coby
       Hakalir, the Chief Executive Officer of Spartan, made certain claims
       indicating the Company was responsible for approximately $200,000 in
       outstanding liabilities pertaining to the Vaughn partnership and its
       related properties. The Company has performed significant due diligence
       procedures in an attempt to substantiate Mr. Hakalir's claims, but has
       not obtained any evidence that supports the claims. Furthermore, Mr.
       Hakalir has not provided evidence to the Company to support his claims.
       However, in an attempt to portray the financial condition of the Company
       as accurately as possible, the Company has elected to record a reserve of
       $200,000 to cover any liabilities arising from the Vaughn partnership.

NOTE 4 - SUBSEQUENT EVENTS

       On October 31, 2003, the Company filed a Registration Statement with the
       Securities and Exchange Commission to register 330,000 shares of common
       stock issued on October 31, 2003 to a consultant, Pinchus Gold. The
       agreement is for services to be provided through January 31, 2004. In
       exchange for receipt of the shares of common stock, the consultant would
       provide various services to the Company, principally relating to the
       identification of suitable merger or acquisition partners for the
       Company. The cost of these services, as measured by


                                      F-11
<PAGE>

NOTE 4 - SUBSEQUENT EVENTS (Continued)

       the market value of the shares at time of issuance, was approximately
       $82,500. On October 10, 2003 the Company sold 208,000 shares of its
       common stock to Wall Street Communications for $26,000 or $0.125 per
       share pursuant to a subscription agreement.

       In November 2003, an investor executed a subscription agreement to
       purchase 1,000,000 shares of the Company's common stock for ten cents
       ($0.10)per share. As of December 31, 2003, the investor has only paid
       $20,000 toward the aggregate purchase price of $100,000; no additional
       amounts have been received to date. This amount has been recorded as a
       current liability as the Private Placement has been cancelled.

       During February 2004, the Company entered into a Memorandum of
       Understanding with a privately-held corporation located in Connecticut
       with the intent of a possible business combination either directly with
       the Company, through a controlled subsidiary of the Company or with a
       public shell available to the Company. The Company is in the preliminary
       investigative stages of its customary due diligence and this combination
       is subject to certain conditions precedent that are material to the
       transaction and whose outcome in subject to material uncertainty at the
       present time.

       On March 19, 2004 the Company executed a loan agreement with Thomas
       Willemsen in the amount of $50,000 for operating capital. This is an
       unsecured loan, due on June 19, 2004 as to both interest in the amount of
       $5,000 and principal.

       On March 22, 2004 the Company executed a loan agreement with Adar Ulster
       Realty in the amount of $40,000 for operating capital. This is an
       unsecured loan due on May 22, 2004 as to both interest in the amount of
       $1,200 and principal.

       During October, 2003, the Company entered into a term sheet with Dutchess
       Private Equities Fund II LP, an equity funding group ("Dutchess") to
       provide the Company with a $2,000,000 equity line of credit to be used
       for general corporate purposes. A formal agreement with Dutchess for this
       equity line was executed on April 15, 2004 and provides that the market
       price of the Company's stock for the five consecutive days prior to the
       put date can not be below 75% of the closing bid price for the ten
       trading days prior to the put date. The put date is the date that the
       Company submits notice to the investor that it desires to draw down a
       portion of the line. The purchase price for the shares to be paid to the
       investor is discounted to the lowest closing bid price of the stock
       during the five trading days immediately after a put date. The funds will
       be available to the Company upon an effective registration of the
       Company's stock issued pursuant to this agreement.


                                      F-12
<PAGE>

NOTE 4 - SUBSEQUENT EVENTS (Continued)

       On June 1, 2004 the Company issued 2,471,700 shares of its previously
       unissued common stock to both Donald Hommel and Jack Ehrenhaus as payment
       for executive services rendered under the terms of the officers'
       respective employment agreements (See note 17). In addition, the Company
       issued an aggregate of 1,437,368 to Mr. Hommel and Mr. Ehrenhaus, as
       bonus compensation per the terms of the aforementioned employment
       agreements. All shares issued on this date were valued at market value of
       $0.05 per share, resulting in an aggregate compensation expense of
       $319,038.

       On July 23, 2004 the Company issued 8,000,000 shares of common stock to
       Cove Hill, Inc. as consideration for certain fund-raising services to be
       performed. The shares were valued at $0.125 per share, for a total of
       $1,000,000. The shares have been held in an escrow account since the date
       of issuance, pending the completion of certain due diligence measures and
       the Company completing certain filings with the Securities and Exchange
       Commission. On October 12, 2004 the Company issued an additional
       6,000,000 shares to Cove Hill, Inc., which shares are also being held in
       escrow under the same provisions. The additional shares were issued at
       $0.0714 per share, and the original 8,000,000 shares were revalued to
       $0.0714 per share, thus maintaining the aggregate total of the shares at
       $1,000,000. As of the date of this report, Cove Hill has not received the
       shares, and has not begun to perform the agreed upon fundraising
       services, as the due diligence provisions have not been fully satisfied.

       In October 2004 the Company's Board of Directors resolved to terminate
       for cause the Company's President and Chief Executive Officer Donald J.
       Hommel. Mr. Jack Ehrenhaus was appointed by the Board to fill these
       executive offices.

NOTE 5 - RESTATEMENT OF FINANCIAL STATEMENTS

       As a result of a reclassification of any equity investment and certain
       other adjustments for the three and nine months ended September 30, 2003,
       the Company is restating its Form 10-Q filing included in those periods.

       The Company originally consolidated its 37.5% investment in Vaughn (See
       Note 3) based on the position that significant control was maintained
       over Vaughn. Subsequently it was determined that the Company did not in
       fact maintain significant control and therefore is recording this
       investment as an equity investment. In addition, other unrelated
       adjustments were discovered by the Company, leading to the following
       changes in financial statement data:

                                      F-13
<PAGE>

NOTE 5 - RESTATEMENT OF FINANCIAL STATEMENTS (Continued)

       Net loss and net loss per share for the three and nine months ended
       September 30, 2003 as previously reported with the first amendment to the
       10-Q filed on May 24, 2004 was $2,710,788 ($0.29 per share) and
       $2,930,406 ($0.44 per share), respectively. The effect of the preceding
       adjustments was an increase in net loss and net loss per share. The
       restated net loss and net loss per share for the three and nine months
       ended September 30, 2003 is $3,531,817 ($0.37 per share) and $3,660,758
       ($0.54 per share), respectively.

                           For the Nine        For the Nine
                           Months Ended        Months Ended
                           September 30,       September 30,
                               2003                2003          Difference
                           -------------       -------------     ----------
                           (As restated)      (As originally
                                              Stated on May
                                                24, 2004)

TOTAL ASSETS               $    341,902        $    343,861      $   (1,959)

TOTAL LIABILITIES          $    896,947        $    166,419      $ (730,528)

NET LOSS                   $ (3,660,758)       $ (2,930,406)     $ (730,352)

NET LOSS PER SHARE         $      (0.54)       $      (0.44)     $     0.10



                                      F-14
<PAGE>

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

      A review of the significant factors which affected the Company's financial
condition at September 30, 2003 and its results of operations for the nine and
three month periods then ended is presented below. Information relating to the
same periods in 2002 is also presented for comparative purposes. This analysis
should be read in conjunction with the Consolidated Financial Statements and the
related Notes appearing elsewhere in this Form 10-Q and in the Company's 2002
Form 10-K.

      This Quarterly Report on Form 10-Q includes forward-looking statements
which are subject to "safe harbors" created by the Private Securities Litigation
Reform Act of 1995. We have based these forward-looking statements on our
current expectations and projections about future events. These forward-looking
statements can be identified by use of such terms and phrases as "may", "will",
"intend", "goal", "estimate", "could", "expect", "project", "predict",
"potential", "plans", "anticipate", "should", "continue", "might", "believe",
"scheduled" or the negative of such terms or other comparable terminology.
Readers are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date the statement was made. These risks,
uncertainties and other factors include those identified under "Risk Factors" in
this Quarterly Report on Form 10-Q. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this Quarterly Report on
Form 10-Q might not occur.

      The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, after the date of this Quarterly Report on Form 10-Q. In
addition, we make no representation with respect to any materials available on
the Internet including materials available on our website.

                                    OVERVIEW

      Consumers Financial Corporation (the "Company") was formed in 1966 as 20th
Century Corporation (a Pennsylvania corporation) and adopted its present name in
1980. The Company was an insurance holding company which, until late 1997, was a
leading provider, through its subsidiaries, of credit life and credit disability
insurance in the states of Pennsylvania, Delaware, Maryland, Nebraska, Ohio and
Virginia. In connection with its credit insurance operations, the Company also
marketed, as an agent, an automobile extended service warranty product. The
Company operated through various wholly-owned subsidiaries since it was formed;
however, as of December 31, 2002, all of these subsidiaries have either been
sold or liquidated and dissolved. From 1992 through 1997, the Company also sold
all of its in-force insurance policies to various third party insurers.

      On March 24, 1998, the Company's shareholders approved a Plan of
Liquidation and Dissolution (the "Plan of Liquidation"), pursuant to which the
Company would be liquidated and dissolved. The Plan of Liquidation permitted the
Board of Directors to continue to consider other alternatives to liquidating the
Company if such alternatives were deemed by the Board to be in the best interest
of the Company and its shareholders. It became apparent to the Board during 2001
that the common shareholders would not receive any distribution under the Plan
of Liquidation, and the preferred shareholders would receive less than the full
liquidation value of their shares. Consequently, the Board concluded that

                                       18
<PAGE>

selling the Company for its value as a "public company shell" was a better
alternative for the common and preferred shareholders than liquidating the
Company. Accordingly, in August 2001, the Company sent request for proposal
letters to several investor groups that had expressed an interest in acquiring
the Company, and also issued a press release soliciting similar offers. In
October 2001, the Board of directors met to consider three offers which were
received, one of which was from CFC Partners, Ltd. ("CFC Partners"). Following
its review of each offer, the Board determined that the offer from CFC Partners
was the best offer. In February 2002, the Company and CFC Partners entered into
an option agreement (the "Option Agreement") which permitted CFC Partners to
acquire a 51.2% interest in the Company's common stock for $108,000, or $.04 per
common share. The purchase price was deposited into an escrow account held by
the Company in March 2002.

      The option held by CFC Partners was exercisable within 15 business days
following the completion by the Company of a tender offer to its preferred
shareholders. The completion of the tender offer was, in turn, dependent on the
sale of the Company's remaining insurance subsidiary, since substantially all of
the Company's assets were held by the subsidiary and state insurance laws would
not permit the withdrawal of those assets. In June 2002, the Company completed
the sale of the insurance subsidiary, and in August 2002, the Company purchased
377,288 shares of preferred stock at $4.40 per preferred share plus accrued
dividends, representing 83.4% of the then total shares outstanding, from those
preferred shareholders who elected to tender their shares.

      On August 28, 2002, CFC Partners exercised its option to acquire a
majority of the outstanding common shares of the Company. Accordingly, on that
date, the Board of Directors terminated the Plan of Liquidation and authorized
the issuance of 2,700,000 shares of common stock to CFC Partners. In accordance
with the Option Agreement with CFC Partners, the Company deposited the sum of
$331,434 into an escrow account, such amount representing the tender price of
$4.40 per preferred share multiplied by the 75,326 preferred shares not tendered
at that time.

      On May 8, 2003, Vaughn Partners LLC ("Vaughn"), an Illinois limited
liability company in which the Company owns a 37.5% interest, acquired a
garden-type apartment complex located in Springfield, Illinois for a purchase
price of $5,440,940. The purchase price was comprised of (i) a $4,650,000
interest only bank loan secured by a first mortgage lien on the property payable
in two years, (ii) a $1,200,000 second mortgage on the property with principal
amounts of $500,000 due six months from acquisition and $700,000 due twelve
months from acquisition, (iii) a $100,000 interest-free loan made by a private
investor due in full on June 13, 2003 and which accrues interest at an annual
rate of 18% beyond its due date, and (iv) $200,000 in cash which was contributed
by third party investors to Vaughn. Vaughn is currently in default on the second
mortgage and on the $100,000 private investor loan. As a result of the default
under the second mortgage, the second mortgagee has the right to, among other
rights, sell the property, collect all rental income from the property and
exclude Vaughn from the proceeds thereof. As a result of the default under the
$100,000 loan, Vaughn is liable for accrued interest from June 15, 2003 at an
annual rate of 18% plus all costs and fees incurred by the lender in collecting
the amounts due under the note. The Company has no obligations under or
guarantees of these notes and the Company's financial risk is limited to its
investment in Vaughn, which is carried at zero value, with the exception of a
reserve in the amount of $200,000 which was created in order to absorb any
liabilities arising from the Vaughn partnership.

                                       19
<PAGE>

      Effective as of October 31, 2003, the Company approved an amended
operating agreement whereby Spartan would transfer to the Company 24.22% of its
interest in Vaughn in consideration for issuance by the Company of 250,000
shares of common stock. This amended operating agreement memorializing this
arrangement was not executed by members of Vaughn Partners holding 5% of the
membership interests and the 250,000 shares of common stock were not issued.
This amended operating agreement has therefore not and will not be ratified.

      The 37.5% equity interest in Vaughn is being accounted for under the
equity method in the Company's financial statements at September 30, 2003.

      On January 29, 2004, the Company, pursuant to approval by shareholders at
a special meeting held in August 2003, filed an amendment to its Articles of
Incorporation increasing its authorized capital shares to 50 million; 40 million
in common shares and 10 million in preferred shares.

                              RESULTS OF OPERATIONS

      A discussion of the material factors which affected the Company's results
of operations for the nine and three months ended September 30, 2003 and 2002 is
presented below.

Nine Months Ended September 30, 2003 and 2002

      For the nine months ended September 30, 2003, the Company reported a net
loss of $3,660,578 ($0.54 per share) compared to net income of $163,889 in the
first nine months of 2002. In 2002, the Company's net income was the result of
$242,480 in net investment gains, as well as $255,000 received in litigation
settlements. These gains were partially offset by $419,078 in general and
administrative expenses..

      For the nine months ended September 30, 2003, the Company had only nominal
non-operating income during the period, so the current year net loss is
primarily the result of expenses incurred while the Company is attempting to
develop new businesses. During the first nine months of 2003, these costs
consisted principally of salaries to two individuals, the expense of $2,598,390
related to the issuance of common stock to consultants.

Three Months Ended September 30, 2003 and 2002

                                       20
<PAGE>

      The Company's net loss for the third quarter of 2003 was $3,531,817 ($0.37
per share). Since the Company only had nominal non-operating income during the
quarter, the net loss is attributable to ongoing expenses incurred in connection
with developing new business operations. During the quarter, the Company
incurred $2,596,390 of stock based compensation expenses in connection with the
issuances of common stock for services rendered. The majority of these expenses
relate to officer salaries and consulting fees.

      For the three months ended September 30, 2002, the Company reported net
income of $123,889 ($0.03 per share) as a result of the gains arising from the
sale of Consumers Life. During the quarter, the Company incurred approximately
$33,500 in salaries and related benefits as well as professional and other fees
of $42,000.

                               FINANCIAL CONDITION

      Capital Resources

      Other than as described below, the Company currently has no commitments
for any capital expenditures. However, if the Company develops certain planned
strategic alliances or identifies a target company to be merged or otherwise
combined with the Company, the Company's plans regarding capital expenditures
and related commitments are likely to change.

      For the nine months ended September 30, 2003, the Company's cash and cash
equivalents decreased by $157,918 to $7,840 at the end of the period. The
decrease is principally the result of the cash expenses paid by the Company
during the period and the $27,500 loan made to CFC Partners. The Company
currently has no ability to pay any additional expenses until it either develops
new revenue sources or obtains financing.

      Hudson Valley

      On September 10, 2003, the Company entered into an agreement with Hudson
Valley Home Builders & Developers Corp. pursuant to which Hudson would use its
commercially reasonable efforts to introduce funding sources to provide the
Company with financing to consummate real estate transactions. Hudson agreed to
provide the Company with financing between $2,000,000 and $4,000,000 for 36
months from the date of the agreement. The Company agreed to use commercially
reasonable efforts to consummate a maximum of 10 real estate transactions each
12-month period. Pursuant to the terms of the agreement, Hudson would notify the
Company within 21 days of receipt of an executed contract on a real estate
project that it would fund such project. The investors would have the right to
designate a portion of their funding to be used to purchase shares of the
Company at a premium above market.

      Pursuant to the agreement, Hudson and its investors would be entitled to
60% of the equity of a deal, as well as a cash payment equal to 10% of the
consideration received by the Company from Hudson and its investors. Upon
financing a real estate deal the Company would issue to Hudson and its investors
a warrant to purchase shares of the Company. The Company agreed to file a
registration statement for the shares of Hudson and its investors within 24
months and granted them piggyback registration rights after 18 months.

                                       21
<PAGE>

Either party has the right to terminate the agreement by written notice to the
other. To date, no funds have been generated by Hudson.

      Equity Credit Line

      During October, 2003, the Company entered into a term sheet with Dutchess
Private Equities Fund II LP, a equity funding group ("Dutchess") to provide the
Company with a $2,000,000 equity line of credit to be used for general corporate
purposes. A formal agreement with Dutchess for this equity line was executed on
April 15, 2004 and provides that the market price of the Company's stock for the
five consecutive days prior to the put date can not be below 75% of the closing
bid price for the 10 trading days prior to the put date. The put date is the
date that the Company submits notice to the investor that it desires to draw
down a portion of the line. The purchase price for the shares to be paid to the
investor is discounted to the lowest closing bid price of the stock during the 5
trading days immediately after a put date. The funds will be available to the
Company upon an effective registration of the Company's stock issued pursuant to
this agreement.

      Investment Banking Agreement

      On October 27, 2003, the Company entered into an agreement with an
investment banking firm to arrange financing for the Company's operations and
expansion, provide financial advisory services on mergers and acquisitions, and
represent the Company with regard to introductions to accredited investors,
financial institutions, strategic partners, and potential clients. The
investment banker is to receive a percentage based on the amount of equity or
debt raised for the Company, as well as a retainer of $3,750 plus 85,000 shares
of common stock of the Company with demand and piggyback registration rights. In
addition, the banker is entitled to warrants equal to 3% of the equity of the
Company upon the successful completion of any financing or m&a transaction. The
banker is also entitled to registration rights, tag along rights, a put option,
anti-dilution protection and a right of first refusal. If the Company fails or
refuses to close a transaction after funds have been placed in escrow or a
commitment letter accepted and approved, the Company is liable for all direct
and consequential damages incurred by the banker.

      Liquidity

      In connection with the acquisition of the Company by CFC Partners,
substantially all of the Company's remaining liquid assets were used to complete
a tender offer to the preferred shareholders in August 2002. At September 30,
2003, the Company had $7,840 in cash. Furthermore, as of that date, the Company
had no significant business operations and no sources of operating revenues and
cash flows. As indicated above, the Company is currently pursuing various
business opportunities, including strategic alliances, as well as the merger or
combination of existing businesses with the Company. The Company's management is
initially focusing on joint ventures with or acquisitions of companies in the
real estate, insurance agent, construction management and medical technology
business segments. However, there is no assurance that the Company's efforts in
this regard will be successful.

      As indicated above, the Company currently has no ability to pay any
additional expenses until it either develops new revenue sources or obtains
financing. Without new revenues and/or immediate financing, management's efforts
to develop the Company's real estate, insurance agent, construction management
and medical technology businesses are not likely to succeed.

                                       22
<PAGE>

      Going concern and management plans

      The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. However, at
September 30, 2003 the Company had a cash balances of only $7,840, current
liabilities of $896,947 without any other current assets, a shareholders'
deficiency of $1,230,174 and was delinquent in its payment to its existing
creditors. These matters raise substantial doubt about the Company's ability to
continue as a going concern.

      CFC Partners is currently pursuing various business opportunities for the
Company, including strategic alliances, as well as the merger or combination of
existing businesses within the Company. The new management of the Company is
initially focusing on joint ventures with, or acquisitions of, companies in the
real estate, construction management and medical technology sectors as well as
the direct purchase of income-producing real estate. However, there is no
assurance that the Company's efforts in this regard will be successful. In fact,
given the Company's current cash position, without new revenues and/or immediate
financing, the Company's efforts to develop the above-referenced businesses are
not likely to succeed.

      The Company's ability to continue as a going concern is dependent on its
success in developing new cash revenue sources or, alternatively, in obtaining
short-term financing while its businesses are being developed. There are no
assurances that such financing can be obtained or, if available, be obtained at
terms acceptable to the Company. To the extent that such financing is equity
based, this may result in dilution to the existing shareholders.

      The condensed consolidated financial statements presented herein do not
include any adjustments that might result from the outcome of this uncertainty.

      Redeemable Preferred Stock

      On August 23, 2002, the Company completed a tender offer to all of its
preferred shareholders, pursuant to which it purchased 377,288 shares
(approximately 83.4% of the shares then outstanding) at $4.40 per share plus
accrued dividends. The tender offer was completed in conjunction with and was a
condition to the exercise of the option by CFC Partners. Since all of the
Company's remaining assets would have been distributed to the preferred
shareholders if the Company had been liquidated, the Board of Directors believed
that the exercise of the option (and the related termination of the Plan of
Liquidation) should not take place until the preferred shareholders had been
given a chance to exchange their shares for cash.

      The terms of the redeemable preferred stock require the Company, when and
as appropriated by the Board out of funds legally available for that purpose, to
make annual payments to a sinking fund. Such payments were to have commenced on
July 1, 1998. The preferred stock terms also provide that any purchase of
preferred shares by the Company will reduce the sinking fund requirements by an
amount equal to the redemption value ($10 per share) of the shares acquired. As
a result of the Company's purchases of preferred stock in the open market and in
the tender offer described above, no sinking fund payment for the preferred
stock is due until July 1, 2006. However, in connection with the exercise of the
option by CFC Partners, the Company deposited $331,434 into a bank escrow
account for the benefit of the remaining preferred shareholders (see Note 6).

                                       23
<PAGE>

      The redeemable preferred stock is redeemable at the option of the Company
at any time, as a whole or in part, for a redemption price of $10 per share plus
all unpaid accrued dividends.

      Dividends at an annual rate of $.85 per share are cumulative from the
original issue date of the preferred stock. Dividends are payable quarterly on
January 1, April 1, July 1 and October 1 of each year. The dividends payable on
January 1, 2004 and for all four quarters of 2003 have not been declared or paid
by the Company. Dividends in arrears for the five quarters total $74,205,
$60,783 of which relate to the four quarterly dividends for 2003. When the
Company is in arrears as to dividends or sinking fund appropriations for the
preferred stock, dividends to holders of the Company's common stock as well as
purchases, redemptions or acquisitions by the Company of shares of the Company's
common stock are restricted. Since the Company is in default with respect to the
payment of preferred dividends and the aggregate amount of the deficiency is
equal to at least four quarterly dividends, the holders of the preferred stock
are entitled, only while such arrearage exists, to elect two additional members
to the then existing Board of Directors. . The preferred shareholders have not
elected these two additional directors as of this date.

      In the event of a liquidation of the Company, the holders of the preferred
stock are entitled to receive $10 per share plus all unpaid and accrued
dividends prior to any distribution to be made to the holders of common stock.

      The preferred stock is convertible at any time, unless previously
redeemed, into shares of common stock at a rate of 1,482 shares of common stock
for each share of preferred stock (equivalent to a conversion price of $6.75 per
share).

      The difference between the fair value of the preferred stock at the date
of issue and the mandatory redemption value is being recorded through periodic
accretions with an offsetting charge to the deficit. Such accretions totaled
$3,479 and $9,627 in the first nine months of 2003 and 2002, respectively.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

      The Company believes it does not have any material exposure to interest
rate risk as its cash equivalents are short-term in nature and its debt
obligations are at fixed rates. The Company does not use derivative financial
instruments to hedge interest rate exposure and did not experience a material
impact from interest rate risk during fiscal 2003.

      Currently, the Company does not have any significant investments in
financial instruments for trading or other speculative purposes, or to manage
its interest rate exposure and has no other material speculative or quantitative
market risks particular to it.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

                                       24
<PAGE>

      As of the end of the period covered by this report, the Company conducted
an evaluation, under the supervision and with the participation of the principal
executive officer and principal financial officer, of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation,
the principal executive officer and principal financial officer have concluded
that the Company's disclosure controls and procedures are effective to ensure
that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange
Commission's rules and forms.

      Changes in Internal Controls Over Financial Reporting

      Internal controls over financial reporting consists of control processes
designed to provide assurance regarding the reliability of financial reporting
and preparation of our financial statements in accordance with accounting
principles generally accepted in the United States of America. To the extent
that components of our internal controls over financial reporting are included
in our disclosure controls, they are included in the scope of the evaluation by
our chief executive officer and chief financial officer referenced above. There
have been no significant changes in the Company's internal controls over
financial reporting during the Company's most recently completed fiscal quarter
that have materially affected, or are reasonably likely to materially affect,
the Company's internal controls over financial reporting.

      In connection with the first amendment to the form 10-Q filed on January
31, 2004, our independent auditors did not report any matters involving internal
controls that were considered to be a reportable condition or material weakness.
In connection with the audit of our December 31, 2003 10-K which was filed with
the Commission on December 14, 2003, our independent auditors have reported to
our Board of Directors certain matters involving internal controls that our
independent auditors considered to be reportable conditions and material
weaknesses, under standards established by the American Institute of Certified
Public Accountants. The reportable conditions and material weaknesses relate to
the December 31, 2003 financial close process and absence of appropriate reviews
and approvals of transactions and accounting entries. Certain adjustments were
identified in the annual audit process, related to the recording of stock-based
compensation, prepaid expenses, accrued expenses, preferred stock and accounting
for an equity method investment. The adjustments related to these matters were
made by the Company in connection with the preparation of the audited financial
statements for the year ended December 31, 2003. It was subsequently determined
that these reportable conditions and material weaknesses also existed as of
September 30, 2003

      Given these reportable conditions and material weaknesses, management
devoted additional resources to resolving questions that arose during our
year-end audit. As a result, we are confident that our financial statements for
the year ended December 31, 2003 and this amended 10-Q for the nine months ended
September 30, 2003, fairly present, in all material respects, our financial
condition and results of operations.

                           PART II. OTHER INFORMATION

                                       25
<PAGE>

Item 1. Legal Proceedings

      The Company is currently in arbitration against its co-defendant, Life of
the South, from a previously settled claim. Life of the South is seeking to
recover from the Company its share of the settlement totaling $17,500,
unreimbursed fees of $27,825 plus interest, attorney fees and cost of
arbitration from the Company. The arbitration is in its initial stages and while
the outcome can not be predicted, the Company believes the arbitration will be
settled in favor of the Company.

      In addition, the Company has been party to subsequent legal disputes,
notably with respect to a Securities and Exchange Commission investigation that
was settled in October 2004. This investigation was initiated with respect to
the Company's dismissal of its certified auditor of record, Marcum & Kliegman,
LLC. The Company received notification from the SEC Division of Enforcement on
October 14, 2004 that a settlement offer was being submitted to the Commission.
The terms of the proposed settlement would stipulate that the Company violated
Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13
thereunder. Further, the Commission would not pursue any actions against Messrs.
Ehrenhaus or Hommel. Through the date of this report, the Company has not
received notification as to whether the Commission has accepted the terms of
this proposed settlement.

Item 2. Changes in Securities and Use of Proceeds

      During the three months ended September 30, 2003, there have been no
limitations or qualifications, through charter documents, loan agreements or
otherwise, placed upon the holders of the registrant's common or preferred stock
to receive dividends, except as described in Item 3 below.

      At a Board meeting September 4, 2003, the Board approved bonuses for
Donald J. Hommel, President and Chief Executive Officer and Jack I. Ehrenhaus,
Chairman and Chief Operating Officer, of the Company. Each of said individuals
were issued 1,956,521 shares of common stock. These issuances were exempt from
the registration requirements of the Securities Act of 1933, as amended.

      On September 1, 2003, the Company entered into employment agreements with
each of Donald J. Hommel, President and Chief Executive Officer and Jack I.
Ehrenhaus, Chairman and Chief Operating Officer, of the Company pursuant to
which, among other things, the Company issued 3,000,000 shares to each of said
individuals. The issuances were pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended.

Item 3. Defaults upon Senior Securities

      Dividends at an annual rate of $.85 per share are cumulative from the date
of original issue of the preferred stock. Dividends are payable quarterly on the
first day of January, April, July and October. The dividends payable on January
1, April 1, July 1 and October 1, 2003 have not been declared or paid by the
Company. In addition, the dividend payable at January 1, 2004 has also not been
declared or paid by the Company. Dividends in arrears for the five quarters as
of January 1, 2004 total $74,205, $60,783 of which relates to the four quarters
of 2003.

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<PAGE>

      When the registrant is in arrears as to dividends or sinking fund
appropriations for the preferred stock, dividends to holders of the registrant's
common stock as well as purchases, redemptions or acquisitions by the registrant
of shares of its common stock are restricted. Since the registrant is in default
with respect to the payment of preferred dividends and the aggregate amount of
the deficiency is equal to four quarterly dividends, the holders of the
preferred stock are entitled, only while such arrearage exists, to elect two
additional members to the then existing Board of Directors.

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

      On August 7, 2003, the Company mailed an Information Statement to its
shareholders in connection with a special meeting of shareholders to be held on
August 27, 2003 (the Special Meeting). At the Special Meeting, the shareholders
were asked to consider and vote upon a proposal to amend the Company's Articles
of Incorporation (i) to effect a one-for-10 reverse stock split of the Company's
common stock by reducing the number of issued and outstanding shares of common
stock from 5,276,781 to approximately 527,678, (ii) to authorize 50 million
shares of capital stock of the Company, of which 40 million shares will relate
to common stock and 10 million shares will relate to preferred stock and (iii)
to permit action upon the written consent of less than all shareholders of the
Company, pursuant to section 2524 of the Pennsylvania Business Corporation Law
of 1988. CFC Partners owns a majority of the Company's issued and outstanding
shares of common stock and has voted to approve the proposal presented above.
Although the meeting occurred and the three actions were approved by the
shareholders, at this time the Company's management has only effected two out of
three of such authorized actions. On January 27, 2004, an amendment to the
Company's Articles of Incorporation was filed with the Pennsylvania Department
of State Corporation Bureau which (i) increased the authorized share capital of
the Company to 50 million shares, divided into 40 million shares of common stock
and 10 million shares of preferred, and (ii) authorized the Company to take
action upon the written consent of stockholders holding the minimum number of
votes that would be necessary to authorize the action at a meeting at which all
stockholders entitled to vote thereon were present and voting.

Item 5. Other Information

      Effective as of October 31, 2003, the Company approved an amended
operating agreement whereby Spartan would transfer to the Company 24.22% of its
interest in Vaughn in consideration for issuance by the Company of 250,000
shares of common stock. This amended operating agreement memorializing this
arrangement was not executed by members of Vaughn holding 5% of the membership
interests and the 250,000 shares of common stock were not issued. This amended
operating agreement has therefore not and will not be ratified.

      The Company is not directly or indirectly liable for any of the
obligations of Vaughn and its exposure is limited solely to its investment in
Vaughn which is carried at zero in these consolidated financial statements.
However, subsequent to September 30, 2003, Mr. Coby Hakalir, the Chief Executive
Officer of Spartan, made certain claims indicating the Company was responsible
for approximately $200,000 in outstanding liabilities pertaining to the Vaughn
partnership and its related properties. The Company has performed significant
due diligence procedures in an attempt to substantiate Mr. Hakalir's claims, but
has not obtained any evidence that supports the claims. Furthermore, Mr. Hakalir
has not provided evidence to the Company to support his claims. However, in an
attempt to portray the financial condition of the Company as accurately as
possible, the Company has elected to record a reserve of $200,000 to cover any
liabilities arising from the Vaughn partnership.

                                       27
<PAGE>

      The 37.5% equity interest in Vaughn is being accounted for under the
equity method in the Company's condensed consoldated financial statements at
September 30, 2003.

      On October 31, 2003, the Company filed a Registration Statement with the
Securities and Exchange Commission to register 330,000 shares of common stock
issued on October 31, 2003 to a consultant, Pinchus Gold. The agreement is for
services to be provided through January 31, 2004. In exchange for receipt of the
shares of common stock, the consultant would provide various services to the
Company, principally relating to the identification of suitable merger or
acquisition partners for the Company. The cost of these services, as measured by
the market value of the shares at time of issuance, was approximately $82,500.

      On March 1, 2004, the Company entered into a one-year consulting agreement
with Corporate Communications Group ("CCG") whereby CCG would provide business
development and marketing services in exchange for 300,000 shares of the common
stock of the Company. The value of these shares on March 1, 2004 was $21,000.

      On March 19, 2004 the Company executed a loan agreement with Thomas
Willemsen in the amount of $50,000 for operating capital. This is an unsecured
loan, due on June 19, 2004 as to both interest in the amount of $5,000 and
principal.

      On March 22, 2004 the Company executed a loan agreement with Adar Ulster
Realty in the amount of $40,000 for operating capital. This is an unsecured loan
due on May 22, 2004 as to both interest in the amount of $1,200 and principal.

      On March 31, 2004, the Company issued 1,540,800 shares of common stock
each to Mr. Ehrenhaus and Mr. Hommel that was accrued at December 31, 2003 for
unpaid compensation.

      In November 2003, an investor executed a subscription agreement to
purchase 1,000,000 shares of the Company's common stock for ten cents ($0.10)per
share. As of December 31, 2003, the investor has only paid $20,000 toward the
aggregate purchase price of $100,000; no additional amounts have been received
to date. This amount has been recorded as a current liability as the Private
Placement has been cancelled.

Item 6. Exhibits and Reports on Form 8-K

      (a) Exhibits:

                  4.1      Employment Agreement effective September 1, 2003, by
                           and between Consumers Financial
                           Corporation and Donald J. Hommel
                  4.2      Employment Agreement effective September 1, 2003, by
                           and between Consumers Financial
                           Corporation and Jack Ehrenhaus
                  4.3      Agreement dated October 27, 2003 between Consumers
                           Financial Corporation and David Sassoon & Co. PLC


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<PAGE>

                  4.4      Agreement dated as of September 10, 2003 by and
                           between Hudson Valley Home Builders & Developers
                           Corp. and Consumers Financial Corp.
                           31 Rule 13a-14(a)/15d-14(a) Certifications

            31.1 Section 302 certification by Chief Executive Officer
            31.2 Section 302 certification by Chief Financial Officer

         32 Section 1350 Certifications

            32.1 Section 906 certification by Chief Executive Officer
            32.1 Section 906 certification by Chief Financial Officer

      (b) Reports on Form 8-K

      On September 25, 2003, the Company filed a Current Report on Form 8-K
under Item 4 to announce the resignation of Stambaugh Ness, PC as the Company's
independent accountants and the engagement of Marcum & Kliegman LLP engaged as
the new principal independent accountants, commencing with the interim financial
statement review for the third quarter ending September 30, 2003, and the audit
for the year ending December 31, 2003.

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                     CONSUMERS FINANCIAL CORPORATION
                                     Registrant

Date   January 6, 2005        By /s/ Jack I. Ehrenhavs
       -------------             -----------------------------------------------
                                      Jack I. Ehrenhavs
                                      President and Chief Executive Officer

Date   January 6, 2005        By /s/ Jack I. Ehrenhavs
       --------------            -----------------------------------------------
                                      Jack I. Ehrenhavs
                                      Chief Financial Officer

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