SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A



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

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


                         Commission File Number: 0-2616


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


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


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


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


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

                                 Yes [X] No [ ]


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

                                                         Outstanding at
         Class of Common Stock                          January 15, 2004
         ---------------------                          ----------------
           $.01 Stated Value                               17,667,096





                                       1
<PAGE>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                                TABLE OF CONTENTS


                                EXPLANATORY NOTE

This Form 10-Q/A  shall amend and restate in its entirety the Form 10-Q filed by
the Company on December 29, 2003.

<TABLE>
<CAPTION>
Number                                                                                          Page
------                                                                                          ----
<S>                                                                                             <C>
             Part I. Financial Information

Item 1.      Condensed Consolidated Financial Statements:

             Balance Sheets - September 30, 2003 (Unaudited) and December 31, 2002               3

             Statements of Operations and Comprehensive Income (Loss) (Unaudited) -
                  For the Nine and Three Months Ended September 30, 2003 and 2002                4-5

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

             Notes to Condensed Consolidated Financial Statements                                7-14

Item 2.      Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                                      15-20

Item 3.      Quantitative and Qualitative Disclosure About Market Risk                           21

Item 4.      Controls and Procedures                                                             21


             Part II. Other Information

Item 1.      Legal Proceedings                                                                   22

Item 2.      Changes in Securities and Use of Proceeds                                           22

Item 3.      Defaults upon Senior Securities                                                     22

Item 4.      Submission of Matters to a Vote of Security Holders                                 22

Item 5.      Other Information                                                                   23

Item 6.      Exhibits and Reports on Form 8-K                                                    23

             Certifications

Pursuant to Section 302 of Sarbanes-Oxley Act                                                    26-27

Pursuant to Section 906 of Sarbanes-Oxley Act                                                    26-27
</TABLE>



                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                             September 30,           December 31,
                                                                                 2003                   2002
----------------------------------------------------------------------------------------------------------------
                                                                              (Unaudited)
ASSETS

Current assets:
<S>                                                                            <C>                      <C>
   Cash and cash equivalents                                                   $ 21,689                 $165,758
    Accounts receivable                                                          11,332
   Construction escrow                                                          299,218
   Prepaid expenses                                                             162,048                   30,420
----------------------------------------------------------------------------------------------------------------
          Total current assets                                                  494,287                  196,178

Property, plant and equipment, net of accumulated depreciation of             5,873,231
$111,731
Restricted cash held in escrow account                                          269,021                  314,225
Prepaid Insurance                                                                                         87,363
Financing costs, net                                                            159,875
----------------------------------------------------------------------------------------------------------------
          Total assets                                                       $6,796,414                 $597,766

LIABILITIES, REDEEMABLE PREFERRED STOCK AND

       SHAREHOLDERS' DEFICIENCY

Current liabilities:
     Accounts payable and accrued expenses                                     $417,868                  $32,168
     Due to officer                                                               5,000
     Notes payable                                                              105,496
     Mortgage payable                                                         1,200,000
     Other                                                                                                22,134


          Total current liabilities                                           1,728,364                   54,302
----------------------------------------------------------------------------------------------------------------
Long term liabilities:
     Mortgages payable                                                        4,650,000
          Total liabilities                                                   6,378,364                   54,302
Redeemable preferred stock:
     Series A, 8 1/2% cumulative convertible,  authorized 632,500 shares;
         issued and outstanding 2003, 72,226 shares, 2002,
              75,326 shares; redemption amount 2003, $722,260, 2002,
               $753,260; net of treasury stock of $8,060 in 2003                711,799                  739,949
Minority interest                                                                87,841
Shareholders' deficiency:
     Common stock, $.01 stated value, authorized 10,000,000
         17,002,096 (includes 9,913,042 shares to be issued) and
          5,276,781 shares issued and outstanding respectively                  170,021                   52,768
     Capital in excess of stated value                                       11,446,311                8,938,865
     Deficit                                                               (11,969,235)              (9,188,118)
     Less:  Deferred compensation                                              (28,687)
          Total shareholders' deficiency                                      (381,590)                (196,485)
          Total liabilities and shareholders' deficiency                     $6,796,414                 $597,766
</TABLE>

            See Notes to Condensed Consolidated Financial Statements




                                       3
<PAGE>
                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                                   (Unaudited)




<TABLE>
<CAPTION>
                                                 Nine Months        Nine Months       Three Months    Three Months
                                                    Ended               Ended             Ended           Ended
                                                September 30,       September 30,     September 30,   September 30,
                                                    2003                2002              2003            2002
                                                -------------       -------------     -------------   -------------
                                                 (Unaudited)         (Unaudited)       (Unaudited)     (Unaudited)

 Operating revenues:
<S>                                                 <C>            <C>                               <C>
      Rental Income                                 $220,752       $                   $137,335      $

  Operating expenses:

     Cost of Rental Operations                      262,359                            181,750

  Loss from Rental Operations                       (41,607)                           (44,415)


     Selling, General and Administrative

     Expenses (Including stock based
     compensation of $2,326,012 for the)
     nine and three months ended
     September 30, 2003)                           2,674,040           419,078        2,402,812           137,653

  Loss from Operations                           (2,715,647)         (419,078)      (2,447,227)         (137,653)
----------------------------------------------------------------------------------------------------------------------------

  Other Income / Expense
     Interest income                                   2,080                                512
     Interest expense                              (177,678)                          (161,193)
     Miscellaneous                                     1,447
     Net investment income                                              44,295                              6,320
     Net realized investment gains                                     242,480
     Proceeds from settlement of
     Litigation                                                        255,000                            255,000
    Miscellaneous                                                       41,192                                222
----------------------------------------------------------------------------------------------------------------------------
  Total Other Income/Expense                       (174,151)           582,967        (160,681)           261,542
    Minority interest                                112,159                            104,979

  Net (loss) income                              (2,777,639)           163,889      (2,502,929)           123,889
  Other comprehensive loss, change
    in unrealized appreciation of debt
    Securities                                                        (54,702)
  Comprehensive (loss) income                   ($2,777,639)          $109,187     ($2,502,929)
                                                                                                         $123,889

  Per share data: (See Note 9)
     Basic and diluted (loss)
       income per common share                       ($0.42)           ($0.05)          ($0.26)              0.00


     Weighted average number of
         common shares outstanding                 6,784,517         2,909,419        9,515,637         3,574,636
</Table>

            See Notes to Condensed Consolidated Financial Statements

                                       4
<Page>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<Table>
<Caption>
                                                                      Nine Months Ended         Nine Months Ended
                                                                        September 30,           September 30, 2002
                                                                            2003
--------------------------------------------------------------------------------------------------------------------
                                                                         (Unaudited)               (Unaudited)
--------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S>                                                                        <C>                            <C>
     Net (loss) income                                                     ($2,777,639)                   $163,889

       Adjustments to reconcile net (loss) income to
       cash flows used in operating activities:
             Depreciation & amortization                                        105,536
             Provision for forgiveness of loans receivable from majority         27,500
             Shareholders
             Gain on sale of investments                                                                  (56,448)
             Gain on sale of insurance licenses                                                          (178,483)
             Minority interest                                                (112,159)
             Stock based compensation                                         2,326,012
       Increase (decrease) in cash attributable to changes in
       assets and liabilities
             Accounts receivable                                               (11,332)                     21,431
             Prepaid expenses                                                  (44,264)                   (13,317)
             Payment of employee severance liability                                                     (177,962)
             Accrued expenses                                                   373,440
             Other current liabilities                                         (16,638)                   (69,841)
             Other                                                                                        (53,439)
             Total adjustments                                                2,648,095                  (528,059)
                                                                      ------------------        -------------------
     Net cash used in operating activities                                    (129,544)                  (364,170)
                                                                      ------------------        -------------------

Cash flows from investing activities:
     Proceeds from sale of investments                                                                     945,181
     Proceeds from sale of insurance licenses, net of
         selling expenses of $44,767 and liability assumed
         by buyer of $132,120                                                                               73,113
     Cash deposited into preferred stock escrow account                                                  (331,434)
     Loan to majority shareholder                                              (27,500)
     Cash withdrawn from preferred stock escrow account                          45,204
     Escrow - construction and real estate tax                                (299,218)
                                                                      ---------------------------------------------
     Purchase of property, equipment and leasehold improvements             (5,671,873)
                                                                      ---------------------------------------------
     Net cash (used in) provided by investing activities                    (5,953,387)                    686,860
                                                                      ------------------        -------------------

Cash flows from financing activities:
     Mortgage Proceeds                                                        5,850,000
     Proceeds from Note Payable                                                 100,000
     Proceeds from Officer                                                        5,000
     Payment of financing costs                                               (196,769)
     Purchase of redeemable preferred stock                                    (19,369)                (1,660,067)
     Proceeds from issuance of common stock                                                                108,000
     Contributed capital                                                        200,000
     Cash dividends to preferred shareholders                                                            (335,986)
                                                                      ---------------------------------------------

     Net cash provided by (used) in financing activities                      5,938,862                (1,888,053)
                                                                      ------------------        -------------------


Net decrease in cash                                                          (144,069)                (1,565,363)
Cash and cash equivalents at beginning of period                                165,758                  1,802,265
                                                                      ------------------        -------------------

Cash and cash equivalents at end of period                                      $21,689                   $236,902
                                                                      =================         ==================

Supplemental disclosures of non-cash financing activity:
               Due to preferred stockholders for redemption of shares                           $           12,260
                                                                                                ==================
               Issuance of stock for brokers fees in connection with purchase
                of property                                                                     $          270,000
                                                                                                ==================
</Table>

            See Notes to Condensed Consolidated Financial Statements



                                       5
<Page>
                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                  NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (Unaudited)



1.      Overview and Basis of Presentation:

The condensed  consolidated balance sheet of Consumers Financial Corporation and
Subsidiary  as  of  September  30,  2003,  the  related  condensed  consolidated
statements of operations for the three and nine months ended  September 30, 2003
and 2002 and the  condensed  consolidated  statements of cash flows for the nine
months ended September 30, 2003 and 2002,  included in Item 1 have been prepared
by the Company,  without  audit,  pursuant to the rules and  regulations  of the
Securities and Exchange Commission ("SEC" or "Commission").  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  pursuant to such rules and  regulations.
In the opinion of management,  the accompanying condensed consolidated financial
statements include all adjustments (consisting of normal, recurring adjustments)
necessary in order to make the financial statements not misleading.  The results
of operations for the nine months ended  September 30, 2003 are not  necessarily
indicative of the results of  operations  for the full year or any other interim
period.  These condensed  consolidated  financial  statements  should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2002 and filed with the Commission.


         From 1998  until the  acquisition  by the  Company of its  interest  in
Vaughn  Partners,  LLC  (described  below),  the  Company  has  had no  business
operations,  and  its  revenues  and  expenses  have  consisted  principally  of
investment  income on remaining  assets and corporate  and other  administrative
expenses.  In  March  1998,  the  Company's  shareholders  approved  a  Plan  of
Liquidation  and  Dissolution  (the Plan of  Liquidation)  pursuant to which the
Company began  liquidating its remaining  assets and paying or providing for all
of its  liabilities.  However,  in February  2002,  the Company  entered into an
option  agreement  with CFC  Partners,  Ltd.,  a New York  investor  group  (CFC
Partners),  pursuant to which CFC Partners  could obtain a majority  interest in
the  Company's  common  stock.  In August  2002,  the option was  exercised  and
2,700,000  new  common  shares  (approximately  51.2% of the  total  outstanding
shares)  were  issued  by  the  Company  to CFC  Partners.  As a  result  of the
acquisition  of  the  Company,   the  Plan  of  Liquidation  was   discontinued.
Immediately  prior to the  transaction  with CFC  Partners,  the Company  paid a
substantial  portion of its remaining  assets to its preferred  shareholders  in
connection with a tender offer to those shareholders (see Note 7).

Going Concern

         The accompanying  consolidated  financial statements have been prepared
assuming that the Company will continue as a going concern. However, as a result
of the events  discussed  above,  at September  30,  2003,  the Company had only
$21,689 in cash, a  shareholders'  deficiency  of $293,749 and was unable to pay
its  existing  creditors.  Vaughn  Partners,  LLC is  currently  in default on a
$1,200,000  second mortgage on its property and on a $100,000 loan made to it by
a private  individual.  Also, as of September 30, 2003, the Company had not paid
its payroll taxes for either the second quarter of 2003 or for the third quarter
of 2003.

CFC  Partners is  currently  pursuing  various  business  opportunities  for the
Company,  including strategic alliances, as well as the merger or combination of
existing  businesses  with 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 businesses 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.



                                       6
<Page>


                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                  NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (Unaudited)


         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 new businesses are being developed. The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.


Basis of Consolidation

The  consolidated   financial  statements  include  the  accounts  of  Consumers
Financial   Corporation,   its  47.5%  owned  subsidiary  Vaughn  Partners,  LLC
("Vaughn") (see Note 3) and its former wholly-owned  subsidiary,  Consumers Life
Insurance  Company  (Consumers Life) until June 19, 2002 when Consumers Life was
sold. All significant  intercompany  balances and transactions  herein have been
eliminated in the consolidation.

Consumers  Financial  Corporation also has a wholly owned  subsidiary  Consumers
Management Group and a 55% owned subsidiary P.E.T. Centers of America LLC. Since
inception, these subsidiaries have had no operations.

Revenue Recognition

The Company  recognized  rental income when earned based on the occupancy of the
property.

Cash and Cash Equivalents

For the  purposes of the  statement  of cash flows,  the Company  considers  all
short-term  investments with an original  maturity of three months or less to be
cash equivalents

Income Taxes

The Company accounts for income taxes using the liability method, which requires
the   determination  of  deferred  tax  assets  and  liabilities  based  on  the
differences  between the financial and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which  differences  are  expected to
reverse. Deferred tax assets are adjusted by a valuation allowance, if, based on
the weight of available  evidence,  it is more likely than not that some portion
or all of the deferred tax assets will not be realized.

Property, Plant and Equipment

Property,  plant and  equipment is stated at cost.  Maintenance  and repairs are
charged to expense as incurred;  costs of major  additions and  betterments  are
capitalized.  When property and equipment is sold or otherwise  disposed of, the
cost and related  accumulated  depreciation are eliminated from the accounts and
any resulting gain or loss is reflected in income.

Depreciation and Amortization

Depreciation and amortization of Building, equipment and furniture,  fixtures is
computed on the  straight-line  method at rates adequate to allocate the cost of
applicable assets over their expected useful lives.

Use of Estimates in the Financial Statements

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.



                                       7
<Page>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                  NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (Unaudited)


Reclassifications

Certain accounts in the prior year financial  statements have been  reclassified
for  comparative  purposes to conform with the  presentation in the current year
financial  statements.  These  reclassifications  have no effect  on  previously
reported income.



2.    Acquisition of the Company:

      On August 28, 2002, CFC Partners exercised its option to acquire 2,700,000
shares of the Company's common stock. The option was granted to CFC Partners
through an option agreement dated February 13, 2002. The option price of
$108,000 had previously been deposited by CFC Partners into an escrow account
held by the Company. The newly issued shares represented approximately 51.2% of
the outstanding common stock of the Company.

      In connection with the issuance of the new shares to CFC Partners, the
Board of Directors also terminated the Plan of Liquidation. The Board had
previously determined that selling the Company for its value as a "public
company shell" was a better alternative for the shareholders than the Plan of
Liquidation, in as much as the common shareholders were not expected to receive
any distribution in a liquidation of the Company. The preferred shareholders
were given an opportunity to exchange their shares for cash in a tender offer
completed by the Company on August 23, 2002 (see Note 7).

      The new management of the Company is currently pursuing various business
opportunities for the Company. Management's efforts have initially been focused
on joint ventures with or acquisitions of companies in the real estate,
construction management and medical technology businesses as well as the direct
purchase of income-producing real estate (see Note 3).



3.       Business Development Activities:

         In May 2003, Vaughn Partners LLC, an Illinois limited liability company
in which the Company owned a 47.5% interest, acquired the Springfield,  Illinois
real estate  referred to above.  Vaughn  acquired  this  property for a purchase
price of $5,440,940,  comprised of a $4,650,000  interest only bank loan secured
by a first  mortgage  lien on the  property  payable in two years,  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, as well
as a $100,000  loan made by a private  investor  and  $200,000 in cash which was
contributed  by third party  investors.  Vaughn is  currently  in default on the
second  mortgage and on the $100,000  loan made by the private  individual.  The
mortgages carry interest rates of 7.25% and 13% respectively. 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  therefrom.  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. Vaughn also obtained and has not used approximately  $299,000 of
a $600,000 construction loan from the bank for the purpose of completing certain
renovations to the property.  The property is recorded net of depreciation which
is recognized on a straight-line basis for a period of 40 years.



                                       8
<Page>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                  NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (Unaudited)


         In May 2003,  the Company had a 47.5% equity  interest in Vaughn (which
was the equity  interest owned by the Company at the formation of Vaughn) and an
informal agreement to acquire an indirect interest in Vaughn of 24.225% (through
the  acquisition  of a 51%  interest  in Spartan  Properties).  The  transaction
wherein  the  Company  was  to  acquire  its   interest  in  Spartan  was  never
consummated.  Effective as of October 31, 2003, the Company  approved an amended
operating  agreement  whereby  Spartan would transfer to the Company its 24.225%
interest in Vaughn in  consideration  for the issuance by the Company of 250,000
shares of common stock.  Accordingly,  as of October 31, 2003, the Company would
have a direct interest in Vaughn  Properties of 71.725%.  This amended operating
agreement  memorializing  this  arrangement  has not yet  been  executed  by the
members of Vaughn Partners holding 5% of the membership interests thereof.

         The 47.5% equity  interest in Vaughn is being  consolidated  into these
financial  statements based on the significant control that the Company has over
Vaughn at September 30, 2003.

         On September 4, 2003,  the  Company's  Board of Directors  approved the
payment of broker's fees to the Company's  majority  shareholder,  CFC Partners,
for real estate and other contracts obtained by CFC Partners and assigned to the
Company.  The Board  agreed  to pay CFC  Partners  an amount  equal to 5% of the
contract price following the completion of each  transaction.  Such payments may
be in the form of cash or common stock of the Company. In that regard, the Board
authorized the issuance to CFC Partners of approximately 1,227,273 shares of the
Company's  common stock in connection  with the  acquisition of the  Springfield
real estate.  The cost of this  transaction  to the Company,  as measured by the
market value of the shares at the time of issuance,  is approximately  $270,000.
The Company has capitalized this amount as part of the cost of the building.

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

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

         Either party has the right to terminate the agreement by written notice
to the other.

         To date, no funds have been generated by Hudson.


4.       Stock Issuances to Consultants



                                       9
<Page>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                  NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (Unaudited)


         On July 1, 2003,  the Company filed a  Registration  Statement with the
     Securities  and  Exchange  Commission  to register an  aggregate of 353,000
     shares of its common stock,  which the Company issued to three  consultants
     pursuant to certain  agreements  entered  into  between the Company and the
     respective consultants. Each of these agreements terminates on December 31,
     2003.  In  exchange  for  receipt  of the  shares  of  common  stock,  such
     consultants  will  provide  various  services to the  Company,  principally
     relating to the  identification of suitable merger or acquisition  partners
     for the Company.  The cost of these services,  measured by the market value
     of the shares at the time of issue, is approximately  $74,470.  The Company
     recorded  these expenses as deferred  compensation  in the amount of $4,473
     and consulting expenses for $69,997.

    On September 19, 2003, the Company filed a  Registration  Statement with the
Securities  and Exchange  Commission  to register  92,000 shares of common stock
which was issued to a consultant  pursuant to a  consultancy  agreement  entered
into  between the  Company  and the  consultant  on said date.  In exchange  for
receipt of the shares of common  stock,  the  consultant  will  provide  various
services to the Company,  principally relating to the identification of suitable
merger  or  acquisition  partners  for the  Company.  The cost of his  services,
measured  by  the  market  value  of  the  shares  at  the  time  of  issue,  is
approximately   $21,160.   The  Company  recorded  these  expenses  as  deferred
compensation in the amount of $15,114 and consulting expenses for $6,046.

    On November 7, 2003,  the Company filed a  Registration  Statement  with the
Securities  and Exchange  Commission to register  140,000 shares of common stock
which was issued to a consultant  pursuant to a  consultancy  agreement  entered
into  between the Company and the  consultant  on July 2, 2003.  In exchange for
receipt of the shares of common  stock,  the  consultant  will  provide  various
services to the Company,  principally relating to the identification of suitable
merger  or  acquisition  partners  for the  Company.  The cost of his  services,
measured  by  the  market  value  of  the  shares  at  the  time  of  issue,  is
approximately   $18,200.   The  Company  recorded  these  expenses  as  deferred
compensation in the amount of $9,100 and consulting expense of $9,100.



5.   Stock Issuances to Officers and Execution of Employment Agreements

     At a Board meeting September 4, 2003, the Board approved bonuses for Donald
     J. Hommel,  President and Chief  Executive  Officer and Jack I.  Ehrenhaus,
     Chairman  and  Chief  Operating  Officer,  of the  Company.  Each  of  said
     individuals  was  issued  1,956,521  shares  of common  stock  valued at an
     aggregate of $860,870.

     On September 1, 2003, the Company entered into  employment  agreements with
     each of Donald J. Hommel, President and Chief Executive Officer and Jack I.
     Ehrenhaus,  Chairman and Chief  Operating  Officer,  of the  Company.  Each
     agreement provides for annual  compensation of $225,000 in base salary with
     annual  increases of 10%, and annual  bonuses as  determined  by the Board,
     which can range from twice the amount of the base  salary,  but in no event
     will  the  bonus be less  than  50% of the  salary.  Each  officer  is also
     entitled to an automobile  allowance of $750 per month and reimbursement of
     all business expenses.  The term of each employment agreement is ten years.
     If the Company  terminates  either officer without cause prior to the term,
     the officer is entitled to a severance  payment equal to his salary for the
     remainder of the 10-year term or two years', whichever is greater. If there
     is a material change in the Company which causes a substantial reduction of
     the officer's  duties,  or a liquidation,  transfer of assets or merger and
     the  Company is not the  surviving  entity,  the  officer is  entitled to a
     severance payment. The employment  agreements also provide for the issuance
     of 3,000,000  shares of the Company's  common stock to each of the officers
     which were valued at an aggregate of  $1,380,000.  Each officer also agreed
     that if the Company has a cash flow shortfall,  the officer will take stock
     in lieu of cash at a 20% discount to the stock price at the payment date.





                                       10
<Page>


                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                  NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (Unaudited)

6.       Loan Receivable

         During the first quarter of 2003,  the Company made  payments  totaling
$27,500 to certain  individuals who had previously  loaned funds to CFC Partners
so that CFC  Partners  could  purchase its  majority  interest in the  Company's
common stock. Since any obligation to repay these individuals,  one of whom is a
director of the  Company,  is the  responsibility  of CFC  Partners  and not the
Company,  CFC Partners has agreed to repay this amount to the Company.  However,
because CFC Partners currently has no ability to repay the amount borrowed, this
loan has been fully reserved in the Company's  consolidated financial statements
through a charge to non-operating expenses.


7.       Restricted Assets

         As required by the terms of the option agreement with CFC Partners, the
Company deposited $331,434 (representing the tender price of $4.40 multiplied by
the 75,326 shares of preferred  stock not tendered)  into a bank escrow  account
for the  benefit  of the  remaining  preferred  shareholders.  The funds in this
account, including any earnings thereon, are restricted in that they may only be
used  by the  Company  to pay  dividends  or  make  other  distributions  to the
preferred  shareholders.  At September  30, 2003 and  December  31, 2002,  these
assets consisted entirely of money market funds.  However,  during 2003, $47,088
was  withdrawn  from the escrow  account to purchase  12,165 shares of preferred
stock for  $31,629.  The  remaining  $15,459 was  deposited  into the  Company's
general  cash  account.  Included  in accounts  payable and accrued  expenses at
September 30, 2003 is $12,260 due to preferred shareholders.

8.       Redeemable Preferred Stock:

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

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



                                       11
<Page>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                  NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (Unaudited)

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

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

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

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

9.    Per Share Information:


<TABLE>
<CAPTION>
                                                       Nine Months         Nine Months       Three Months       Three Months
                                                          Ended               Ended             Ended               Ended
                                                      September 30,       September 30,     September 30,       September 30,
                                                          2003                2002              2003                2002
                                                      -------------       -------------     -------------       -------------
<S>                                                   <C>                 <C>                 <C>                 <C>
Net income (loss)                                       ($2,777,639)         $163,889       ($2,502,929)         $123,889

Preferred stock dividend requirement                        (44,777)         (239,806)          (13,422)          (47,445)

Accretion of carrying value of  preferred
   stock                                                     (3,479)          (83,708)           (1,513)          (74,821)

Numerator for basic income (loss) per share -
 income (loss) attributable to common shareholders       (2,825,895)         (159,625)       (2,517,864)            1,623

Effect of dilutive securities                                     0                 0                 0                 0

Numerator for diluted income (loss) per share           ($2,825,895)        ($159,625)      ($2,517,864)           $1,623

Denominator for basic income (loss) per share -
 weighted average shares outstanding                      6,784,517         2,909,419         9,515,637         3,574,636
Effect of dilutive securities                                     0                 0                 0                 0

Denominator for diluted income (loss) per share           6,784,517         2,909,419         9,515,637         3,574,636

Basic and diluted income (loss) per common share             ($0.42)           ($0.05)           ($0.26)            $0.00
</Table>


                                       12
<Page>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                  NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (Unaudited)

10.   Significant Accounting Pronouncements


New Accounting Pronouncements

In May 2003,  the FASB issued SFAS NO. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
addresses certain financial instruments that, under previous guidance,  could be
accounted for as equity, but now must be classified as liabilities in statements
of  financial  position.  These  financial  instruments  include:  1)  mandatory
redeemable  financial  instruments,  2)  obligations  to repurchase the issuer's
equity shares by  transferring  assets,  and 3)  obligations to issue a variable
numbers  of  shares.  SFAS No.  150 is  generally  effective  for all  financial
instruments entered into or modified after May 31, 2003, and otherwise effective
at the beginning of the first interim period  beginning after June 15, 2003. The
effect of the  adoption of SFAS No. 150 did not have an effect on the  condensed
consolidated financial statements.

11. Subsequent Events:

         On October  15,  2003,  the Company  entered  into a term sheet with an
equity  funding  company to provide the Company with a two million dollar equity
line of  credit  to be used for  general  corporate  purposes.  The  term  sheet
provides that the market price of the Company's stock for the 5 consecutive days
prior to the put date can not be below 75% of the  closing  bid price for the 10
trading  days prior to the put date.  The put date is the date that the  Company
submits  notice to the  investor  that it  desires to draw down a portion of the
line. The purchase price for the shares to be paid to the investor is a discount
to the  lowest  closing  bid  price  of the  stock  during  the 5  trading  days
immediately after a put date.

         The  funds  will  be   available  to  the  Company  upon  an  effective
registration of the Company's  stock. The Company is currently in the process of
commenting on a draft of the agreements provided by the proposed investor.

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



                                       13
<Page>

                CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                  NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
                                   (Unaudited)


         On October 31, 2003,  the Company filed a  Registration  Statement with
the  Securities  and Exchange  Commission to register  330,000  shares of common
stock issued to a consultant, Pinchus Gold.

         In November  2003,  an investor  executed a  subscription  agreement to
purchase  1,000,000  shares of the Company's  common stock for ten cents ($0.10)
per share. As of January 13, 2004, the investor has only paid $20,000 toward the
aggregate purchase price of $100,000.

         At the Special  Meeting of the  shareholders of the Company held August
27, 2003,  the  shareholders  were asked to consider and vote upon a proposal to
amend the Company's Articles of Incorporation (i) to effect a one-for-10 reverse
stock split of the  Company's  common stock by reducing the number of issued and
outstanding  shares of common  stock,  (ii) to  authorize  50 million  shares of
capital stock of the Company,  of which 40 million  shares will relate to common
stock and 10 million  shares will relate to preferred  stock and (iii) to permit
action upon the written  consent of less than all  shareholders  of the Company,
pursuant to section 2524 of the Pennsylvania  Business  Corporation Law of 1988.
Although  the  meeting  occurred  and the three  actions  were  approved  by the
shareholders, at this time the Company's management has only effected two out of
three of such  authorized  actions.  On January 29,  2004,  an  amendment to the
Company's  Articles of Incorporation was filed with the Pennsylvania  Department
of State Corporation  Bureau which (i) increased the authorized share capital of
the Company to 50,000,000 shares, divided into 40,000,000 shares of common stock
and  10,000,000  shares of preferred,  and (ii)  authorized  the Company to take
action upon the written  consent of  stockholders  holding the minimum number of
votes that would be necessary to authorize  the action at a meeting at which all
stockholders  entitled to vote thereon  were present and voting.  The Company is
currently  awaiting  confirmation  from  the  Pennsylvania  Department  of State
Corporation Bureau confirming this filing.



                                       14
<Page>


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

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

         The Private  Securities  Litigation Reform Act of 1995 provides a "safe
harbor"   for   forward-looking   statements.   This  Form   10-Q  may   include
forward-looking  statements  which  reflect  the  Company's  current  views with
respect  to future  events  and  financial  performance.  These  forward-looking
statements  are  identified by their use of such terms and phrases as "intends",
"intend",  "intended",  "goal", "estimate",  "estimates",  "expects",  "expect",
"expected",  "project",  "projected",   "projections",  "plans",  "anticipates",
"anticipated",   "should",   "designed  to",  "foreseeable  future",  "believe",
"believes" and "scheduled" and similar expressions. Readers are cautioned not to
place undue reliance on these forward-looking  statements which speak only as of
the date the  statement  was made.  The  Company  undertakes  no  obligation  to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.

                                    OVERVIEW

         At a  special  meeting  of  shareholders  held on March 24,  1998,  the
Company's preferred and common  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.
Because the common  shareholders would not receive a distribution under the plan
of liquidation and  dissolution,  and the preferred  shareholders  would receive
less than the full  liquidation  value of their  shares,  the Board of Directors
subsequently  determined  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.

       In October  2001,  the Board of  Directors  met to consider  three offers
which were received regarding the potential purchase of the Company.  One of the
three offers 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  which  permitted  CFC  Partners  to acquire a 51.2%  interest  in the
Company  at $.04 per share.  The option  held by CFC  Partners  was  exercisable
following  the  completion  by the  Company of a tender  offer to its  preferred
shareholders. The completion of this 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.  In July 2002, the Board of Directors approved a tender offer to the
Company's preferred  shareholders at a price of $4.40 per share, and on July 19,
2002,  tender offer materials were mailed to the holders of the preferred stock.
On August 23, 2002, the Company  purchased 377,288 shares of preferred stock, or
83.4% of the total preferred  shares  outstanding,  from those  shareholders who
elected to tender their shares.

         On August  28,  2002,  the Board of  Directors  terminated  the Plan of
Liquidation  and authorized the issuance of 2,700,000  shares of common stock to
CFC  Partners.  Donald  J.  Hommel,  the  president  of CFC  Partners,  was also
appointed as a Director of the Company to fill an existing vacancy on the Board.
Following  such  appointment,  the  Company's  officers  resigned  and the Board
elected Mr. Hommel as the Company's  President and Chief Executive  Officer.  In
addition,  James C. Robertson and John E.  Groninger,  who had been Directors of
the Company for more than 30 years, also resigned.




                                       15
<Page>

         In October 2002, the Board of Directors appointed Shalom S. Maidenbaum,
Esq. as an additional Director of the Company to fill an existing vacancy on the
Board. In addition,  the Directors elected Mr. Hommel as the Company's Treasurer
and Mr. Maidenbaum as the Company's Vice President and Secretary. In March 2003,
the Board of Directors  appointed William T. Konczynin as an additional Director
to fill an existing vacancy.  In April 2003, Mr. Jack Ehrenhaus was appointed as
an additional Director to the Board.

         As a result of the  approval  of the Plan of  Liquidation,  the Company
adopted a liquidation  basis of accounting for the period from March 25, 1998 to
August 28,  2002.  Under this basis of  accounting,  assets were stated at their
estimated net realizable values and liabilities were stated at their anticipated
settlement  amounts.  As a result of the  transaction  with CFC Partners and the
related  termination of the Plan of Liquidation,  effective August 29, 2002, the
Company re-adopted accounting principles applicable to going concern entities.

         At September 30, 2003, other than its interest in Vaughn Partners, LLC,
the Company had no significant business  operations;  however, the Company's new
management is currently pursuing various business ventures.  Their initial focus
is on joint  ventures  with or  acquisitions  of  companies  in the real estate,
construction  management and medical technology  businesses.  In April 2003, the
Company,  through its majority  shareholder,  entered into agreements to acquire
garden  apartment  complexes  in  Springfield,  Illinois.  The Company  also had
agreements to purchase  garden  apartment  complexes in Marietta,  Georgia and a
high-rise   residential  building  in  Chicago,   Illinois;   however,   neither
transaction was consummated. In June 2003, the Company entered into an agreement
to acquire a 200-unit garden apartment complex in the Tampa,  Florida area; this
transaction was also never consummated.

         In  May  2003,  Vaughn  Partners  LLC  (Vaughn),  an  Illinois  limited
liability company in which the Company currently owns a 47.5% interest, acquired
the  Springfield,  Illinois  garden  apartment  complexes.  Vaughn acquired this
property  with cash  contributed  by the  third  party  investors  who own 5% of
Vaughn,  a $4,650,000 bank loan secured by a first mortgage lien on the property
and a $1,200,000 second mortgage on the property. Vaughn is currently in default
on the second  mortgage.  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  therefrom.  An
individual  lent  Vaughn  $100,000  to close on the  acquisition,  and Vaughn is
currently in default on said loan. 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.  Vaughn is  currently  in  discussions  with both the second
mortgagee  and the  individual  lender  regarding  terms  of  re-payment  on the
defaulted  notes.   Vaughn  also  obtained  and  used  $301,000  of  a  $600,000
construction  loan  from  the  bank  for  the  purpose  of  completing   certain
renovations  to the  property.  In  connection  with  the  acquisition,  Spartan
Properties  LLC,  also  entered  into an  agreement  with  Vaughn to manage  the
property for a fee.

         In May 2003,  the Company had a 47.5% equity  interest in Vaughn (which
was the equity  interest owned by the company at the formation of Vaughn) and an
informal agreement to acquire an indirect interest in Vaughn of 24.225% (through
the  acquisition  of a 51%  interest  in Spartan  Properties).  The  transaction
wherein  the  Company  was  to  acquire  its   interest  in  Spartan  was  never
consummated.  Effective as of October 31, 2003, the Company  approved an amended
operating  agreement  whereby  Spartan would transfer to the Company its 24.225%
interest in Vaughn in  consideration  for the issuance by the Company of 250,000
shares of common stock.  Accordingly,  as of October 31, 2003, the Company would
have a direct interest in Vaughn  Properties of 71.725%.  This amended operating
agreement  memorializing  this  arrangement  has not yet  been  executed  by the
members of Vaughn Partners holding 5% of the membership interests thereof.

         The 47.5% equity  interest in Vaughn is being  consolidated  into these
financial  statements based on the significant control that the Company has over
Vaughn at September 30, 2003.

         In April  2003,  CFC  Partners  entered  into a letter of intent with a
leading   radiologist  and  operator  of  several   radiology   centers  in  the
metropolitan New York area to purchase,  develop and operate  positron  emission
tomography  (PET)  imaging  centers,  initially  in the New York area,  but this
letter of intent has terminated. On September 10, 2003, the Company, through its
subsidiary,  P.E.T. Centers of America,  signed a lease for 3,450 square feet of


                                       16
<Page>

medical space and will begin to design and build its first PET imaging 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 PET Centers are liable to the  landlord  for all costs and  expenses
incurred in connection with enforcing the provisions of the lease as well as the
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.

         At September 30, 2003, the Company's  shareholders'  deficiency totaled
$293,749  compared to a shareholders'  equity deficiency of $196,485 at December
31, 2002.  The Company's  net loss for the nine months ended  September 30, 2003
totaled  $2,777,639  compared to net income of  $109,187  for the same period in
2002.

                              RESULTS OF OPERATIONS

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


Nine Months Ended September 30, 2003 and 2002

       For the nine months ended September 30, 2003, the Company  reported a net
loss of  $2,777,639  ($.42 per share)  compared to net income of $109,187 in the
first nine months of 2002. In 2002, the Company's net income was the result of a
$179,000 gain from the sale of the state  insurance  licenses of Consumers Life,
as  part of the  sale of that  subsidiary,  and a  $56,000  gain on the  sale of
certain bonds held by the subsidiary.  During this period,  the Company incurred
approximately  $62,000 in professional  fees,  principally  legal and accounting
fees,  including  $17,000  in legal  fees  related  to the  tender  offer to the
Company's  preferred  shareholders.  The Company also  incurred a $29,000 fee in
connection with the termination of a guaranteed  investment contract held by the
Company's retirement plan custodian.

         For the nine months ended  September  30, 2003,  the Company had only a
nominal amount of revenues, so the current year net loss is primarily the result
of expenses  incurred while the Company is attempting to develop new businesses.
During the first nine  months of 2003,  these  costs  consisted  principally  of
salaries to two individuals,  the expense of $2,326,012  related to the issuance
of an aggregate of  11,725,315  shares  issued  during  2003,  audit,  legal and
consulting fees, insurance and a $27,500 provision for loss on a receivable from
the Company's majority shareholder.


Three Months Ended September 30, 2003 and 2002

         The  Company's  net loss for the third  quarter of 2003 was  $2,502,929
($.26 per share).  Since the  Company  only had  $137,335  in  revenues  for the
quarter, the net loss is attributable to ongoing expenses incurred in connection
with  developing  new  business  operations.  During the  quarter,  the  Company
incurred $2,326,012 of stock based compensation  expenses in connection with the
issuances of an aggregate of 11,725,315  shares,  $181,750 of operating expenses
in connection with the garden  apartment  complex in  Springfield,  Illinois and
$76,800 of additional selling, general and administrative expenses. The majority
of these expenses consists of officer salaries and consulting fees.

         For the three months ended September 30, 2002, the Company reported net
income of $123,889  ($.01 per share) as a result of the gains  arising  from the
sale of Consumers Life. During the quarter,  the Company incurred  approximately
$33,500 in salaries and related  benefits as well as professional and other fees
of $42,000.



                                       17
<Page>

                               FINANCIAL CONDITION

Capital Resources

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

         For the nine months ended  September 30, 2003,  the Company's  cash and
cash equivalents  decreased by $144,069 to $21,689 at the end of the period. The
decrease  is  principally  the result of the cash  expenses  paid by the Company
during  the  period  and the  $27,500  loan made to CFC  Partners.  The  Company
currently has no ability to pay any additional expenses until it either develops
new revenue sources or obtains financing.

         Hudson Valley

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

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

         Either party has the right to terminate the agreement by written notice
to the other.

       To date, no funds have been generated by Hudson.

         Equity Credit Line

         On October  15,  2003,  the Company  entered  into a term sheet with an
equity  funding  company to provide the Company with a two million dollar equity
line of  credit  to be used for  general  corporate  purposes.  The  term  sheet
provides that the market price of the Company's stock for the 5 consecutive days
prior to the put date can not be below 75% of the  closing  bid price for the 10
trading  days prior to the put date.  The put date is the date that the  Company
submits  notice to the  investor  that it  desires to draw down a portion of the
line. The purchase price for the shares to be paid to the investor is a discount
to the  lowest  closing  bid  price  of the  stock  during  the 5  trading  days
immediately after a put date.

         The  funds  will  be   available  to  the  Company  upon  an  effective
registration of the Company's  stock. The Company is currently in the process of
commenting on a draft of the agreements provided by the proposed investor.

         Investment Banking Agreement

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




                                       18
<Page>

Liquidity

         In  connection  with the  acquisition  of the Company by CFC  Partners,
substantially all of the Company's remaining liquid assets were used to complete
a tender offer to the  preferred  shareholders  in August 2002. At September 30,
2003, the Company had $21,689 in cash. Furthermore, as of that date, the Company
had no significant  business operations and no sources of operating revenues and
cash flows.  As  indicated  above,  the Company is  currently  pursuing  various
business opportunities,  including strategic alliances, as well as the merger or
combination of existing businesses with the Company. The Company's management is
initially  focusing on joint ventures with or  acquisitions  of companies in the
real estate,  construction  management and medical technology business segments.
However, there is no assurance that the Company's efforts in this regard will be
successful.


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




<PAGE>



Redeemable Preferred Stock

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

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


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



                                       19
<Page>

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

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

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



                                       20
<Page>


Item 3.  Quantitative and Qualitative Disclosure About Market Risk

         The requirements for certain market risk disclosures are not applicable
to the Company because, at September 30, 2003 and December 31, 2002, the Company
qualifies  as a "small  business  issuer"  under  Regulation  S-B of the Federal
Securities Laws.

Item 4.  Controls and Procedures

         As of the  end of the  period  covered  by  this  report,  the  Company
conducted an evaluation, under the supervision and with the participation of the
principal  executive officer and principal  financial officer,  of the Company's
disclosure  controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities  Exchange Act of 1934 (the 'Exchange Act')).  Based on this
evaluation, the principal executive officer and principal financial officer have
concluded that the Company's disclosure controls and procedures are effective to
ensure that information  required to be disclosed by the Company in reports that
it files or submits  under the Exchange Act is recorded,  processed,  summarized
and  reported  within the time  periods  specified  in  Securities  and Exchange
Commission's  rules and  forms.  There  have been no  changes  in the  Company's
internal  control over  financial  reporting  during the Company's most recently
completed fiscal quarter that has materially  affected,  or is reasonably likely
to materially affect, the Company's internal control over financial reporting.



                                       21
<Page>

                           PART II. OTHER INFORMATION


Item 1.  Legal Proceedings

         The  registrant  is not  involved  in any  existing  or  pending  legal
proceedings

Item 2.  Changes in Securities and Use of Proceeds

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

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

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

         On October 27, 2003,  the Company  entered into an  investment  banking
agreement with David Sassoon & Co. Plc.  Pursuant to which,  among other things,
the Company  issued 85,000  shares to its  investment  banker.  The issuance was
pursuant to an exemption from the  registration  requirements  of the Securities
Act of 1933, as amended.


Item 3.  Defaults upon Senior Securities

         The January 1, 2003,  April 1, 2003,  July 1, 2003, and October 1, 2003
dividends payable on the registrant's  redeemable  preferred stock have not been
declared  or paid by the  registrant.  The  amount  of  these  dividends  totals
$60,783.  When the  registrant  is in arrears as to  dividends  or sinking  fund
appropriations for the preferred stock, dividends to holders of the registrant's
common stock as well as purchases, redemptions or acquisitions by the registrant
of shares of its common stock are restricted. Since the registrant is in default
with respect to the payment of preferred  dividends and the aggregate  amount of
the  deficiency  is  equal  to four  quarterly  dividends,  the  holders  of the
preferred  stock are entitled,  only while such arrearage  exists,  to elect two
additional members to the then existing Board of Directors.

         Vaughn  Partners,  LLC is  currently  in default  under the  $1,200,000
second mortgage loan and a $100,000 note payable to a private  individual.  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 therefrom.  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. Vaughn is currently in discussions with both the
second mortgagee and the individual  lender regarding terms of re-payment on the
defaulted notes.

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



                                       22
<Page>

         On August 7, 2003, the Company  mailed an Information  Statement to its
shareholders  in connection with a special meeting of shareholders to be held on
August 27, 2003 (the Special Meeting).  At the Special Meeting, the shareholders
were asked to consider and vote upon a proposal to amend the Company's  Articles
of Incorporation (i) to effect a one-for-10 reverse stock split of the Company's
common stock by reducing the number of issued and  outstanding  shares of common
stock from  5,276,781  to  approximately  527,678,  (ii) to authorize 50 million
shares of capital stock of the Company,  of which 40 million  shares will relate
to common stock and 10 million  shares will relate to preferred  stock and (iii)
to permit action upon the written  consent of less than all  shareholders of the
Company,  pursuant to section 2524 of the Pennsylvania  Business Corporation Law
of 1988.  CFC Partners owns a majority of the Company's  issued and  outstanding
shares of common  stock and has voted to approve the proposal  presented  above.
Although  the  meeting  occurred  and the three  actions  were  approved  by the
shareholders, at this time the Company's management has only effected two out of
three of such  authorized  actions.  On January 29,  2004,  an  amendment to the
Company's  Articles of Incorporation was filed with the Pennsylvania  Department
of State Corporation  Bureau which (i) increased the authorized share capital of
the Company to 50,000,000 shares, divided into 40,000,000 shares of common stock
and  10,000,000  shares of preferred,  and (ii)  authorized  the Company to take
action upon the written  consent of  stockholders  holding the minimum number of
votes that would be necessary to authorize  the action at a meeting at which all
stockholders entitled to vote thereon were present and voting.

Item 5.  Other Information

         In May 2003,  the Company had a 47.5% equity  interest in Vaughn (which
was the equity  interest owned by the company at the formation of Vaughn) and an
informal agreement to acquire an indirect interest in Vaughn of 24.225% (through
the  acquisition  of a 51%  interest  in Spartan  Properties).  The  transaction
wherein  the  Company  was  to  acquire  its   interest  in  Spartan  was  never
consummated.  Effective as of October 31, 2003, the Company  approved an amended
operating  agreement  whereby  Spartan would transfer to the Company its 24.225%
interest in Vaughn in  consideration  for the issuance by the Company of 250,000
shares of common stock.  Accordingly,  as of October 31, 2003, the Company would
have a direct interest in Vaughn  Properties of 71.725%.  This amended operating
agreement  memorializing  this  arrangement  has not yet  been  executed  by the
members of Vaughn Partners holding 5% of the membership interests thereof.

         The 47.5% equity  interest in Vaughn is being  consolidated  into these
financial  statements based on the significant control that the Company has over
Vaughn at September 30, 2003.

         In November,  2003, an investor  executed a  subscription  agreement to
purchase 1,000,000 shares of common stock for ten cents a share, or an aggregate
of $100,000.  Said  investor  was granted  piggy-back  registration  rights with
respect to its shares for a period of two years.  As of December 24,  2003,  the
investor has only paid $20,000 of its purchase price.



                                       23
<Page>

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits:

         4.1      Employment  Agreement  effective  September  1,  2003,  by and
                  between Consumers Financial Corporation and Donald J. Hommel

         4.2      Employment  Agreement  effective  September  1,  2003,  by and
                  between Consumers Financial Corporation and Jack Ehrenhaus

         4.3      Agreement dated October 27, 2003 between  Consumers  Financial
                  Corporation and David Sassoon & Co. PLC

         4.4      Agreement dated as of September 10, 2003 by and between Hudson
                  Valley  Home  Builders  &  Developers   Corp.   and  Consumers
                  Financial Corp.

         31       Rule 13a-14(a)/15d-14(a) Certifications

                  31.1     Section 302 certification by Chief Executive Officer

                  31.2     Section 302 certification by Chief Financial Officer

         32       Section 1350 Certifications

                  32.1     Section 906 certification by Chief Executive Officer

                  32.2     Section 906 certification by Chief Financial Officer



         (b) Reports on Form 8-K

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



                                       24
<Page>


                                   SIGNATURES


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



                                       CONSUMERS FINANCIAL CORPORATION
                                       Registrant




Date  January , 2004                   By /s/ Donald J. Hommel
      ---------------                     ------------------------------------
                                          Donald J. Hommel
                                          President and Chief Executive Officer




Date  January __, 2004                 By /s/ Donald J. Hommel
      ------------------                  ------------------------------------
                                          Donald J. Hommel
                                          Chief Financial Officer