UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                       ----------------------------------

                                   FORM 10-QSB

        |X| QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

               For Quarterly period Ended: September 30, 2004; or

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

                For the transition period _________ 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 a
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |_| No |X|

      The number of shares outstanding of the registrant's common stock, $0.01
par value, as of January 11, 2005, was 38,167,499.

      Transitional Small Business Disclosure Format. Yes |_| No |X|
<PAGE>

                         CONSUMERS FINANCIAL CORPORATION

                              Report on Form 10-QSB

                    For the Quarter Ended September 30, 2004

                                      INDEX

                                                                        Page
                                                                        ----
Part I.  Financial Information

         Item 1.  Financial Statements (unaudited)...................   3

                  Consolidated Balance Sheet ........................ F-1
                  Consolidated Statements of Operations ............. F-2
                  Consolidated Statements of Cash Flows.............. F-3
                  Notes to the Consolidated Financial Statements .... F-4

         Item 2.  Management's Discussion and Analysis
                           or Plan of Operation .......................11

         Item 3.  Controls and Procedures ...........................  14

Part II. Other Information

         Item 1.  Legal Proceedings .................................  14

         Item 2.  Changes in Securities .............................  15

         Item 3.  Defaults Upon Senior Securities ...................  15

         Item 4.  Submission of Matters to a Vote of
                           Security Holders ...........................15

         Item 5.  Other Information .................................  15

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


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)


                        CONSOLIDATED FINANCIAL STATEMENTS


                    September 30, 2004 and December 31, 2003


                                       3
<PAGE>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                         (A Development Stage Company)
                           Consolidated Balance Sheets

                                     ASSETS

<TABLE>
<CAPTION>
                                                                   September 30,   December 31,
                                                                       2004             2003
                                                                   ------------    ------------
                                                                    (Unaudited)
<S>                                                                <C>             <C>
CURRENT ASSETS

      Cash                                                         $    101,656    $        100
      Prepaid expenses                                                   13,965          13,300
                                                                   ------------    ------------

            Total Current Assets                                        115,621          13,400
                                                                   ------------    ------------

FIXED ASSETS, NET                                                         1,310           2,047
                                                                   ------------    ------------

OTHER ASSETS

      Restricted cash held in escrow                                     21,299         284,402
      Prepaid insurance                                                  38,391          48,767
                                                                   ------------    ------------

            Total Other Assets                                           59,690         333,169
                                                                   ------------    ------------

            TOTAL ASSETS                                           $    176,621    $    348,616
                                                                   ============    ============


           LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

      Bank overdraft                                               $         --    $      7,242
      Accounts payable and accrued expenses                             482,304         347,582
      Contingent liability                                              355,676         355,676
      Reserve for partnership liabilities                               200,000         200,000
      Notes payable                                                      70,000          20,000
      Notes payable - related                                            52,423          38,806
                                                                   ------------    ------------

            Total Current Liabilities                                 1,160,403         969,306
                                                                   ------------    ------------

            TOTAL LIABILITIES                                         1,160,403         969,306
                                                                   ------------    ------------

REDEEMABLE PREFERRED STOCK

      Preferred stock; 10,000,000 shares authorized;
      68,376 shares issued and outstanding                              677,718         675,129
                                                                   ------------    ------------

STOCKHOLDERS' EQUITY (DEFICIT)

      Common stock; 40,000,000 shares authorized,
        at $0.01 par value,  23,931,499 and 17,550,731
        shares and outstanding, respectively                            239,315         175,507
      Additional paid-in capital                                     11,781,746      11,526,316
      Treasury stock - preferred                                        (18,070)        (18,070)
      Deferred compensation                                                  --         (85,800)
      Deficit accumulated prior to the development stage            (12,893,772)    (12,893,772)
      Deficit accumulated during the development stage                 (770,719)             --
                                                                   ------------    ------------

            Total Stockholders' Equity (Deficit)                     (1,661,500)     (1,295,819)
                                                                   ------------    ------------

            TOTAL LIABILITIES, REDEEMABLE PREFERRED
              STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)             $    176,621    $    348,616
                                                                   ============    ============
</TABLE>

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


                                      F-1
<PAGE>


                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                         (A Development Stage Company)
                     Consolidated Statements of Operations
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                      From Inception
                                                                                                          of the
                                              For the Three                    For the Nine           Development Stage
                                              Months Ended                     Months Ended           on January 1, 2004
                                              September 30,                    September 30,               Through
                                       ----------------------------    ----------------------------     September 30,
                                           2004             2003           2004            2003             2004
                                       ------------    ------------    ------------    ------------    ------------
<S>                                    <C>             <C>             <C>             <C>             <C>
REVENUES                               $         --    $         --    $         --    $         --    $         --

EXPENSES

      General and Administrative            249,068       3,555,855         777,751       3,668,119         777,751
      Bad debt expense                           --          27,500              --          27,500              --
      Depreciation                              245             899             736             899             736
                                       ------------    ------------    ------------    ------------    ------------

           Total Expenses                   249,313       3,584,254         778,487       3,696,518         778,487
                                       ------------    ------------    ------------    ------------    ------------

LOSS FROM OPERATIONS                       (249,313)     (3,584,254)       (778,487)     (3,696,518)       (778,487)
                                       ------------    ------------    ------------    ------------    ------------

OTHER EXPENSES

      Interest income                            --           2,431             396           2,461             396
      Interest expense                       (1,558)         (5,648)        (11,279)         (5,648)        (11,279)
      Proceeds from litigation
        settlement                               --          35,000              --          17,500              --
      Gain on extinguishment of debt             --          20,000              --          20,000              --
      Other income                           18,952             654          21,439           1,447          21,439
                                       ------------    ------------    ------------    ------------    ------------

           Total Other Expenses              17,394          52,437          10,556          35,760          10,556
                                       ------------    ------------    ------------    ------------    ------------

NET LOSS                               $   (231,919)   $ (3,531,817)   $   (767,931)   $ (3,660,758)   $   (767,931)
                                       ============    ============    ============    ============    ============

BASIC LOSS PER SHARE                   $      (0.01)   $      (0.37)   $      (0.04)   $      (0.54)
                                       ============    ============    ============    ============

WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING                 23,931,499       9,524,750      20,355,464       6,784,643
                                       ============    ============    ============    ============
</TABLE>

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


                                      F-2
<PAGE>


                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                         (A Development Stage Company)
                     Consolidated Statements of Cash Flows
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                    From Inception
                                                                                                        of the
                                                                          For the Nine             Development Stage
                                                                          Months Ended             on January 1, 2004
                                                                          September 30,                 Through
                                                                  -----------------------------       September 30,
                                                                       2004            2003              2004
                                                                  -------------    -------------    -------------
<S>                                                               <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES

     Net loss                                                     $    (767,931)   $  (3,660,758)   $    (767,931)
     Adjustments to reconcile net loss to
       net cash used by operating activities:
          Provision for loss on loan receivable                              --               --               --
          Depreciation                                                      737              889              737
          Common stock issued for services                              319,038        2,598,390          319,038
          Amortization of deferred compensation                          85,800               --           85,800
          Redemptionof preferred stock                                       --           50,345               --
          Accretion of preferred stock                                       --           (3,596)              --
     Changes in operating assets and liabilities:
          Change in restricted cash                                     263,103           29,823          263,103
          (Increase) decrease in prepaid expenses                         9,711           17,120            9,711
          (Increase) decrease in other assets                                --           53,050               --
          Increase (decrease in accounts payable and
            accrued expenses                                            134,723          238,963          134,723
          Increase in contingent and other liabilities                       --          555,676               --
                                                                  -------------    -------------    -------------

               Net Cash Provided (Used) by Operating Activities          45,181         (120,098)          45,181
                                                                  -------------    -------------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES

          Purchase of fixed assets                                           --           (2,936)              --
                                                                  -------------    -------------    -------------

               Net Cash Used by Investing Activities                         --           (2,936)              --
                                                                  -------------    -------------    -------------

CASH FLOWS FROM FINIANCING ACTIVITIES

          Net proceeds from notes payable                                50,000           20,000           50,000
          Purchase of redeemable preferred stock                             --          (18,070)              --
          Change in redeemable preferred stock                               --          (64,820)              --
          Net proceeds from notes payable - related                      13,617           28,006           13,617
          Change in bank overdraft                                       (7,242)              --           (7,242)
                                                                  -------------    -------------    -------------

               Net Cash Provided (Used) by Financing
                 Activities                                              56,375          (34,884)          56,375
                                                                  -------------    -------------    -------------

          NET INCREASE (DECREASE) IN CASH                               101,556         (157,918)         101,556

          CASH AT BEGINNING OF PERIOD                                       100          165,758              100
                                                                  -------------    -------------    -------------

          CASH AT END OF PERIOD                                   $     101,656    $       7,840    $     101,656
                                                                  =============    =============    =============

SUPPLIMENTAL DISCLOSURES OF
     CASH FLOW INFORMATION

     CASH PAID FOR:

          Interest                                                $          --    $          --    $          --
          Income Taxes                                            $          --    $          --    $          --

     NON-CASH FINANCING ACTIVITIES

          Common stock issued for services                        $     319,038    $          --    $     319,038
</TABLE>

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


                                      F-3
<PAGE>

                 CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARY
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                    September 30, 2004 and December 31, 2003

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

       The accompanying 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
       for the three and nine months ended September 30, 2004 and 2003, and from
       inception of the development stage on January 1, 2004 through September
       30, 2004, 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, 2003 audited financial statements.
       The results of operations for the periods ended September 30, 2004 and
       2003 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, 2004, the Company had current assets totaling $115,621, and
       its current liabilities of $1,160,403 exceeded its current assets by
       $1,044,782, the Company had a total accumulated deficit of $13,664,491,
       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.


                                      F-4
<PAGE>

NOTE 2 - GOING CONCERN (Continued)

       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 significant
       ownership dilution for the existing company shareholders.

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

       In addition, due to the fact that the Company's planned principal
       operations have not materially commenced and the Company has not
       developed an on-going flow of revenues, the Company is considered to have
       entered the development-stage. January 1, 2004 is the date management has
       determined most accurately reflects the Company's re-entrance into the
       development stage.

NOTE 3 - SIGNIFICANT EVENTS

       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 which is due on June 19, 2004.

       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 which is due on May 22, 2004.


                                      F-5
<PAGE>

NOTE 3 - SIGNIFICANT 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.

NOTE 4 - LITIGATION

       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,
       un-reimbursed 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.


                                      F-6
<PAGE>

NOTE 4 - LITIGATION (Continued)

       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.


                                      F-7
<PAGE>

NOTE 5 - SUBSEQUENT EVENTS

      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.

                                      F-8
<PAGE>

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

         CAUTIONARY FORWARD - LOOKING STATEMENT

         The following discussion should be read in conjunction with the
Company's financial statements and related notes.

         Certain matters discussed herein may contain forward-looking statements
that are subject to risks and uncertainties. Such risks and uncertainties
include, but are not limited to, the following:

          -    the volatile and competitive nature of the Company's business,

          -    the uncertainties surrounding the rapidly evolving markets in
               which the Company competes,

          -    the arrangements with present and future customers and third
               parties.

         Should one or more of these risks or uncertainties materialize or
should any of the underlying assumptions prove incorrect, actual results of
current and future operations may vary materially from those anticipated.

         Business 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
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

                                       4
<PAGE>

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.

                                       5
<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 December 31, 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.

         Plan of Operation

            Prior to the discontinuation of its business operations as noted
above, the Company operated in three industry segments: the Automotive Resource
Division, which marketed credit insurance and other products and services to its
automobile dealer customers, the Individual Life Insurance Division and the Auto
Auction Division. These segments did not include the corporate activities of the
Company. Effective with the real estate acquisition by Vaughn, the Company,
through its Vaughn subsidiary operates a garden-type apartment complex in
Springfield, Illinois.

      The Company intends to initially expand into the real estate, construction
management, insurance agent and medical technology industries through a
combination of strategic alliances, mergers or consolidations, or acquisitions.

      With respect to its plans for the real estate business, the Company
intends to acquire additional garden-type apartment complexes initially in
Illinois and New York and subsequently in other northeastern United States
locations. The Company also expects to become involved in real estate
development activity, initially in the New York area.

      In connection with its construction management initiatives, the Company
intends to manage its real estate development activities as well as selected
outside projects.

      With regard to the medical technology business, the Company plans to
develop, own and operate positron emission tomography ("PET") imaging centers
initially in the New York area and then in other regional locations. The Company
has formed a 55% owned subsidiary, P.E.T Centers of America LLC, and through
this subsidiary, has initiated some business arrangements, but none of
significant consequence to date. In September the Company, through its
subsidiary, had signed a lease for a PET center in Suffolk County, New York, but
subsequently the lease terminated. The Company received a letter from the

                                       6
<PAGE>

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
Company has received no further communications from the landlord in connection
with its demand. The Company has accrued $355,676 associated with this
terminated lease.

      During April, 2003, the Company entered into a Memorandum of Understanding
with Mariculture Systems, Inc. ("Mariculture") whereby the Company would acquire
60% of the outstanding shares of Mariculture in exchange for the Company's
management and financial expertise. Mariculture designs, builds and operates
aquaculture farms used for raising certain species of fish for the consumer
market. Although not aggressively pursued by either party to date, and still
requiring appropriate due diligence review and board approvals, this memorandum
has no expiration date and neither party has expressed an intent to terminate
it.

      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 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.

      The Company intends to move forward with its due diligence in this
transaction pursuant to this memorandum.

         Results of Operations

                 A discussion of the material factors which affected the
Company's results of operations for the three and six months ended June 30, 2004
and 2003 is presented below.

THREE MONTHS ENDED September 30, 2004

     For the three months ended September 30, 2004, the Company reported a net
loss of $231,919 ($0.01 per share) compared to a net loss of $3,581,817 ($0.37
per share) in the third quarter of fiscal 2003. Since the Company now has only a
nominal amount of revenues, the current period net loss is primarily the result
of expenses incurred while the Company is developing new business opportunities.
During the third quarter of 2004, these expenses consisted principally of
salaries to two officers, and audit, legal, and consulting fees.

     The Company's net loss for the third quarter of 2003 was $3,581,817 ($0.37
per share). The Company had zero operating revenue for the period. The net loss
consisted primarily of officer salaries, a provision for the Company's default
on its office lease, a provision for the Company's potential liabilities
associated with its Vaughn subsidiary and other expense incurred while exploring
business opportunities.


                                       7
<PAGE>

NINE MONTHS ENDED September 30, 2004

     For the nine months ended September 30, 2004, the Company reported a net
loss of $767,931 ($0.04 per share) compared to a net loss of $3,660,758 ($0.54
per share) in the first nine months of fiscal 2003. Since the Company now has
only a nominal amount of revenues, the current period net loss is primarily the
result of expenses incurred while the Company is developing new business
opportunities. During the first nine months of 2004, these expenses consisted
principally of salaries to two officers, and audit, legal, and consulting fees.

     The Company's net loss for the first nine months of 2003 was $3,660,758
($0.54 per share). The Company had zero operating revenue for the period. The
net loss consisted primarily of officer salaries, a provision for the Company's
default on its office lease, a provision for the Company's potential liabilities
associated with its Vaughn subsidiary and other expense incurred while exploring
business opportunities.

         Liquidity

         During the nine months ended September 30, 2004 and 2003, the Company
provided (used) cash in operations of $45,181 and $(120,098), respectively. The
Company had cash on hand of $101,656 as of September 30, 2004 compared to $7,840
cash as of September 30, 2003. The Company received $50,000 net cash proceeds
from the issuance of notes payable, and an additional 13,617 from notes to
related parties during the nine months ended September 30, 2004. However, the
largest inflow of non-restricted cash during the period came from the
liquidation of the Company's previously restricted escrow account reserve for
preferred shareholders. The Company received a legal opinion stating that the
Company was not required to keep this cask in reserve, so it was transferred
into an operating account during the period.

         The Company anticipates that it will need to raise approximately
$2,000,000 in cash in the next twelve months to cover general and administrative
expenses and other anticipated cash needs, particularly for additional due
diligence on acquisition candidates. The Company may seek to raise such needed
funds through the sale of its shares of stock or by borrowing. No assurance can
be given that the Company will be able to raise the necessary funds on terms
acceptable to the Company if at all.

Item 3. Controls and Procedures.

         (a) Evaluation of Disclosure Controls and Procedures. The Company's
Chief Executive Officer, Jack I. Ehrenhaus, and Chief Financial Officer, Jack I.
Ehrenhaus, have reviewed the Company's disclosure controls and procedures as of
the end of the period covered by this report. Based upon this review, Mr.
Ehrenhaus believes that the Company's disclosure controls and procedures are
effective in ensuring that material information related to the Company is made
known to him by others within the Company.

         (b) Changes in Internal Controls Over Financial Reporting. There have
been no significant changes in internal controls over financial reporting that

                                       8
<PAGE>

occurred during the fiscal period covered by this report that have materially
affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.

PART II - OTHER INFORMATION.

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.

         Recent Sales of Unregistered Securities

         On June 1, 2004, the Company issued an aggregate of 4,943,400
restricted shares of common stock to its two primary executive officers, Mr.
Jack I. Ehrenahus and Mr. Donald J. Hommel for administrative services rendered
to the Company. The securities were issued pursuant to an exemption from
registration provided under Section 4(2) and 4(6) of the Securities Act of 1933.
The parties to whom the shares were issued received information concerning the
Company. The shares were appropriately restricted. No underwriters were involved
in the transactions and no commissions were paid.

         On June 1, 2004, the Company issued and additional 1,437,638 restricted
shares of common stock to the Company's CEO and COO, Donald J. Hommel and Jack
I. Ehrenhaus, respectively, for bonus compensation. The securities were issued
pursuant to an exemption from registration provided under Section 4(2) and 4(6)
of the Securities Act of 1933. The parties to whom the shares were issued
received information concerning the Company. The shares were appropriately
restricted. No underwriters were involved in the transactions and no commissions
were paid.


Item 3. Defaults Upon Senior Securities.

                                       9
<PAGE>

         None.

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

         No matter was submitted to a vote of our shareholders during the first
quarter.

Item 5. Other Information.


         None applicable.

         None.

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

         (a) List of Exhibits attached or incorporated by referenced pursuant to
Item 601 of Regulation S-B.


     Exhibit                      Description
     -------                      -----------

      (2)   Plan of acquisition, reorganization, arrangement, liquidation or
            succession (1)

      (3)   Articles of incorporation and by-laws (i)

      (4)   Instruments defining the rights of security holders, including
            indentures (i)

      (9)   Voting trust agreements (ii)

      (10)  Material contracts (ii)

      (11)  Statement re: computation of per share earnings (ii)

      (12)  Statement re: computation of ratios (ii)

      (13)  Annual report to security holders (ii)

      (16)  Letter re: change in certifying accountants (i)

      (18)  Letter re: change in accounting principles (ii)

      (21)  Subsidiaries of the registrant (iii)

      (22)  Published report regarding matters submitted to a vote of security
            holders (i)

      (23)  Consents of experts and counsel (ii)

      (24)  Power of attorney (ii) (31.1)Certification of Chief Executive
            Officer (Section 302 of Sarbanes-Oxley Act) (iii)

      (31.2)Certification of Chief Financial Officer (Section 302 of
            Sarbanes-Oxley Act) (iii)

      (32.1)Certification of Chief Executive Officer (Section 906 of
            Sarbanes-Oxley Act) (iv)

      (32.2)Certification of Chief Financial Officer (Section 906 of
            Sarbanes-Oxley Act) (iv)

      (i)   Information or document provided in previous filing with the
            Commission

      (ii)  Information or document not applicable to registrant

      (iii) Information or document included as exhibit to this Form 10-K

      (iv)  Document furnished with this Form 10-K

      (b)   Reports on Form 8-K.

                                       10
<PAGE>

         The Company filed no reports on Form 8-K during the period covered by
this report.


                                       11
<PAGE>

                                   SIGNATURES

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

                                      CONSUMERS FINANCIAL CORPORATION


Dated: January 13, 2005
                                      By
                                        ---------------------------------------
                                        Jack I. Ehrenhaus
                                        President, Chief Executive Office and
                                        Chief Financial Officer


                                       12