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: June 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 12, 2005, was 38,167,499.

         Transitional Small Business Disclosure Format. Yes [ ]  No [X]


                                       1
<PAGE>

                         CONSUMERS FINANCIAL CORPORATION

                              Report on Form 10-QSB

                       For the Quarter Ended June 30, 2004

                                      INDEX

                                                                            Page
                                                                            ----

Part I.  Financial Information

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

                  Consolidated Balance Sheet ..............................    4
                  Consolidated Statements of Operations ...................    5
                  Consolidated Statements of Cash Flows ...................    6
                  Notes to the Consolidated Financial Statements ..........    7

         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


                       June 30, 2004 and December 31, 2003


<PAGE>


                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                     ASSETS

                                                              June 30,      December 31,
                                                                2004            2003
                                                            ------------    ------------
                                                             (Unaudited)
CURRENT ASSETS
<S>                                                         <C>             <C>
      Cash                                                  $        100    $        100
      Prepaid expenses                                            13,300          13,300
                                                            ------------    ------------
            Total Current Assets                                  13,400          13,400
                                                            ------------    ------------
FIXED ASSETS, NET                                                  1,556           2,047
                                                            ------------    ------------
OTHER ASSETS
      Restricted cash held in escrow                             284,799         284,402
      Prepaid insurance                                           42,116          48,767
                                                            ------------    ------------
            Total Other Assets                                   326,915         333,169
                                                            ------------    ------------
            TOTAL ASSETS                                    $    341,871    $    348,616
                                                            ============    ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
      Bank overdraft                                        $      3,690    $      7,242
      Accounts payable and accrued expenses                      362,863         347,582
      Contingent liability                                       355,676         355,676
      Reserve for partnership liabilities                        200,000         200,000
      Notes payable                                              110,000          20,000
      Notes payable - related                                     61,505          38,806
                                                            ------------    ------------
            Total Current Liabilities                          1,093,734         969,306
                                                            ------------    ------------
            TOTAL LIABILITIES                                  1,093,734         969,306
                                                            ------------    ------------
REDEEMABLE PREFERRED STOCK
      Preferred stock; 10,000,000 shares authorized;
      68,376 shares issued and outstanding                       676,855         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          (537,937)             --
                                                            ------------    ------------
            Total Stockholders' Equity (Deficit)              (1,428,718)     (1,295,819)
                                                            ------------    ------------
            TOTAL LIABILITIES, REDEEMABLE PREFERRED
              STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)      $    341,871    $    348,616
                                                            ============    ============
</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 OPERATIONS
                                  (UNAUDITED)

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

EXPENSES
      General and Administrative        309,569          96,422         526,198         222,633         526,198
      Depreciation                          245            --               490            --               490
                                   ------------    ------------    ------------    ------------    ------------
           Total Expenses               309,814          96,422         526,688         222,633         526,688
                                   ------------    ------------    ------------    ------------    ------------
LOSS FROM OPERATIONS                   (309,814)        (96,422)       (526,688)       (222,633)       (526,688)
                                   ------------    ------------    ------------    ------------    ------------

OTHER EXPENSES
      Interest income                      --              --               397            --               397
      Interest expense                   (2,321)           --            (9,721)           --            (9,721)
      Other income                         --             2,098            --             3,015            --
                                   ------------    ------------    ------------    ------------    ------------
           Total Other Expenses          (2,321)          2,098          (9,324)          3,015          (9,324)
                                   ------------    ------------    ------------    ------------    ------------
NET LOSS                           $   (312,135)   $    (94,324)   $   (536,012)   $   (219,618)   $   (536,012)
                                   ============    ============    ============    ============    ============
BASIC LOSS PER SHARE               $      (0.02)   $      (0.02)   $      (0.03)   $      (0.04)
                                   ============    ============    ============    ============
WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING              19,584,163       5,276,781      18,573,064       5,276,781
                                   ============    ============    ============    ============
</TABLE>

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


                                      F-3
<PAGE>


                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           From Inception
                                                                                               of the
                                                                      For the Six         Development Stage
                                                                     Months Ended         on January 1, 2004
                                                                       June 30,               Through
                                                               ------------------------       June 30,
                                                                  2004         2003            2004
                                                                ---------    ---------       ---------
<S>                                                             <C>          <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                   $(536,012)   $(219,618)      $(536,012)
     Adjustments to reconcile net loss to
       net cash used by operating activities:
           Provision for loss on loan receivable                     --         27,500            --
           Depreciation                                               491         --               491
           Common stock issued for services                       319,038         --           319,038
           Amortization of deferred compensation                   85,800         --            85,800
     Changes in operating assets and liabilities:
           Change in restricted cash                                 (397)        --              (397)
           (Increase) decrease in prepaid expenses                  6,651       50,784           6,651
           Increase (decrease in accounts payable and
             accrued expenses                                      15,282        1,840          15,282
                                                                ---------    ---------       ---------
                Net Cash Used by Operating Activities            (109,147)    (139,494)       (109,147)
                                                                ---------    ---------       ---------
CASH FLOWS FROM INVESTING ACTIVITIES
           Loan to majority shareholder                              --        (27,500)           --
           Cash withdrawn from preferred stock escrow account        --         12,958            --
           Purchase of fixed assets                                  --         (2,946)           --
                                                                ---------    ---------       ---------
                Net Cash Used by Investing Activities                --        (17,488)           --
                                                                ---------    ---------       ---------
CASH FLOWS FROM FINANCING ACTIVITIES
           Net proceeds from notes payable                         90,000         --            90,000
           Purchase of redeemable preferred stock                    --         (8,060)           --
           Net proceeds from notes payable - related               22,699         --            22,699
           Change in bank overdraft                                (3,552)        --            (3,552)
                                                                ---------    ---------       ---------
                Net Cash Provided (Used) by Financing
                  Activities                                      109,147       (8,060)        109,147

           NET DECREASE IN CASH                                      --       (165,042)           --

           CASH AT BEGINNING OF PERIOD                                100      165,758             100
                                                                ---------    ---------       ---------
           CASH AT END OF PERIOD                                $     100    $     716       $     100
                                                                =========    =========       =========
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-4
<PAGE>


                 CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                 Notes to the Consolidated Financial Statements
                       June 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 six months ended June 30, 2004 and
         2003, and from inception of the development stage on January 1, 2004
         through June 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 June 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
         June 30, 2004, the Company had minimal current assets totaling $13,400,
         and its current liabilities of $1,093,734 exceeded its current assets
         by $1,080,334, the Company had an accumulated deficit of $13,431,709,
         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-5
<PAGE>
                 CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                 Notes to the Consolidated Financial Statements
                       June 30, 2004 and December 31, 2003


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-6
<PAGE>
                 CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                 Notes to the Consolidated Financial Statements
                       June 30, 2004 and December 31, 2003


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.

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, 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.


                                      F-7
<PAGE>
                 CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                 Notes to the Consolidated Financial Statements
                       June 30, 2004 and December 31, 2003


NOTE 5 - SUBSEQUENT EVENTS

         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.


                                      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
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.



                                       4
<PAGE>

         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
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.



                                       6
<PAGE>

         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 June 30, 2004

         For the three months ended June 30, 2004, the Company reported a net
loss of $312,135 ($0.02 per share) compared to a net loss of $94,324 ($0.02 per
share) in the second 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 increased expenses incurred while the Company is developing new business
opportunities. During the second 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 second quarter of 2003 was $94,324
($0.02 per share). The Company had zero operating revenue for the period. The
net loss consisted primarily of officer salaries and other expense incurred
while exploring business opportunities.


                                       7
<PAGE>


SIX MONTHS ENDED June 30, 2004

         For the six months ended June 30, 2004, the Company reported a net loss
of $536,012 ($0.03 per share) compared to a net loss of $219,618 ($0.04 per
share) in the first six 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 increased expenses incurred while the Company is developing new business
opportunities. During the first six 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 six months of 2003 was $219,618
($0.04 per share). The Company had zero operating revenue for the period. The
net loss consisted primarily of officer salaries and other expense incurred
while exploring business opportunities.

         Liquidity

         During the six months ended June 30, 2004 and 2003, the Company used
cash in operations of $109,147 and $139,494, respectively. The Company had cash
on hand of $100 as of June 30, 2004 compared to $716 cash as of June 30, 2003.
The Company received $90,000 cash proceeds from the issuance of notes payable,
and an additional 22,699 from notes to related parties during the six months
ended June 30, 2004.

         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
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.



                                       8
<PAGE>

         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.

         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.


                                       9
<PAGE>

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.

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


                                       10
<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 12, 2005

                                        By /s/ Jack I. Ehrenhaus
                                          -------------------------------------
                                          Jack I. Ehrenhaus
                                          President, Chief Executive Office and
                                          Chief Financial Officer


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