UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

            For the fiscal year ended: September 30, 2003

                                       or

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

            For the Transition period from ___________ to _______________

            Commission file number: 333-98651*

                             AMERIFIRST FUND I, LLC
                 (Name of small business issuer in its charter)

            Florida                                     16-1628-844
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or organization)

1712-H Osborne Rd.  St. Marys, Georgia                               31558
(Address of principal executive offices)                           (Zip Code)

Issuer's telephone number, including area code: (912) 673-9100

Securities registered under Section 12(b) of the Act:

     Title of each class            Name of each exchange on which registered
     -------------------            -----------------------------------------
              None                               Not Applicable

Securities registered under Section 12(g) of the Act:

                                      None
                                (Title of Class)

<PAGE>

      Indicate by check mark whether the issuer has: (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) been subject to such filing requirements for the past 90
days. Yes |X| No |_|

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. |X|

      Issuer's revenues for its fiscal year ended September 30, 2003: $0.

      The aggregate market value of issuer's voting and non-voting common equity
held by non-affiliates of the issuer as of December 15, 2003, was $0. There is
no established public trading market for the registrant's units.

      The registrant had 0 units of membership interest outstanding as of
December 15, 2003.

                       DOCUMENTS INCORPORATED BY REFERENCE

      None.

      Transitional Small Business Disclosure Format (Check One) : Yes |_| No |X|

      *Registration Statement on Form S-1 was declared effective by the
Securities and Exchange Commission on May 14, 2003, as amended by Post-Effective
Amendment No. 2 declared effective on October 17, 2003.


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<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS.

General

      AmeriFirst Fund I, LLC (the "Fund," "we" or "our") was formed in the State
of Delaware in April 2002 and reincorporated in Florida on September 20, 2002,
as a Florida limited liability company. The Fund was formed solely for the
restricted, limited purpose of purchasing life insurance policies at a discount
to face value from terminally ill and chronically ill persons of all ages and
senior citizens, age 65 and older, with estimated life expectancies based solely
on actuarial tables, to create a pool of life insurance policies. Our manager,
AmeriFirst Financial Services, Inc. ("Manager"), will select life insurance
policies for the Fund to purchase and will also assist the Fund by servicing
such life insurance policies, although it may decide to outsource any or all
non-financial services to unaffiliated third parties. Our provider, AmeriFirst
Funding Group, Inc. ("Provider") will originate policy purchases either directly
from the insured, when it is licensed or not required to be licensed, from other
providers or from a broker network. Our existence will terminate on December 31,
2027, unless earlier dissolved or terminated in accordance with our Operating
Agreement dated as of May 13, 2003 ("Operating Agreement"), by amendment to our
Operating Agreement or as otherwise provided by law.

      On May 14, 2003, our Registration Statement on Form S-1, as amended by
Post-Effective Amendment No. 2 on October 17, 2003 (the "Prospectus"), became
effective with the Securities and Exchange Commission ("SEC") for the initial
public offering of up to a maximum of 100,000 units of membership interest in
the Fund at $1,000 per unit (the "Offering"), with an initial minimum investment
of 100 units at $100,000, although our Manager reserves the right to accept
initial subscriptions of less than $100,000. The Offering is being made pursuant
to the Fund's Prospectus dated October 17, 2003, which date is hereinafter
referred to as the "Effective Date of the Offering." The units represent
fractional beneficial interest in the income to be generated primarily from a
pool of life insurance policies. We must raise a minimum of $2,500,000 in the
Offering before we can commence operations and purchase life insurance policies.
The proceeds of the Offering will be held in an interest bearing escrow account
with SouthTrust Bank until we raise the $2,500,000 minimum. If the minimum
amount is not received within six months of the Effective Date of the Offering,
unless extended for an additional six months until October 17, 2004, then all
subscription amounts (including interest) will be returned to all subscribers.
Our underwriter, AmeriFirst Capital Corp. ("Underwriter"), an NASD licensed
broker-dealer, which is also an affiliate of our Manager, is solely responsible
for the offer and sale of the units in the Fund. However, units may also be sold
by officers of the Fund who are sales representatives licensed by the NASD and
by other selected dealers who will receive commissions where permitted. Each
member of the Fund is entitled to his or her proportionate beneficial interest
in the income to be generated from the life insurance policies. As of December
15, 2003, we have not sold any units of membership interest in the Fund.

The Life Settlements Market

      The life settlements market is an extension of the viatical market that
became popular in the late 1980s. Then, the focus was on buying policies of
terminally ill people (particularly AIDS patients) who had a life expectancy of
less than three years and needed money before their


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<PAGE>

death. The focus has expanded to currently include senior citizens with a
limited life expectancy who have insurance policies they no longer need or who
require more liquidity. Historically, the only option available for people who
either did not want or could not afford to pay premiums on a policy was to
surrender it for cash value. Life settlement firms, like the Fund, will pay
significantly more than the cash surrender value.

      Another option available to senior citizens is to use their accelerated
death benefit option on their policy if it is an option. See "Competition"
below. While these are not for every policyholder, they are a valuable option.
According to Senior Market Advisor, senior advisors should be aware of the
benefits of the life settlements. Seniors in the United States hold life
insurance policies worth nearly half a trillion dollars, according to insurance
industry experts. More than $100 billion of this amount is eligible for sale as
life settlements.

      Seniors may have purchased large insurance policies when they had young
families and then, when they reached older age and their children became adults,
no longer needed the life insurance coverage that was necessary when they were
younger. In many cases, seniors might simply have stopped paying premiums and
allowed their policies to lapse. Senior settlements relieve seniors of the
obligation to pay insurance premiums, which on some types of policies may be
quite high for older insureds, and permit them to obtain a portion of their
policy limits to use while they are alive.

      According to the National Center for Health Statistics and Center for
Disease Control in a report issued August 6, 1999, Americans have a longer life
expectancy in the twenty-first century due to the advancements in medical
technology and treatment. However, despite our remarkable progress, heart
disease and stroke remain leading causes of disability and death, especially in
older adults and seniors. In addition, declines in heart disease and stroke
mortality mask important differences in rates of decline by race/ethnicity, sex
socioeconomic status and geographic region. Also, according to American Cancer
Society, Surveillance Research, 2002, cancer is the second leading cause of
death in the United States, exceeded only by heart disease. Although many trends
have been positive, trends for some important indicators have not improved
substantially, have leveled off, or are reversing.

The Fund

      The Fund has no operating history and had only nominal capital and did not
have any assets other than $326,509 of deferred offering costs as of September
30, 2003. The Fund does not have its own employees or offices. The employees of
our Manager and Provider and their parent, AmeriFirst, Inc., will carry out our
operations at their offices or will outsource and oversee the services performed
by a third party servicer. AmeriFirst, Inc., the holding company controlled by
John Tooke, has agreed pursuant to the Restated Expense Agreement dated as of
December 23, 2003 by and between the Fund and AmeriFirst (the "Expense
Agreement"), to pay at its own expense, all organizational and offering expenses
of the Offering including without limitation, legal and accounting expenses,
photocopy costs, selling expenses, and filing fees paid to the SEC and state
securities commissions. Accordingly, the Fund will receive all proceeds from the
Offering. The address and telephone number of the Fund is 1712-H Osborne Road,
St. Marys, Georgia 31558, (912) 673-9100.


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<PAGE>

      John Tooke is the Chief Executive Officer and controlling shareholder of
our Manager, Provider and Underwriter and may be deemed to be a founder and/or
promoter of the Fund. However, the loss of John Tooke's services would not
terminate the Fund's business and operations. At this point in time, each
company is established with experienced staff with the knowledge and ability to
continue their departments in the case that Mr. Tooke is unable to fulfill his
duties. AmeriFirst, Inc. has two other shareholders, as described below under
"Officers and Directors of AmeriFirst, Inc." who may become active participants
in the operations of the corporations at a later point in time. They would be
able to immediately step in to work if Mr. Tooke's services were not available.
The contingency plan would also have AmeriFirst, Inc.'s counsel, Mr. Dan
Armstrong, actively run the operations of the companies in Mr. Tooke's absence.
Mr. Armstrong has been with Mr. Tooke during the entire establishment of the
operations and has been involved in the life settlements business for more than
a year and he has extensive experience in senior management for several decades
with multi-national companies and his own companies. Management believes that
the business and operations of all the companies of AmeriFirst Inc. would
continue to be operational even with the loss of Mr. Tooke's services.

Our Manager

      Our Manager is AmeriFirst Financial Services, Inc. Our Manager was formed
in the State of Delaware on September 4, 2002 and is qualified to do business in
Florida and Georgia. Our Manager's main office is in Florida, but it also
maintains an office at the Fund's and our Provider's Georgia location.
AmeriFirst, Inc., a Delaware holding company ("AmeriFirst"), 50% of whose
capital stock is beneficially owned by John Tooke, owns all of the capital stock
of our Manager. Our Manager was formed to be a real estate broker, mortgage
broker and to provide managerial services not only for the Fund, our Provider
and our Underwriter, but may also provide services to other outside companies or
funds for a fee. Our Manager also holds a mortgage broker's license and real
estate broker's license in the State of Florida. Our Manager is regulated by the
Department of Business and Professional Regulation--Division of Real Estate and
the Florida Office of the Comptroller--Department of Banking and Finance along
with the Secretary of State for the State of Florida. The address for our
Manager is 814 North Highway A1A, Suite 300, Ponte Vedra Beach, Florida, 32082,
and its telephone number is (904) 373-3034.

      Our Manager will manage and control all our affairs and is responsible for
making all investment decisions on behalf of the Fund and dealing directly with
members of the Fund. In addition, our Manager currently intends to act as
servicer of the insurance policies acquired by us from our Provider; however,
our Manager may outsource any or all non-financial services to an unaffiliated
third party. Our Manager has contracted with four medical review service
companies to conduct medical evaluations and determine life expectancies of
prospective insureds. Our Manager will not engage in the insurance business
except as permitted. Our Manager's responsibilities on behalf of the Fund will
include identification of potential policy purchases through our Provider and a
nationwide of unaffiliated life settlement brokers. Our Manager will have sole
fiduciary responsibility over all investors' funds once obtained from the escrow
agent and thereafter directly from investors and the purchase of life
settlements.


                                       5
<PAGE>

      The duties of our Manager and/or our servicer will include:

      o     dealings with members;

      o     accounting, tax and legal matters;

      o     communications and filings with regulatory agencies;

      o     deciding what agreements we will enter into and whether we will
            enter into joint ventures with other companies to invest in life
            insurance policies;

      o     due diligence review of the insured and the life insurance policy,
            estimate the life expectancy of the insured with the assistance of
            medical review service companies, close the transaction, monitor the
            life status of the insured and status of the policy, and file claims
            for proceeds when the insured passes away; and

      o     managing our other operations, if any.

      Under the Fund's operating agreement, our Manager may be removed for cause
(as defined in the Fund's operating agreement), for default (as defined in the
Fund's operating agreement), or otherwise after our Manager has received
distributions that equal or exceed 125% of the aggregate expenses of the
Offering, including sales commissions. Such removal without cause may be
effected by the members holding at least 2/3 in interest of the Units.

Our Provider

      The Provider of our life settlements will be AmeriFirst Funding Group,
Inc., an affiliate of our Manager, although the Fund may also use other licensed
providers to obtain policies. Our Provider was formed in the State of Delaware
in August 2002 and will operate as a life settlement provider in the State of
Georgia. Our Provider is in compliance with the laws of the State of Georgia to
conduct life settlement business and will comply with the insurance and/or
securities laws of all states which regulate the purchase and/or sale of life
insurance policies. Our Provider will originate policy purchases either directly
from the insured, when it is licensed or not required to be licensed, or from
other Providers, or from a broker network. Our Provider has agreed in writing to
assign all policies which it purchases to the Fund, except those it may sell on
a non-securitized basis to unaffiliated third parties. John Tooke, Chief
Executive Officer of our Manager, is also Chief Executive Officer of our
Provider and Underwriter. Our Provider has four employees, no operating history
and only nominal capital. Employees of our Provider involved in the purchasing
of the polices will not engage in the offering of units of the Fund. Our
Provider will purchase insurance policies on behalf of the Fund, although it may
also sell policies to others on a non-securitized basis. Our Provider will enter
into viatical settlement contract with the insureds. In accordance with the
terms of such agreements, our Provider will (a) transfer, assign, and convey to
the Fund all of our Provider's right, title and interest in and to the insurance
policies, or (b) in states which prohibit an assignment of the insurance policy
to anyone other than a Provider, our Provider will be the owner and the Fund
will hold an


                                       6
<PAGE>

irrevocable beneficial interest in the policy, and (c) take all actions that are
required under state law to establish the Fund's ownership interest in and to
the insurance policies. The address of our Provider is 1712-H Osborne Road, St.
Marys, Georgia 31558, and its telephone number is (912) 673-9100.

      Our Provider intends to be a nationwide specialty financial services
company that purchases insurance policies from terminally ill and chronically
ill persons of all ages and senior citizens, age 65 and older with estimated
life expectancies based solely on actuarial tables, in order to aggregate the
policies into a pool of policies, as we are offering here. Our Provider intends
to enter into agreements to purchase insurance policies directly from insureds
where it is licensed as a broker or not required to be licensed, from other
Providers, or from a nationwide network of life settlement brokers. Many states
require an insured to be represented by an independent third party or a broker.
Since most states also require brokers to be licensed, the names of these
brokers are readily available. Our Provider intends to establish its reputation
through strategies of compliance, integrity and due diligence.

      We will make payments for the purchase of policies from our Provider's
escrow account, maintained at SouthTrust Bank, as escrow agent, located at 110
Office Park Drive, 2nd Floor, Birmingham, Alabama 35223. The insured will
receive a settlement check or wire transfer upon closing of the life settlement.
The Fund, through our Manager, will pay our Provider for its services.

      Brokers are typically paid a market based fee which we estimate to be
between 4% and 8% of the face value of the policy. Either our Provider or the
insured will pay the broker for negotiating the sale of the insurance policy
upon the funding of the policy. This is exclusive of the fees which the Fund
will pay to our Provider. Our Provider does not intend to pay referral fees to
doctors, lawyers or other professionals to whom our Provider is prohibited by
applicable law from paying a referral fee and will not do business with referral
sources which our Manager does not believe to be reputable. Brokers and certain
other referral sources also handle other administrative functions, such as
collecting applications from potential clients and collecting medical and
insurance records.

Our Servicer

      Our Manager intends to act as servicer also and service the life insurance
policies directly, but it may outsource any or all non-financial services to a
third party. As of the date of this annual report, we have no agreements,
arrangements or understandings with any third party to act as our servicer,
although our Manager has contracted with four unaffiliated medical review
service companies to determine estimated life expectancies and monitor the lives
of the insureds. Our Manager and its affiliate, AmeriFirst, Inc., employed 18
persons as of December 15, 2003, to initially conduct such operations, including
John Tooke, an employee of each of our Manager and AmeriFirst, who was regarded
as one employee. Our Manager would need to hire additional employees, or
outsource non-financial services, if we acquire a large number of life insurance
policies or is otherwise warranted. Current employees include a senior software
architect, in-house legal staff, accounting staff, insurance review, medical
review, policy administration, computer and data processing personnel, customer
service and medical administration.


                                       7
<PAGE>

      Our servicer, who is also our Manager, has a computer system which
consists of a web server, mail server, database server, two firewalls, network
attached storage, an integrated T-1 for our web server, and an integrated T-1
for servers. Our servicer uses DVD backup that is taken off the premises in a
fire safe to back up our programs and information concerning the individual
insureds and policyholders. Windows XP workstations are located throughout the
offices attached to the servers.

      Our servicer will track on a daily basis the status of the Fund and the
members' interests in the Fund. Investors will be able to monitor their
investment on a daily basis through the Fund's Internet web site which they can
access using a pass-code. Investors will see the financial statements of the
Fund every quarter.

      The fee which will be paid by the Fund to our servicer, who is also our
Manager, is equal to 5% of the gross proceeds of the Offering. In the event that
we determine to use the services of an unaffiliated third party, we expect to
enter into a servicing agreement. Servicing the insurance policies involves
monitoring the life status of the insured, tracking the maturing of the policy
and filing claims for proceeds when the policy matures.

      Upon the closing of our Provider's purchase of the policy, our servicer
will evaluate and process the life settlements. Our Provider will then assign
the insurance policies, without recourse, to the Fund. Our Provider will execute
an assignment of the life insurance policy to the Fund where permitted, or
otherwise name the Fund as irrevocable beneficiary of such insurance policy.

      Our Manager will undertake to service and administer the insurance
policies and to collect payments due under the insurance policies in accordance
with customary and usual servicing procedures and it shall have full power and
authority, acting alone or through any party properly designated by it to do, so
any and all things in connection with such servicing and administration which it
may deem necessary or desirable. Our Manager is authorized and empowered, unless
such power and authority is revoked by the Fund on account of the occurrence of
a default by our Manager, to execute and deliver, on behalf of the Fund for the
benefit of its members, any and all instruments of satisfaction or cancellation,
or of part or full release or discharge, and all other comparable instruments,
with respect to the insurance policies. Our Manager will obtain any powers of
attorney and other documents reasonably necessary or appropriate to enable our
servicer to carry out its servicing and administrative duties.

      Our Manager is not obligated to use separate servicing procedures, offices
or employees for servicing the insurance policies from where it may service
other insurance policies, if any; provided, however, that our servicer is at all
times required to be able to accurately reflect the status of collections and
shall maintain separate accounts. Our servicer is not required to maintain
fidelity bond coverage insuring against losses through wrongdoing of its
officers and employees who are involved in the servicing of the insurance
policies.

      Our Manager's business will involve the following principal steps which
are described in further detail below:


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<PAGE>

      o     due diligence review, which includes evaluating the terms of each
            policy and of all medical records of the insured and reviewing
            insurance and final underwriting for proposed policies;

      o     obtaining the estimated life expectancy of the insured from an
            independent medical review service company, which has contracted
            with independent medical specialists;

      o     closing the transaction, which includes obtaining releases of all
            beneficiaries and an insurance policy assignment and recording of
            the Fund as beneficiary, or irrevocable change of beneficiary, as
            well as payment of the purchase price of the policy;

      o     monitoring the life status of the insured through a contracted
            affiliate of a medical review service company; and

      o     collecting the policy proceeds following the policy's maturity.

In addition, our Manager will also provide the following functions:

      o     review financial analysis of each policy and its relationship to the
            aggregate pool of policies;

      o     audit integrity of financial model on a periodic basis;

      o     maintain data on pool characteristics;

      o     audit premium calendar database; and

      o     prepare reports as agreed.

Evaluating the Insured and the Insurance Policy

      The due diligence review process is designed to obtain accurate
information regarding both the insured and the life insurance policy (a) to
determine whether our Provider will offer to purchase the policy and, if so, the
price it will offer and (b) to ensure that certain criteria are met to minimize
challenges by former beneficiaries or by an insurance company to payment of the
face value of the policy.

      The insurance review is our process of evaluating life insurance policies
and their suitability for purchase. Our Provider will obtain an insurance policy
directly from the insured when it is licensed as a broker or when states do not
require a broker's license, or from other Providers, or from a broker network.
Our Provider will utilize our Manager, as our servicer, to execute the following
procedures to verify that it purchases a complete insurance policy.


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<PAGE>

The insurance review process includes:

      o     review of the broker's application for required identification and
            personal information for the insured;

      o     examination of company records for previous policies on the life of
            the insured;

      o     review of all insurance applications associated with the policy and
            comparison of answers to any medical questions;

      o     ensuring the insurance company rating is A- or better;

      o     examination of the policy to make sure it is complete, including,
            among other things, that it is non-contestable and not a group
            policy (other than a Retired Federal Employees' Group Life
            Insurance, FEGLI);

      o     determination of the amount of death benefit available for purchase;

      o     thorough review of the insurance contract terms;

      o     escrowing sufficient premiums to fund the policy death benefit until
            the maturity date;

      o     verification of coverage by the insurance company or administrator;

      o     ensuring the file is complete before forwarding to the bidding
            department; and

      o     granting final approval for purchase once the bid has been accepted.

      The purpose of the insurance review is to ensure the amount of benefit
purchased will be available to the Fund upon maturity for distribution to its
members. In accomplishing this goal, the insurance review declines policies with
unacceptable risks and accepts only policies of the highest quality.

      Once a potential insured or broker contacts our Provider, an application
and consent form permitting our Provider to obtain medical and insurance
coverage information of the insured will be sent to the potential client. All
information obtained by our Provider in connection with policy purchases,
including the identities of the insureds, will be held in confidence and access
thereto will be restricted by our Provider to its employees and other
representatives. Upon receipt of the completed application, it will be reviewed
to determine the overall medical status and a preliminary estimated life
expectancy. The file will also be reviewed to determine whether the beneficiary
can be changed to the Fund rather than the insured or his family, and whether
the insurance company which issued the policy is of a credit quality deemed
acceptable by our Manager.


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<PAGE>

      If it appears from the application that the policy is one the Fund would
be interested in purchasing, our Provider will obtain from the broker the
insured's attending physician's medical information which usually includes
several years' worth of laboratory reports and physicians' notes and a written
letter of competency signed by the attending physician. Our Manager will forward
such documentation to an independent medical review service company, consisting
of a panel of specialists. Our Manager has contracted with four different
unaffiliated organizations to provide independent medical consulting, as
described below. In evaluating the life expectancy of the insured, the medical
consultant, will review the file and other information forwarded by our
Provider. We will make a decision to bid on the life insurance policy based, in
part, on the review of the medical review service company. See "Medical Due
Diligence Review" below.

      Simultaneously, our Provider, using the insured's consent form, will
obtain verification of insurance coverage and other policy information from the
insurance company, the employer or the group administrator. The insurance
documents will be reviewed to determine the type of policy, and any provisions
which may effectively reduce the face value of the policy, (i.e., loan against
the policy), and to ensure, among other things, that:

      o     the policy under consideration is past any contestability periods
            (i.e., the periods during which the insurance company may deny
            payment for various reasons, including suicide and a misstatement of
            material fact);

      o     all current primary beneficiaries are willing to execute releases
            with respect to any present or future claims they may have with
            respect to the policy;

      o     the Fund is able to obtain ownership of or became the irrevocable
            beneficiary of the policy and the associated policy proceeds. Our
            Provider will not purchase a policy if a minor is a named
            beneficiary at the time of purchase. Our Provider will also review
            the policy premium schedule and determine whether the policy
            contains a disability waiver of premium rider which impacts future
            premium payments. Our Provider will attempt to ensure that the
            policy is compatible with the Fund's portfolio in terms of cash on
            hand. The review process for the insurance documents generally will
            take one to three weeks, depending on the extent of cooperation
            received from third parties; and

      o     our Provider will not purchase policies of insureds who are not
            residents of the United States or whose insurance companies are not
            domiciled in the United States.

      Some of the documentation gathering described above, including collection
of necessary medical, personal and insurance information, may be performed prior
to submission of the application to our Provider, but the determination of the
insured's life expectancy and compatibility with investment criteria, review of
insurance documents and determination of legal and contractual issues will be
made by our Manager.


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<PAGE>

Medical Due Diligence Review

      Our Manager intends to utilize the services of four unaffiliated medical
review service companies, named below, to conduct a medical evaluation of
terminally ill and chronically ill (a continuing disease which is not currently
but may become terminal) persons of all ages prior to our Provider purchasing
the life insurance policies. These firms were selected on the basis of the
quality of their services, background of experienced underwriters and their
panel of medical specialists. However, each agreement is for only a 90-day
initial term and can be replaced by our Manager at its discretion at any time.
Each firm uses a panel of physicians consisting of many specialties including,
but not limited to, oncology, geriatrics and infectious diseases. These
specialists all have extensive backgrounds in clinical practice and/or research.

      Depending on the insured's medical condition, the life expectancy review
is accomplished through independent reviewing physicians. The life expectancy
review includes a review of the insured's medical records and related forms. The
insured's medical records may be furnished by the sourcing broker or requested
by our Provider

      The following medical records will be used by our servicer and/or our
medical review service companies in their medical review process of evaluating
the insured:

      o     progress notes from the primary care Provider and physician
            specialists;

      o     laboratory results;

      o     x-ray reports and other diagnostic tests;

      o     surgical reports;

      o     communications with insured's attending physicians;

      o     hospital admit/discharge summaries;

      o     pathology reports;

      o     previous and current therapy/treatment;

      o     lifestyle risk factors;

      o     functional impairments; and

      o     psychological parameters.

      The above components are necessary to establish an accurate overall view
of the health status of the insured. After this evaluation is reviewed, our
Manager then decides if the policy meets the Fund's objectives.


                                       12
<PAGE>

      Continuous insight into new medical advancements, treatments and
medications is important for the medical review process. We will incorporate
this information into each medical file reviewed and it is a vital part of
maintaining the high standards necessary for our medical review department.

Medical Consulting Services

      Our Manager entered into four separate consulting agreements with medical
service companies. These companies include Fasano & Associates, Inc. of
Washington, D.C., Systems for Advanced Risk Analysis, L.P. (SARA/ALI Group), of
San Antonio, Texas, 21st Services of Minneapolis, Minnesota and American
Viatical Services, LLC, of Woodstock, Georgia (collectively, the "Consultants").
The Consultants have no relationship to the Fund or its affiliates or to the
insureds themselves or the brokers representing the insureds. Each agreement is
on a non-exclusive basis for an initial 90-day term. The Consultant is paid
approximately $225 to $250 for each evaluation. The terms of such relationships
are industry standard and were negotiated on an arm's length basis, and each
agreement is substantially the same.

      Each of our medical consulting service companies has extensive experience
in the viatical industry. Fasano & Associates is a consulting practice that
began in 1990 and incorporated in 1997. Their group of underwriters and medical
directors have experience in all aspects of the underwriting function. They
maintain a network panel of practicing medical specialists providing quality
standards and determination for life settlement evaluations. SARA was
incorporated in March 1989 when the viatical market began. Their medical
underwriters and medical directors have many years of experience and are
comprised of a panel of medical specialists providing quality standards for life
settlements, underwriting and administration. The three founding principals of
21st Services have more than 20 years combined experience in financial modeling,
life expectancy evaluation, insurance underwriting, post-purchase portfolio
management, and compliance. They gained their experience while working for one
of the first institutionally funded viatical purchasing companies, which is
still in business today. In 1998, 21st Services created 21st Diagnostics that
introduced a statistically based model to provide life determinations for the
senior clients in the senior settlement market. It is the first comprehensive
model of its kind in the life insurance settlement industry. They maintain a
national of practicing medical specialists who are leading field researchers and
attend major conferences where medical advances are discussed and evaluated.
Many of these physicians have authored books, articles and research publications
used in the medical field and life insurance underwriting industry. American
Viatical Services, LLC, created in 1994 to provide third party medical
evaluations for the terminally ill and senior citizens, employs two physicians,
one Ph.D. in immunology, 3 RN's and support personnel. They currently employ 10
professionals to provide evaluation and tracking services.

      The Consultants are experienced medical review companies used by our
Manager for evaluating and determining an estimated life expectancy. The
Consultants have state of the art medical Underwriters and a panel of medical
physicians who rely on extensive clinical and research experience to make their
determinations of estimated life expectancy. The specialists include
cardiologists, oncologists, hospice specialists, geriatric specialists,
infectious disease specialists and internists. Many of the physicians hold
positions as medical directors of major


                                       13
<PAGE>

institutions. The Consultants provide a comprehensive review of medical records
and a mortality profile on the terminally ill or chronically ill individuals of
all ages. Our Manager is to submit life settlement files, including all medical
and other information needed to produce a life expectancy estimate. Our Manager
must warrant that the information is accurate and complete. The Consultant is
permitted to contact attending physicians of the insured to obtain clarification
or verbal updates, but does not examine or speak directly with the insured. Life
expectancy estimates may be based on underwriting mortality tables converted
into life expectancy by using statistical studies and clinical judgment or by a
combination of the foregoing.

      Factors influencing each Consultant's determination or an insured's life
expectancy may include the specialist's own clinical experience, peer review,
rigorous analysis of medical journals, library, non-public information
concerning clinical trials, investigational new drugs, and statistical
information.

      The medical review process involves conducting an evaluation of available
medical records. The medical review service will not confirm the existence of a
terminal illness. It will only evaluate to estimate a life expectancy.
Similarly, the medical review companies will base an estimated life expectancy
on seniors with a diagnosed chronic illness which would contribute to a lesser
life expectancy than a healthy person of that age. The eligibility for the
Fund's purchase will then be established.

Purchase of Policies

      If our Manager determines that the policy meets the Fund's criteria,
including due diligence review and investment criteria, our Manager will
instruct our Provider to make an offer to the insured or to the broker
representing the insured to purchase the policy. The purchase price will be
based upon the face value of the policy, our medical review service company's
estimate of the insured's life expectancy, the premiums estimated to be paid
under the policy over the insured's estimated life expectancy, and certain other
costs of the policy. If the insured or broker accepts the offer, purchase
documents are prepared from forms generated by our Manager's management
information system. The documents include a viatical settlement contract, a
consent to change of beneficiary and authorization to release medical
information of the insured.

      The Fund will become the owner of an individual policy, or absolute
assignee of the insured's rights in a group policy, by filing a change of
ownership or absolute assignment form and an irrevocable change of beneficiary
form with the applicable insurance company, employer or plan administrator.
Following receipt of appropriate acknowledgment of the receipt of such changes,
a closing occurs and funds are disbursed as directed to the insured. Our Manager
anticipates that the closing process will take one to three weeks and the entire
purchase process, from application to closing will take from four to eight
weeks. Our Provider will provide a rescission option through which the insured
may, for any reason, return the disbursed funds and any premium payments made by
the Fund in the interim, and be unconditionally released from the viatical
settlement contract. The rescission period is at least 15 days from receipt of
the purchase price and is longer (i.e., 30 days), if required by applicable law.
See "Government Regulation of Life Settlements" below.


                                       14
<PAGE>

Monitoring

      When the funds from the Offering are released from escrow, a premium
escrow account will be established with SouthTrust Bank generally equal to l50%
of the funds expected to pay the premiums during the estimated life expectancy
of the insureds with a minimum of two years beyond the estimated life
expectancy. We will attempt to pay premiums up front when possible or establish
a bank draft for automatic payment to avoid frequent monitoring of the premium
escrow account. At all times, however, an internal accountant will monitor the
premium escrow account to maintain required balances. We are also developing a
custom software application to house information regarding the policies,
insureds, brokers, agents, money market accounts and any other aspect that needs
to be monitored internally.

      We will also attempt to maximize returns on investment by increasing the
death benefit where the insurance policy permits benefit increases. The insured
will be regularly monitored to obtain timely information concerning the insured
so that proceeds may be collected as promptly as possible following the maturity
of the policy.

      Our Manager will monitor the policy to ensure it does not lapse because of
a failure to timely pay premiums. Some protection against the failure to pay
premiums is provided by statutory or policy provisions that require insurance
companies to provide written notice before terminating a policy for failure to
pay premiums. As owner of record of the policy, or as absolute assignee of all
of the insured's rights under the policy, the Fund generally receives such
notice directly.

      Our Manager has contracted with an independent third party, 21st Holdings,
LLC, an affiliate of 21st Services, one of our medical review service companies,
which will be responsible for monitoring or "tracking" the insureds' whereabouts
and/or ongoing medical condition. They will monitor the insureds through their
attending physician's office when possible. They will make quarterly calls to
the insured's physician to determine when the insured was last seen or the
insured's next scheduled appointment. All records will be kept in the insured's
file and on a monthly basis all updates will be sent to our Manager for its
files. If the insured does not regularly visit his physician then his personal
references will be contacted and if they cannot be reached, then the insured
itself will be contacted unless precluded by state or federal rules or
regulation. 21st Holdings, LLC will also be responsible to notify the insurance
company of the insured's death and will file the claim for benefits.
Representatives of our Manager in our Georgia office will receive all notices of
change in status of the insurance policy, a change in premium payments, annual
statements, or any reduction in death benefits. For all of the above services of
monitoring the insured, 21st Services will be paid a one-time set up fee of
$15.00 and monthly fee of $15.00 for each life settlement policy until the
policy matures.

Collection of Policy Proceeds

      Once a policy matures, one of the Consultants which is monitoring the life
status of the insured will file a request for a copy of the death certificate in
the appropriate governmental office. Often the insured's family or companion
will also submit a copy of the death certificate to the insurance company. The
Consultant will then file the death certificate with the insurance


                                       15
<PAGE>

company and request payment of the policy proceeds. The Consultant will monitor
the collection status until the Fund receives the face value of the policy.
Monitoring the collection status will be assisted by our servicer's management
information system, which will reflect the filing of the death certificates, the
filing of claim forms with the insurance companies by our servicer and provide
for a status update until the claims have been paid. Insurance companies have an
incentive to pay promptly on policies because most states require insurance
companies to pay interest on claims which take more than 30 days to settle.
Actual collections will generally occur within 30 to 55 days following the
maturity of the policy. However, in certain states (i.e., New York), actual
collections may take a longer period of time due to delays in processing of
documents by state authorities.

Description of Return on Investment

      We are offering proportionate interests in the income to be generated
primarily from individual life insurance policies, which we will purchase to
create a pool. The pool is intended to reduce risk by purchasing a large number
of policies from a diverse group of terminally ill and chronically ill (a
continuing disease which is not currently, but may become terminal) persons of
all ages and senior citizens, age 65 and older with estimated life expectancies
based solely on actuarial tables. The pool of life insurance policies will range
from face values between $25,000 and $2.5 million or more. In addition, the pool
should provide a blended rate of return closer to the estimated rate of return,
rather than if investors were to purchase a single life insurance policy.

      We will attempt to purchase insurance policies at a discount to the face
value of the policy based on our estimates of life expectancies. The discount is
directly connected with life expectancy and will increase along with estimated
life expectancy. A one-year life expectancy may have a relatively small discount
of perhaps 10%, while a 10-year life expectancy may have a 50% discount. The
amount of the discount to the insured is negotiated based on market conditions
and statutes and varies depending upon the nature of the life insurance policy,
the stability of the insurer, prevailing interest rate, the estimated premiums
to be paid by our Manager for the policy over the expected life of the insured,
the insured's estimated life expectancy and certain other costs of the life
settlement. Sixteen states require a minimum amount to be paid to an insured. We
will attempt to create a pool of life insurance policies in which our Manager
generally does not intend to purchase any life insurance policy which based on
the estimated life expectancy would not provide a return to members of the Fund
of at least 8% interest compounded annually. However, the estimated rate of
return on investment is not a guaranteed rate of return and the hypothetical
figures presented in this report are based on estimated life expectancies.
However, if the insured lives longer than the estimated life expectancy, the
return on investment would be lower than 8%.

      Only when we acquire from insurance carriers the proceeds after maturity
of insurance policies will members receive a distribution consisting of their
proportionate share of such proceeds. After the policy is underwritten and
medical and actuarial tables are examined, our Manager will estimate the
maturity of the policy. The estimated rate of return on the purchase price of a
life insurance policy: is inclusive of all fees connected with the purchase;
reflects our Underwriter's selling commission which will be paid at the time of
purchase, and payments


                                       16
<PAGE>

made to the premium escrow account. The actual rate of return can only be
determined when the Fund is paid by the insurance carrier after the policy
matures. The actual return on investment to members of the Fund is determined by
subtracting the discounted amount paid for each policy purchased (including all
fees and policy premiums paid or escrowed), as well as any capital calls paid,
and payments to the premium escrow account from the face value of such policy
when the policy matures. See "Investors Accounts and Allocation of Collections"
and "Capital Calls" below.

      The actual overall rate of return to all members can only be determined
when all policies have matured at the end of the Fund. We cannot guarantee
members the full return of their investment. The return will be increased to the
extent that there is an account balance and interest earned in the premium
escrow account at the end of the Fund which will be distributed to the members.
The actual overall rate of return may be adversely affected by, among other
things; (i) policies maturing after the estimated life expectancy; (ii) delays
in tracking or disbursements of claims at maturity by the insurance company,
(iii) delays in investing gross proceeds of the Offering resulting in members
receiving 1-2% interest in the operating escrow account, as opposed to the
estimated rate of return from gross proceeds invested in insurance policies,
(iv) any capital calls (e.g., if the premium escrow account have been
exhausted), (v) payments from the premium escrow amount; and (vi) policies that
terminate, lapse or the refusal or inability of the insurance carrier to pay the
claim, when the policy matures.

      The estimated rate of return, the blended rate of return and the actual
rate of return on investments in life insurance policies and the overall rate of
return are projected using annual compounded interest rates.

      For illustrative purposes only, set forth below is a hypothetical of how
an $79,383 investment might be used to purchase a 100% interest in a $100,000
face amount of a universal life insurance policy from a 50 year old terminally
ill insured with a three-year life expectancy. If a $100,000 policy is purchased
for $79,383 inclusive of all fees, and if the insured were, in fact, to pass
away in three years, the aggregate return on investment would be $20,617, or a
return on investment of 8% interest compounded annually.

      The estimated rate of return on investment is not a guaranteed rate of
return and the hypothetical figures presented in this report are based on
estimated life expectancies. Accordingly, if the insured lives one year beyond
the estimated life expectancy of three years, or a total of four years, then the
rate of return is 5.26% interest compounded annually for the four years. If the
insured lives two years beyond the estimated life expectancy of three years, or
a total of five years, the rate of return is 4.73% compounded annually for the
five years. The longer the insured lives beyond the estimated life expectancy
the greater the likelihood that the Fund will exhaust the premium escrow account
and need to make a capital call. See "Capital Calls" below.


                                       17
<PAGE>

      Expenditure                                                     Amount
      -----------                                                     ------

      Payment to seller (1)                                          $50,507

      Broker's fee (2)                                                 8,000

      Deposit to premium escrow account (3)                            5,000

      Provider's origination fee (4)                                   3,969

      Manager's and Servicer's fee (5)                                 3,969

      Selling commissions (6)                                        $ 7,938
                                                                     -------

                        Total:                                       $79,383
                                                                     =======

----------
(1) Payment to Seller. The price paid to an insured for a life insurance policy
is based primarily on the life expectancy of the insured and the estimated
premiums payable by the Fund over the expected life of the insured. Competitive
bidding (i.e., offers made on the same policies by other life settlement
companies) also influences the percentage of the face value that will be paid
for the policy. Generally, the shorter the life expectancy of the insured, the
greater the price paid for the policy. This is an arm's length negotiation
between the buyer and seller and depends generally on market conditions. In
management's opinion the information upon which this example is based uses
reasonable current market assumptions. The above example meets the minimum
payment of 50% to the insured, based on certain states' requirements; however,
approximately 30 states do not set any minimum amount which must be paid to an
insured. See "Government Regulation of Life Settlements" below.

(2) Broker's Fee. Either our Provider or the insured will pay the broker for
negotiating the sale of the insurance policy. Broker's fees are based on market
conditions and we currently estimate to be between 4% and 8% of the face amount
of the policy. Vermont is currently the only state which limits broker's fees to
2% of the amount paid to the insured while other states say it must be a
reasonable fee. However, we have assumed the maximum 8% fee for purposes of the
above table. Although we have no agreement or understanding to acquire an
ownership interest in a broker, certain states permit a Provider or its
affiliates to have an ownership interest and we may acquire such an interest in
the future.

(3) Deposit to Premium Escrow Account. The funds in the premium escrow account,
which will be used exclusively to pay policy premiums, are expected to generally
equal l50% of the premiums for the estimated life expectancy of the individual
insured for each of the three-year life expectancy in the above example with a
minimum of two years beyond the estimated life expectancy. Such escrowed funds
will be invested in interest bearing bank accounts, money market funds, or used
to purchase U.S. Treasury Bills.

(4) Provider's Origination Fee. The fee to be paid to the Provider, which may be
our Provider or another Provider in the secondary market, will be equal to 5% of
the gross proceeds of the Offering.


                                       18
<PAGE>

(5) Our Manager's and/or Third Party Outsourcing Fees. The fees to be paid to
our Manager, who intends to service the policies and monitor the insureds on
behalf of the Fund, will be negotiated and determined by our Manager, and will
equal 5% of the gross proceeds of this offering. Services provided by our
Manager will include: due diligence and policy review, independent medical
review for estimating the life expectancy of the insured, closing costs, which
include legal fees, administering the policy and the investors and monitoring
the life status of the insured.

(6) Selling Commissions. We intend to pay to our Underwriter, at the time of
purchase of insurance policies, a selling commission of 2.5% of the gross
proceeds of the number of units sold by our Underwriter. Our Underwriter may
also negotiate fees to be paid to selected dealers on units sold by them. The
total selling commissions to our Underwriter and selected dealers cannot exceed
10% of the gross proceeds of units sold, which is the maximum fee permitted by
the NASD. Broker-dealers, other than our Underwriter, AmeriFirst Capital Corp.,
will be paid upon acceptance of the investor as a member of the Fund unless the
broker-dealer agrees to defer payment.

Investor Accounts and Allocation of Collections

      The Fund's assets shall include investor accounts which consist of the
operating escrow account, premium escrow account and a provider escrow account,
each of which shall be established and maintained by our Manager or Provider
with SouthTrust Bank for the benefit of members of the Fund only upon the
completion of the minimum offering of $2,500,000 and the release of the funds
from the escrow agent.

      Operating Escrow Account. The operating escrow account shall be
established by the Fund and maintained by our Manager as a segregated, interest
bearing money market escrow account and it shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
members and shall be subject to distribution in accordance with the Fund's
operating agreement. The operating escrow account shall contain collections
attributable to insurance policies and funds on hand from the Offering to
purchase life insurance policies, transfer funds to the premium escrow account
and provider escrow account and pay fees to our Manager, Provider and
Underwriter. All funds will be deposited into the operating escrow account after
the minimum offering is completed. Notwithstanding that fact, if a broker-dealer
other than our Underwriter requests payment of selling commissions at the time
of acceptance of an investor as a member of the Fund such fees will be paid
then.

      Provider Escrow Account. The provider escrow account shall be established
by our Provider and maintained by our servicer as a segregated, interest bearing
escrow account through which the insurance policies are purchased and in certain
instances the referring broker's fee is paid. The funds deposited by the Fund in
this account shall be used by our Provider to purchase life insurance policies
from the insured, when applicable pay the broker's fee to the insured's broker
and pay any other fees assumed with the purchase.

      Premium Escrow Account. The premium escrow account shall be established by
the Fund and maintained by our Manager as a segregated interest bearing escrow
account. It shall bear a


                                       19
<PAGE>

description clearly indicating that the funds deposited therein are held in
escrow solely to pay premiums for all policies purchased by the Fund. The amount
of premium payments set aside for each policy shall generally be equal to 150%
of the annual premiums for the estimated life expectancies of the insureds with
a minimum of two years beyond the estimated life expectancy. Upon liquidation of
the Fund, the remaining premium escrow account shall be transferred in whole to
members of the Fund together with accrued interest thereon.

      Distributions from Investor Accounts. Our Manager shall have the revocable
authority to make withdrawals and distributions from, or transfers between, the
investor accounts. Funds on deposit in the operating escrow account, premium
escrow account, and provider escrow account may at all times be invested in
permitted investments, including interest-bearing bank accounts, money market
funds or short-term U.S. treasury bills, provided that any investment shall
mature and the funds shall be available for withdrawal on or prior to the
purchase of any life insurance policy from an insured. Our Manager shall hold
for the benefit of the members the negotiable instruments or securities, if any,
evidencing the permitted investments from the time of purchase until the time of
sale or maturity. Subject to the maturity restrictions set forth above, the Fund
shall instruct the escrow agent, in writing, as to the investment of funds on
deposit in the premium escrow and provider escrow account. If, for any reason,
the Fund does not provide investment instructions to our escrow agent, then the
availability of funds or the balances in the provider escrow account and the
premium escrow account, all investment earnings on the funds shall be deemed not
to be available or on deposit. Our Manager shall not be responsible for any
losses incurred in connection with any permitted investments.

      Our Manager is required to deposit immediately or cause to be deposited in
the operating escrow account all collections, which it receives.

Capital Calls

      In the event that sufficient funds are unavailable to pay any premium on
an insurance policy and an insurance policy would thereby lapse, our Manager
shall have the right to require all members of the Fund to make additional
capital contributions (e.g., a "capital call") of up to six months premiums to
insure that no policy lapses. A capital call to pay a policy premium shall only
be made when the premium escrow account has been exhausted. There will be no
other reserve fund (e.g., a sinking fund) available to pay policy premiums. Our
Manager also has the discretion to make a capital call to cover litigation costs
and any other expenses to preserve the Fund and for which there are insufficient
funds on hand. The members of the Fund will make the capital call in proportion
to their membership interests in the Fund. Capital contributions pursuant to
this provision shall be made within 30 days after receipt of notice from our
Manager of the amount of the contributions. If a member shall default in making
any such capital contribution, the other members of the Fund shall have, with
respect to the defaulted contribution, the right to contribute proportionately
and receive a substantial premium (expected to equal at least 150%) of the
membership interest attributable to the defaulted capital contribution.


                                       20
<PAGE>

General Description of Different Types of Insurance Policies to be Purchased by
the Fund And Investment Strategies

      Our portfolio will consist mainly of the following types of life insurance
policies: whole life insurance, adjustable whole life, universal life insurance,
variable adjustable life insurance, Retired Federal Employees' Group Life
Insurance (FEGLI) and term policies as described in detail below.

      o     Whole Life (including joint and survivorship): Whole life insurance
            offers protection for the life of the insured based on a fixed
            premium payment. Policies may provide coverage on a single life or
            joint lives, either first to die or survivorship.

      o     Retired Federal Employees Group Life Insurance: The only group life
            insurance which the Fund intends to purchase is Retired Federal
            Employees Group Life Insurance (FEGLI) policies which provide
            coverage for the life of the insured without any termination or
            decrease in death benefits. An absolute assignment will be made so
            that the Fund will be the only person able to make changes on the
            policy or terminate the policy. Our Manager will need to reimburse
            the insured for premium payments, on a quarterly or semi-annual
            basis as payroll deductions are the only mode available and an
            insured will be required to mail pay stubs to the Fund.

      o     Adjustable Whole Life and Combination Whole Life/Term Rider:
            Adjustable whole life and combination whole life/term rider policies
            can have limited guaranteed protection periods, or in the case of
            combination policies, the term portion decreases. In both cases,
            dividends are used to extend the coverage period or purchase paid-up
            whole life to replace the decrease in the amount of term insurance.

      o     Flexible Premium Universal Life and Variable Adjustable Life
            (including joint and survivorship): Flexible premium universal life
            and variable adjustable life policies are designed to mature or
            expire at 95 and beyond for specific amounts. Policies may provide
            coverage on a single life or joint lives, either first to die or
            survivorship.

      o     Term Policies (must be convertible or exchangeable): Term policies
            are issued for a specific period and generally expire without a
            death benefit at ages from 90 to 100. We will purchase only those
            policies with coverage periods at least three times the insured's
            life expectancy. All term policies must be convertible or
            exchangeable, without medical evidence and reinstatement of
            contestability or suicide provisions.


                                       21
<PAGE>

      Our Manager intends to follow the following policy origination guidelines
in purchasing life insurance policies through our Provider depending on the type
of life insurance policy purchased, as described above. An explanation of the
A.M. Best ratings appears following the guidelines set forth below.

Policy Origination Guidelines

      Our Provider will follow the criteria described below when originating
policies. The number and scope of life insurance policies in the pool that we
intend to create will increase with the amount of proceeds we obtain. Our goal
is to create a diverse pool of between 250 and 500 life insurance policies owned
by terminally ill and chronically ill persons of all ages and senior citizens,
age 65 and over to be determined by medical and insurance underwriting and based
on actuarial tables. In any event, our Manager which is controlled by John Tooke
will have sole discretion to oversee these strategies. We intend to use the
following strategies.

      o     All insurance carriers in the Fund covering the life settlements
            must be rated A- or better by A.M. Best as discussed in further
            detail below.

      o     We will not invest more than twenty percent of the proceeds of the
            Fund in policies from any one insurance company. To the extent that
            we sell less than $100 million of units, at any given time we will
            use our best efforts to, but may not be able to stay in line with
            these strategies.

      o     We will only purchase policies where the estimated life expectancy
            of the insured is between one and eight years.

      o     We will only purchase policies beyond the contestable and suicide
            periods.

      o     We will only purchase group insurance policies from Retired Federal
            Employees' Group Life Insurance.

      o     We will not purchase policies from individuals who have been
            diagnosed HIV positive only; the insured must have been diagnosed as
            having the terminal illness of Acquired Immune Deficiency Syndrome.
            The Acquired Immune Deficiency Syndrome is the end stage of HIV
            infection, characterized by opportunistic infections or a specific
            blood test, CD4 count of less than 200/mm., malignancies,
            generalized wasting and profound loss of the immune system as
            defined by the Center for Disease Control. For insureds with
            Acquired Immune Deficiency Syndrome the maximum policy size we will
            accept is $500,000.

      o     We will require an outside medical review to establish the estimated
            life expectancy for all terminally and chronically ill (a continuing
            disease which is not currently, but may become terminal) insureds.
            Also, for policies over $1 million, we will require two medicals and
            will rely upon the more conservative of the two medicals.


                                       22
<PAGE>

      o     We will not invest more than one-third of the proceeds of the Fund
            in policies in from any one type of terminal or chronic illness. To
            the extent that we sell less than $100 million of units, at any
            given time we will use our best efforts to, but may not be able to
            stay in line with these strategies.

      o     The maximum policy size for terminally and chronically ill insureds
            of all ages and seniors, age 65 and older with a life expectancy
            based solely on actuarial tables, is $2.5 million dollars.

      o     For seniors, age 65 and older, we have the right to base the
            estimated life expectancy solely on actuarial tables for whole life
            policies only. Mortality projections for Senior Life Settlements (65
            years or older) are based on the 2001 CSO Mortality Tables for
            females and males.

      o     We will not purchase Universal Life policies that terminate before
            the insured is age 95 or Term policies that terminate prior to age
            95 and cannot be converted or exchanged to extend the death benefit
            to age 95. All Universal Life and Term policies must have a coverage
            period of a minimum of three times the insured's estimated life
            expectancy based on their age at the time the policy is purchased by
            the fund until the termination date of the policy, or a minimum
            coverage period of 10 years beyond the estimated life expectancy and
            the termination date, whichever is greater.

A.M. Best's Ratings

      The objective of the A.M. Best rating system is to provide an overall
opinion of an insurer/insurance company's ability to meet its obligations to
policyholders.

      According to A.M. Best, their company ratings are based on three main
factors used to measure an insurer's financial strength and ability to meet
obligations to policyholders, as compared with industry composites. The factors
are:

            1.    Balance Sheet Strength

            2.    Operating Performance

            3.    Business Profile

      Balance sheet strength is determined by measurement of growth in
underwriting, ratio of premiums written to capital and surplus, capital adequacy
ratio, ratio of capital and surplus to liabilities, ratio of re-insurance
expenses to capital and surplus funds, annual change in capital, capital
structure of holding companies, quality and appropriateness of reinsurance,
adequacy of policy reserves, quality and diversification of assets and various
liquidity tests.

      Operating performance is centered around the insurer's profitability from
insurance operations, using various tests such as benefits paid as a percentage
of net premiums, commissions and expenses incurred as a percentage of net
premiums written, and return on equity.


                                       23
<PAGE>

      Business profile issues analyze the diversification of an insurer as to
how the book of business is spread geographically, by product and distribution.
In addition, A.M. Best analyzes the insurer's market position, management,
revenue composition, insurance market risk, and event risk.

      The range of A.M. Best ratings are as follows:

      A.M.         Best Ratings
      -------------------------
      A++, A+      Superior
      A, A-        Excellent
      B++, B+      Very Good B,
      B-           Fair
      C++, C+      Marginal
      C, C-        Weak
      D            Poor
      E            Under Regulatory Supervision
      F            In Liquidation
      S            Rating Suspended

      An A.M. Best rating may be lowered or withdrawn entirely by A.M. Best if,
in its judgment, circumstances so warrant.

      Ratings of A+ to A++ are assigned to insurance companies which have, on
balance, superior financial strength, operating performance and market profile
when compared to the standards established by A.M. Best. A.M. Best believes that
these companies have a very strong ability to meet their ongoing obligations to
policyholders. Ratings of A- to A are assigned to insurance companies which
have, on balance, excellent financial strength, operating performance and market
profile when compared to the standards established by A.M. Best. A.M. Best
believes that these companies have a strong ability to meet their ongoing
obligations to policyholders.

Competition

      Our Manager believes potential insureds distinguish insurance settlement
companies based on three principal factors:

      o     price;

      o     response time; and

      o     sensitivity and professionalism in dealing with the insured and his
            friends and relatives.

      A life settlement company typically determines the price that it is
willing to pay for a life insurance policy principally based upon its estimate
of the life expectancy of the insured and the


                                       24
<PAGE>

present value of such policy discounted at a rate as determined by such life
expectancy. Response time is affected by our Provider's internal ability to meet
demand, the cooperation received from the potential client's insurance company
and the insured's doctor and, ultimately, our Provider's access to capital to
fund its purchase of a policy.

      Our Manager believes that approximately 50 to 60 life settlement companies
currently operate in the United States. Although lack of traditional funding
sources and high financing costs have limited the industry's growth in the past,
competition has recently increased. The increased competition has contributed to
higher purchase prices and lower original estimated annual rates of return.

      Most insurance companies also offer some form of accelerated death
benefits to holders of their policies with terminal illnesses, but the costs
thereof vary substantially among such companies. A recent article appearing on
The Northwestern Mutual Life Insurance Company website, states that while
insurers began developing accelerated death benefits only a few years ago, today
more than 200 companies offer people with terminal and chronic illnesses
accelerated benefits, protecting over 18 million policyholders. As with any new
product, there are substantial variations in design, cost and coverage.
According to "Gay Money Magazine," accelerated benefits or acceleration often
requires a special rider on an individual's life insurance policy in order to
pay part or all of the policy face amount directly through separate life
settlement companies from the insurer if such individual's doctor signs a
statement certifying the insured's life expectancy is less than 6 or 12 months.
Also, most insurers allow acceleration on only part of policy, often only
25-50%. This is a reflection of this industry's assumption that life insurance
is for those left, not the living. Of course, this varies among insurers.

      An article from insure.com on April 17, 2001, states that most companies
require that the insured's life expectancy be 12 months or less from the time
the insureds applies for accelerated death benefits. Most policies specify that
the insured has a "dread disease" such as a heart attack, life-threatening
cancer, stroke, coronary artery bypass surgery or kidney failure. Some policies
charge the insured a higher premium for the option of accelerating his/her death
benefit. However, there are others that charge only if the benefit is
accelerated, while others do not charge at all. Most life insurance companies
limit the amount of the insured's death benefit he can accelerate, either by
restricting the percentage of his death benefit or the dollar amount that the
insured can receive.

      Our Manager believes that insurance companies, on an industry-wide basis,
have not aggressively participated in the market for terminally ill, chronically
ill and senior citizen life settlements or related products or services
primarily because of the undeveloped nature of the market and the potential for
public relations problems for the insurance industry resulting from insurance
companies redeeming policies for less than the death benefit promised to their
policyholders.

      Given the restrictions typically imposed on the availability of
accelerated death benefits, life settlements have, to date, been an attractive
alternative to accelerated death benefits for insureds. Life settlements can
also offer some people with terminal illnesses the opportunity to pursue
lifelong goals while they are still relatively healthy. Although our Manager
believes that


                                       25
<PAGE>

insurance companies may continue to be reluctant to enter the life settlement
market they may reduce their restrictions applicable to accelerated death
benefits, may begin to provide life settlements directly or through separate
settlement companies or may offer other competing products or services on a
broader basis.

      Our Manager believes that the Fund will be well-positioned within the life
settlements industry to compete. The Fund intends to establish a reputation in
the industry for providing life settlements in a professional, efficient and
responsible manner. In addition, our Manager believes that it will be able to
establish relationships with other Providers which will provide it with a
competitive advantage. Our Manager also believes that the confidentiality
afforded the insureds by having their policies beneficially owned by the Fund,
which will not disclose any confidential information, will be an additional
incentive for them to do business with our Provider rather than sell their
policies to persons who will hold the policies directly and know confidential
information. Finally, if the Offering is successful, the proceeds from the
Offering will allow our Provider to have significant financial flexibility in
such a fragmented market since it will have more resources which will allow it
to purchase more insurance policies at more favorable prices than if it was only
purchasing policies on an individual basis for one investor rather than for a
pool of investors.

Government Regulation of Life Settlements

      We will monitor the progress of new legislation and regulations in each
state in which we purchase policies. However, given the emerging nature of life
settlement regulations, there may be periods in which we may not be in
compliance, or are unable to comply with the effective provisions of each
applicable, statute and regulation.

      The Viatical Settlements Model Act was developed by the National
Association of Insurance Commissioners (NAIC) to encourage states to adopt
uniform standards to regulate the life settlements industry. Viatical and life
settlements are regulated by state laws of either the departments of insurance
or securities departments. A number of states have adopted the NAIC Model Act
and others have implemented certain provisions of the NAIC Model Act in the
regulations they have enacted. Set forth below are all material provisions of
the NAIC Model Act, as well as any material state variations, as follows:

      o     requires life settlement Providers, brokers or investment agents to
            be in compliance with state insurance laws in the state of residence
            of the insured, and specifies the requirements for obtaining a
            license, where applicable, and circumstances under which state
            regulators may refuse to issue, suspend or revoke a license.

      o     requires that life settlement contracts and related disclosure
            statements be submitted and approved by the state insurance
            regulator prior to use.

      o     requires the licensee to file an annual statement with each state's
            insurance regulator and gives the regulator flexibility regarding
            the form and content of that statement. The reporting requirements
            for Texas are believed to be the most


                                       26
<PAGE>

            extensive and require an annual report of all viatical or life
            settlement transactions in Texas, and a separate complete and
            accurate annual report of all viatical or life settlement
            transactions for all states in the aggregate. The reports shall
            contain the information set forth in paragraphs as follows: for each
            viatical or life settlement contracted during the reporting period;
            the date the settlement contract was signed by all necessary
            parties; insurance carriers name, age, life expectancy in months,
            insured's state of residence, face amount of policy, net death
            purchased, estimated total premium to keep policy in force for total
            life expectancy or not applicable because the policy is paid up or
            no premiums are due. Net amount paid to the owner, source of policy,
            type of policy, age of the policy at the time of contract, primary
            diagnostic code at time of settlement contract, type of funding,
            status as of ending date, death if applicable; sold if sold, appoint
            if appointed to another Provider or broker. Where death occurred,
            unique identifying number, date contract signed, age and life
            expectancy, insured's state or residence, net death benefit
            collected, total amount of premiums paid, net amount paid to owner,
            primary diagnostic code, date of death, difference between the
            actual number of months the insured lived after the date the
            contract was signed, and total life expectancy used by the reporting
            Provider, name and address of each Provider, representative, or
            broker, from which the reporting Provider was referred a policy;
            name and address of any person from which the reporting Provider was
            referred a policy for which a fee was given for referral; name and
            address of each Provider or broker to whom the reporting Provider
            referred a policy; number of policies reviewed and rejected,
            secondary market purchases as percentage of total policies
            purchased, name and address of any person whom our Provider utilizes
            to perform medical evaluations of any kind relating to life
            settlors, the name and address or any Provider or broker that our
            Provider utilizes to track a life settlor's health status after a
            settlement contract has been signed by all necessary parties, and
            payment has been made to the owner, or to indicate tracking
            performed by in house employees. The report shall not include any
            confidential information. For those states which require financial
            responsibility, our Provider's net capital will have to be verified
            each year and a bond kept in place.

      o     prohibits any person, including the licensee, in the context of a
            life settlement transaction, with the knowledge of an insured's
            identity, from disclosing that identity or the insured's financial
            or medical information, to any person, unless an exception applies,
            such as when such information is directly related to and necessary
            to be disclosed for the completion of the life settlement contract
            following the death of the insured.

      o     maintains broad procedures where state insurance regulators can
            examine and investigate licensees in the life settlement business
            and requires licensees to keep all records for a period of 5 years.

      o     requires disclosure of information to the insured, including, but
            not limited to: (i) disclose to insured that his or her medical,
            financial or personal information, as given to the life settlement
            Provider or broker, may be disclosed to others in order


                                       27
<PAGE>

            to effectuate the life settlement, (ii) possible alternatives to
            life settlement contracts, (iii) implications of proceeds received
            from the life settlement (i.e. creditors rights to proceeds, any
            effect on insured's eligibility to receive some form of governmental
            benefit, taxes on proceeds), (iv) name, address and telephone number
            of the life settlement Provider, and (v) the amount and method of
            calculating the broker's compensation.

      o     requires disclosure of information to potential investors (not
            including investors who are accredited investors, a financing
            entity, a special purpose entity, a related Provider trust or a
            licensee under the NAIC Model Act), including, but not limited to:
            (i) annual rate of return, (ii) the risks involved in this
            investment, including no returns will be received until the insured
            dies and investor will lose all benefits or received substantially
            reduced benefits if the insurer goes out of business during the term
            of the viatical investment, (iii) type of policy being viaticated,
            its current status and any additional benefits in the policy, (iv)
            whether the policy is contestable, and (v) information with respect
            to monitoring the insured's condition and the frequency of such
            monitoring.

      o     list general rules relating to the procedure for entering into a
            life settlement contract, and provisions regarding advertising and
            fraud.

      Sixteen regulated states have enacted statutes or adopted or proposed
regulations that establish minimum purchase prices to be paid to the insured
according to the insured's life expectancy. Those 16 states are as follows:
Arkansas, Mississippi, North Carolina, Tennessee, Washington, Minnesota,
Wisconsin, Virginia, Iowa, Nebraska, Louisiana, Alaska, Oklahoma, Montana, Maine
and Vermont. These states generally provide that if the life expectancy is 0-6
months, at least 75-85% (but generally 80%) of the face amount of the policy
must be paid; 6-12 months, at least 65-80% (generally 70%) must be paid; 12-18
months, at least 65-75% must be paid; 18-24 months, at least 60-70% must be
paid; 24-30 months, at least 50%-60% must be paid; 30 months or longer, at least
50% must be paid. Many of these states reduce the required amounts to be paid
for insurance carriers lower than the 4 highest A.M. Best ratings.

      Most states have statutes that regulate conducting a life settlement
business. Many states regulate the life settlement business through their
respective departments of insurance, while others, regulate through their
respective securities departments. Our Provider is in compliance with the laws
of the State of Georgia, which regulates the sale of insurance polices as a
security through the Division of Securities and Business Regulation. Most other
states regulate the purchase, rather than the sale, of life settlement policies.
Our Provider will seek to become licensed where required or otherwise comply
with the laws of all other states which regulate the purchase and/or sale of
life settlement policies. However, our Provider may not be able to obtain a
license in every state when required, or to renew or prevent revocation of a
previously issued license or approval. Our Provider may be precluded from doing
business in any state in which it is unable to obtain or maintain a required
license or otherwise comply with the insurance or securities laws. In the event
our Provider is not licensed or approved to do business, in a limited number of
states it may purchase policies referred by other licensed Providers.


                                       28
<PAGE>

      Although we are not aware of any judicial authority interpreting whether
the life settlement business constitutes conducting an insurance business, some
states may consider life settlements to be an insurance company and preclude the
Fund, which is not an insurance company, from operating in those states.

      Most states require each viatical and life settlement company to develop a
written anti-fraud policy, along with an anti-fraud training and education
program. AmeriFirst has established such a written policy and has developed a
training program to educate its employees about the danger of fraud and how to
prevent it, along with a procedure to report any suspected fraud that the
employee may encounter in the normal course of business. If the insurance review
or medical review indicates any material discrepancies that have not been
adequately explained, then the policy must be a "non-bid," and the information
must be immediately forwarded to the Fund's compliance department. Once reported
to the compliance department, incidents of possible fraud will be reviewed, and
if appropriate, reported to the applicable state Department of Insurance.

Employees

      As of December 15, 2003, the Fund does not have its own employees. The
employees of our Manager and Provider and their parent, AmeriFirst, Inc., will
carry out our operations or will outsource and oversee the services performed by
a third party servicer. As of December 15, 2003, our Manager employed nine
persons, and AmeriFirst, our controlling shareholder, employed ten persons, all
of whom are full-time employees. They include, John Tooke, the founder and
principal of the Fund, an executive assistant, a senior software architect,
in-house legal and accounting staff, insurance review, medical review, policy
administration, computer and data processing personnel, customer service,
medical review and administrative assistants. None of our Manager's employees is
covered by a collective bargaining agreement. In addition, as of December 15,
2003, our Provider employed four persons to handle policy origination, and our
Underwriter employed three persons in broker-dealer operations. For purposes of
illustrating the number of employees of each of our Manager, AmeriFirst, our
Provider and our Underwriter set forth above, John Tooke, an employee of each of
our Manager, Provider, Underwriter and AmeriFirst, was regarded as an employee
of each such entity, and Dawn Arnett, an employee of both our Provider and our
Underwriter was regarded as an employee of each such entity.

Risks Associated with the Fund

      An investment in the Fund is subject to significant risks including,
without limitation, the following.

Risks Related to Our Business and Industry

We may not have a viable business because of our lack of an operating history.

      The Fund and our Provider were recently incorporated in 2002, and together
with our Manager, have no operating history. At September 30, 2003, the Fund had
no assets other than deferred offering costs of $326,509 and our Provider had
assets of approximately $1,396.00.


                                       29
<PAGE>

Furthermore, the life settlements industry is relatively new. There can be no
assurance that life settlements will remain a viable industry or that the Fund
will be able to compete in this industry. See "Competition" above.

There is little, if any, precedent for a public company engaged in the life
settlements industry.

      There are very few, if any, public companies engaged in the life
settlements industry. Therefore, there are no models for potential investors to
view in which to compare the proposed operations and future performance of the
Fund. The estimated rate of return on investment is based on the insured's
estimated life expectancy and is not a guaranteed rate of return.

The inability of our Provider to purchase policies will have a material adverse
effect on the Fund.

      The Fund will depend upon our Provider for the acquisition of life
insurance policies on behalf of the Fund, either directly from the insured when
it is licensed or not required to be licensed, from other providers, or from a
broker network. There can be no assurance that our Provider will be able to
purchase a sufficient amount of insurance policies to utilize the entire gross
proceeds which may be raised from the Offering of units. In addition, we may
have to pay broker's selling commissions to unaffiliated broker-dealers upon the
sale of units. This would adversely affect the Fund's return on investment if
there were delays in purchasing insurance policies with such net proceeds. If
AmeriFirst Funding Group, Inc. were to cease acting as our Provider of insurance
policies, this would be expected to have a material adverse effect on the Fund's
ability to purchase life insurance policies.

We may not have a viable business because of our inability to generate an
adequate return on investment.

      The purchase price of life insurance policies to be paid to the insureds
is determined by market conditions of supply and demand and by various state
regulations. In addition, the various fees when added together are substantial
and that, in turn, also reduces the potential yield to the Fund. There is no
precedent for the Fund to know whether it will be able to balance such
objectives while still being able to compensate the various entities providing
services to the Fund.

      In order to generate an adequate return on investment, the various related
entities providing services to the Fund may reduce their fees on certain
policies. However, if there are not enough policies available to provide an
adequate return on investment and compensate the various entities, the Fund may
have to terminate its operations.

The loss of services of John Tooke could adversely affect the business and
operations of our Manager, Underwriter and Provider.

      John Tooke is the chief executive officer and controlling shareholder of
our Manager, Underwriter and our Provider. Mr. Tooke has no actual experience in
the purchase of life


                                       30
<PAGE>

settlements, although he has researched the industry since at least April 2001.
An investment in the Fund is substantially dependent on the efforts and
expertise of John Tooke. Until such time as the Fund establishes an operating
history, he is currently irreplaceable. Our Underwriter has a non-compete
provision in its employment contract with John Tooke, should he terminate
employment, which prevents him from engaging in any business, which is
competitive with the business of our Manager and soliciting any past or present
customer or employee of our Manager. Neither the Fund nor any of its affiliated
entities maintains key man life insurance on John Tooke's life and the loss of
his services would be expected to adversely affect the Fund's business and its
affiliated entities' ability to perform their duties and obligations in
connection with the Offering. While other officers of AmeriFirst, Inc., the
parent company of our Manager, Underwriter and Provider, have significant
business experience to carry on the operations of the Fund, there can be no
assurance the Fund will be able to recover from Mr. Tooke's loss and continue
its operations.

Our Manager has no prior track record relating to the sale of life settlements.

      We are relying on our Manager to conduct our business. Our Manager has not
commenced operations and we cannot present a track record for our Manager. John
Tooke, the controlling shareholder of our Manager, has experience with the
placement of investor funds in mortgage backed financing. While Mr. Tooke's
prior performance in real estate may give some indication of the future
performance of the Fund, any relevant prior performance of Mr. Tooke's
experience is more than 10 years old and not in his possession. Mr. Tooke has no
experience selling life settlements and thus there is no prior performance data
available.

Members are relying entirely on our Manager to direct the Fund without
independent review.

      Members of the Fund will have no right or power to take part in the
operations of the Fund except through the exercise of their limited voting
rights described in the Fund's Operating Agreement. However, the investment and
operating policies of the Fund may change without a vote of members. Potential
investors should not purchase units unless they are willing to trust our Manager
to direct the Fund.

      We do not have any of our own employees or facilities and are relying
completely on those of our Manager, our Provider and our Underwriter. Our
Manager is our sole manager and we have no ownership interest in our Manager.
Nobody has the responsibility of making an independent review for us of our
Manager's performance of its duties.

Our Manager has limited assets and will primarily fund its operations from fees
it earns in the purchase of life settlements.

      Our Manager has nominal capitalization and intends to fund its operations
from fees it earns in life settlements. If our Manager is unable to meet its
obligations to the Fund in order to enable the Fund to continue its operations,
the Fund's members may be required to vote to replace our Manager. In such
event, the Fund may be required to make a capital call upon members in order to
continue the Fund's operations without interruption.


                                       31
<PAGE>

Conflicts of interests may arise among our Manager, our Provider, our
Underwriter, the Fund and John Tooke, which could adversely affect the
operations of the Fund.

      The selection, purchase and servicing of our policies are controlled by
our Manager, all of whose stock is owned by AmeriFirst, 50% of whose stock is
owned by John Tooke. Our Manager will purchase policies on behalf of the Fund
through our Provider, which is also owned by AmeriFirst, either buying directly
from the insured, when it is licensed or not required to be licensed, from other
providers, or utilizing a broker network. While our Manager has agreed to act
within the best interest of the Fund and its members, the potential value of the
Fund's portfolio of policies will be affected by our Manager's selection of
policies. Our Provider will have conflicts between its duty to the Fund and its
own interests. Our Provider has agreed to sell policies it purchases to the
Fund. However, our Provider may sell, on a non-securitized basis, the life
insurance policies it purchases to other companies that have similar objectives
of the Fund and our Provider may have conflicts of interest in determining which
client will purchase the life insurance policy purchased by our Provider. As
beneficial owner of our Manager and our Provider, circumstances may arise from
time to time which make it more advantageous to AmeriFirst, and, in turn, John
Tooke, to act in the best interest of either our Manager or our Provider, rather
than in the best interest of the Fund and its members.

      We do not have our own staff and are completely dependent upon our Manager
for management, administration and servicing the polices. Our Manager believes
it has a sufficient staff to be capable of discharging its responsibility to us.
However, there may arise a time in which we are handling a high volume of
policies, and our Manager may not be able to service the policies on a timely
basis. Any delays in servicing our policies could have an adverse effect upon
our operations.

      Our Manager, Provider and Underwriter will receive substantial fees in
connection with the transactions described herein. Our Manager and Provider will
each receive their fees based on the gross proceeds of the Offering, regardless
of whether the insured dies within the estimated life expectancy, whereas the
members' return on investment will depend on the insured dying within his
estimated life expectancy. Although we believe that such fees are reasonable,
these fees are not the result of arm's length negotiations and may create
conflicts of interest among such parties. See "Conflicts of Interest" below.

Our inability to accurately predict estimated life expectancies would adversely
affect our financial results and may lead to payment delays or losses.

      The Fund's operations and financial results are dependent on the ability
of our Manager, with the assistance of unaffiliated medical review service
companies to conduct medical reviews through independent physicians, to
accurately predict the estimated life expectancies of the insureds. Life
expectancy is a significant factor in our determination of the purchase price of
an insurance policy. Insureds can live significantly beyond the predicted life
expectancy. Unanticipated delays in the collection of policies, whether caused
by underestimating an insured's life expectancy, or otherwise, could have a
material adverse effect on the Fund's financial results and will reduce the rate
of return to members of the Fund.


                                       32
<PAGE>

      Inaccurate forecasting of an insured's life expectancy by our Manager
could result from, among other things:

      o     advances in medical treatment resulting in deaths occurring later
            than forecasted;

      o     inaccurate diagnosis or prognosis on terminally ill insureds;

      o     improved living habits resulting in better health; or

      o     fraud or misrepresentation by the insured.

We may not have a commercially viable business as a result of competition from
other life settlement companies.

      The market for the purchase of life settlements is highly competitive.
There are few substantial barriers to prevent new competitors from entering this
market. The Fund expects to face additional competition from existing
competitors and new market entrants in the future. As a result, we may not be
able to compete on a commercially viable basis. Many competitors may have
substantially greater financial, technical and marketing resources, longer
operating histories, greater name recognition and more established relationships
in the industry than the Fund is expected to have. As a result, some of these
competitors may be able to:

      o     develop and expand their service offerings more rapidly;

      o     take advantage of institutional financing and other financing
            opportunities more readily;

      o     devote greater resources to the marketing and sales of their
            service; and

      o     adopt more aggressive pricing policies.

      We may face additional competition from benefits offered by insurance
companies. Other companies could choose to enter the Fund's target market and
devote greater resources and capital to the acquisition of insurance policies
from insureds. In addition, many major insurance companies now offer terminally
ill policyholders "accelerated benefits" options with their existing or
newly-acquired policies which provide a way for terminally ill policyholders to
draw on their life insurance benefits before death. The life insurance industry
may become more aggressive in offering such benefits to terminally ill and
chronically ill persons and senior citizens, although we believe insurance
companies have generally offered accelerated death benefits on terms more
restrictive than the terms of life settlements.

Regulation as an investment company may terminate the Fund.

      While the Fund may be considered similar to an investment company, it does
not intend to register as such under the Investment Company Act of 1940.
Accordingly, the provisions of


                                       33
<PAGE>

such Act, which, among other matters, require investment companies to have a
majority of disinterested directors and regulate the relationship between the
investment advisers and the investment company, will not be applicable in the
opinion of Snow Becker Krauss P.C. If the Fund is deemed to be an investment
company, our Manager may terminate the Fund and distribute its assets which will
affect the Fund's profitability.

We may not be able to recover accounting losses recorded on acquisition of life
settlements.

      Pursuant to Financial Accounting Standards Board Technical Bulletin 85-4
"Accounting for Purchases of Life Insurance," acquired policies will be recorded
at their cash surrender value and not at the amount of cash paid for the policy.
This treatment will have a negative impact on our balance sheet as well as our
statement of operations, because we will incur an immediate loss on the
acquisition of a life settlement contract. There is a risk that we may not be
able to recover the losses recorded on the acquisition of life settlements
contracts.

The Fund has no proprietary information or rights to give us a competitive
advantage.

      Except for information represented by the existing business relationships
of the Fund's management, the Fund will have no protected or proprietary
information. This means that the Fund will not enjoy a competitive advantage on
any protected basis over other potential industry entrants or over existing life
settlement companies. The Fund is applying to register its name or a depiction
thereof under the federal trademark laws to enjoy protected "brand" recognition
for the securities offered in the Offering.

Risks Related to the Offering

Members may experience a loss in excess of their initial investment.

      The Fund will purchase life insurance policies based on the estimated life
expectancy of the individual policy holder. If the insured lives beyond the
estimated life expectancy, the return on investment can become as low as the
initial investment and members may experience a loss in excess of their initial
investment. This would occur if the premium escrow account is exhausted and/or
there are insufficient proceeds from any maturing life insurance policies. The
Fund would have to make a capital call from all members to prevent policies from
lapsing. Once the capital calls exceed the return a members is to receive, the
overall return would be less than an initial investment and members may
experience a loss in excess of their initial investment.

Our Underwriter's lack of experience could adversely effect the business and
operations of the Fund.

      Our Underwriter is a newly formed broker-dealer with no prior operating
experience. Furthermore, the management of our Underwriter have no experience in
the offer and sale of units relating to life settlements. Our Underwriter may
also engage other NASD broker-dealers and foreign dealers who agree to abide by
the NASD's rules to sell our units. However, neither we, nor our Underwriter,
has identified any brokers or dealers which will participate in the


                                       34
<PAGE>

Offering and neither of us has any agreement, arrangement or understanding with
any such broker or dealer.

A reduced supply of life insurance policies could adversely affect members' rate
of return.

      Changes in the economy and other changed circumstances may result in a
reduced supply of life insurance policies and could result from, among other
things:

      o     improvement in the economy, generating higher investment returns to
            individuals from their investment portfolios;

      o     improvements in health insurance coverage, limiting the need of
            insureds to use the funds received to pay the cost of their medical
            treatment;

      o     a change in law that requires our Manager to apply more stringent
            credit standards in purchasing life insurance policies; or

      o     the introduction into the market of less reputable third party
            brokers who submit inaccurate information to our Provider on behalf
            of insureds.

If our Provider is not licensed or able to comply with state insurance laws, we
must purchase policies from brokers, none of which are obligated to sell to us.

      Our Provider is required to be licensed in the states requiring a license
before it can be permitted to purchase life insurance policies. In addition, it
must comply with the laws of each state which regulates the purchase and/or sale
of insurance policies. Our Provider is in compliance with the laws of the State
of Georgia which regulates the sale of insurance policies as a security through
the Division of Securities and Business Regulation and the Insurance
Commissioner for the State of Georgia. Our Provider will seek to comply with the
insurance laws of all other states which regulate the purchase and/or sale of
life insurance policies. However, our Provider may not be able to comply with
every state's laws, or to renew or prevent revocation of a previously issued
license or approval. Our Provider may be precluded from doing business in any
state in which it is unable to obtain or otherwise maintain a required license
or otherwise comply with the insurance or securities laws of that state. In the
event our Provider is not licensed or approved to do business, it may only
purchase polices referred by other licensed providers or brokers.

Newly issued life insurance policies carry special risks which could decrease
the return on members' investments.

      An insurance company may contest the payment of a death benefit or cancel
the life insurance policy should the insured die within a certain time period or
under certain conditions, or should the policy have been obtained fraudulently.
Typically, the time period in which an insurance company can contest an
insurance policy is two years. In the event that an insurance company
successfully contested a policy and did not pay death benefits, the Fund would
incur a loss, which would decrease the return on members' investments. Examples
of reasons to cancel


                                       35
<PAGE>

a policy would be if the insured did not truthfully answer a question on the
policy application, or if the insured commits suicide within the two-year
contestability period. The Fund intends to only purchase life insurance
policies, which are beyond their contestability periods. See "Evaluating the
Insured and the Insurance Policy" above.

General risks of types of policies purchased.

      Our portfolio will consist mainly of the following types of life insurance
policies: whole life insurance, universal life insurance, variable adjustable
life insurance, Retired Federal Employees Group Life Insurance (FEGLI) and term
policies.

      o     Whole life insurance offers protection for the life of the insured
            based on a fixed premium payment. Policies may provide coverage on a
            single life or joint lives, either first to die or survivorship. The
            greatest risk lies with the purchase of whole life contracts from
            insureds who may outlive their estimated maturity dates.

      o     Adjustable whole life and combination whole life/term rider policies
            can have limited guaranteed protection periods, or in the case of
            combination policies, the term portion decreases. In both cases,
            dividends are used to extend the coverage period or purchase paid-up
            whole life to replace the decrease in the amount of term insurance.
            The dividends are not guaranteed and the risk is that the insurance
            carrier would fail to make a dividend payment.

      o     Flexible premium universal life and variable adjustable life
            policies are designed to mature or expire at 95 and beyond for
            specific amounts. Policies may provide coverage on a single life or
            joint lives, either first to die or survivorship. Insurance costs
            may become prohibitive at higher ages and there is the possibility
            of the insured outliving the coverage.

      o     The only group life insurance which the Fund intends to purchase is
            Retired Federal Employees Group Life Insurance (FEGLI) policies
            which provide coverage for the life of the insured without any
            termination or decrease in death benefits. Our Manager will need to
            reimburse the insured on a quarterly or semi-annual basis for
            premium payments as payroll deduction is the only mode available.
            There is a risk that either the government could discontinue this
            insurance program and terminate the policy or the premiums could
            increase significantly. Either of these factors could adversely
            affect the Fund's investment performance.

      o     Term policies are issued for a specific period and generally expire
            without a death benefit at ages from 90 to 100. The risks are that
            premiums become prohibitive and the possibility of the insured
            outliving the coverage.


                                       36
<PAGE>

If only the minimum funds are raised, we will not create a diverse pool of life
insurance policies and members' rate of return will be lower.

      Our ability to reduce risk by creating a pool of life insurance policies
will be limited by the amount of funds we raise. If only the minimum $2.5
million is raised, we will be able to acquire only a few insurance policies and
members' return on investment may be low if we do not predict accurately the
life expectancies of the insureds. Also, we would not necessarily be able to
follow the diversification requirements and strategies described under "General
Description of Different Types of Insurance Policies to be Purchased by the Fund
and Investment Strategies." The pool of life insurance policies will have
different maturity dates and members of the Fund will receive their
proportionate share of an indeterminate cash flow.

We may lack funds to pay policy premiums and members may need to make capital
calls to prevent the lapse of policies.

      The Fund will establish a premium escrow account at SouthTrust Bank with
proceeds of the Offering generally equal to l50% of the premiums for the
estimated life expectancy of the individual insureds, with a minimum of two
years beyond the estimated life expectancy, which is believed to be appropriate
and necessary to cover anticipated premiums owed. However, if a policy lapses,
the Fund will suffer a loss equal to the purchase price of the insurance policy.
If the premium escrow account is depleted for any reason, there is no other
reserve fund (e.g., a sinking fund) and the Fund will not be able to pay
premiums on outstanding policies.

      If the Fund is unable to make any premium payments or meet any other
operating expenses to preserve the Fund, our Manager will make a capital call
(of up to 6 months of premiums) where the members will need to make a
proportionate capital contribution to the Fund. A capital call will not result
in higher revenue for the Fund. Such a contribution would result in lower
returns to members of the Fund. If enough additional capital is not contributed
to cover additional premiums required, the individual policy on the insured's
life will lapse. If less than all of the members contribute to the capital call,
those members who contribute to the capital call will receive a premium to be
determined by our Manager of the membership interest attributable to the
defaulted capital contribution. Those who do not contribute to the capital call
will have a reduced membership interest in the Fund and their return on
investment will be reduced. See "Capital Calls" above.

We can only estimate and cannot guarantee members rate of return.

      The actual overall rate of return to members of the Fund can only be
determined at the maturity of the individual policies. We can only estimate and
cannot predict or guarantee members a rate of return. The estimated rate of
return is based on the insured's estimated life expectancy. This estimate is
based on medical and insurance underwriting and actuarial tables. Factors
affecting the accuracy of our estimate include the experience and qualifications
of the medical personnel estimating the life expectancy, the nature and progress
of the insured's illness and the future developments in treatments and cures. If
an insured passes away before the estimated life expectancy, the actual rate of
return will be more than the estimated rate of return, but if the insured dies
after the estimated life expectancy, the actual rate of return will be less


                                       37
<PAGE>

than the estimated life expectancy. The actual rate of return may also be
adversely affected by delays in payment or non-payment by carriers, delays in
purchasing policies, capital calls and policies that terminate or lapse. In
addition, we are attempting to securitize a diverse pool of terminally ill and
chronically ill persons of all ages and senior citizens, age 65 and older, with
estimated life expectancies based solely on actuarial tables. There is little,
if any, precedent as a public company, there can be no meaningful historical
data regarding the life expectancies of an undetermined pool. We have no
historical data regarding losses experienced with life settlements and/or delays
experienced in collecting amounts due under life insurance policies.

The rate of return to members may be lower than expected if the third party
information we receive to predict life expectancy is not accurate.

      The rate of return to members of the Fund is highly dependent on our
ability to predict accurately the life expectancy of the insured. In a pool of
life insurance policies, we cannot monitor the insured's medical progress on our
own. The Fund and our Manager must rely on third party information to assess the
accuracy and validity of life insurance policy information. We must rely on
third party medical and actuarial information when estimating the life
expectancies of the insureds. We will rely on life expectancy estimates of
independent physicians who may not have sufficient data available.

We will depend on third party information to predict estimated life
expectancies.

      The independent physicians on whom we will rely to assist us in estimating
the life expectancies of the insureds who are terminally or chronically ill do
not personally examine any of the insureds. The independent physicians working
for the medical review service companies with whom we have contracted will rely
instead on the insured's medical records and the reports provided to them by the
attending physician with whom they can communicate, as well as on certain
actuarial assumptions.

Cures and advances in medical treatments for terminal illnesses will reduce
members' rate of return and the number of persons seeking life settlements.

      The development of a cure for, or vaccine against, terminal and chronic
illnesses, or the development of new drugs or other treatments which extend the
life expectancy of individuals with such illnesses could have a material adverse
effect on the rate of return to members of the Fund. In addition, such medical
developments would likely reduce the number of individuals seeking life
settlements. Substantial reductions in the cost of treating terminal illnesses,
including reductions from the development of less costly treatments, may also
reduce the number of individuals seeking life settlements.

Our working capital reserves may not be adequate to meet our obligations.

      We intend to maintain small working capital reserves to meet our
obligations, including operating expenses. We will, however, maintain a premium
escrow account to pay life insurance premiums. If we do not have adequate cash
reserves, members of the Fund could suffer a loss of their investment unless we
make a capital call. In the event our Manager cannot or does not pay


                                       38
<PAGE>

our operating costs, it will be necessary to borrow funds, and there can be no
assurance that such borrowing will be on acceptable terms or even available to
us. Such a result may require us to liquidate our investments and abandon our
activities unless we are able to successfully raise the necessary funds in a
capital call.

We will depend on a broker network, but will have no contractual rights to
policies.

      Our Provider can only purchase policies referred by other providers or
sourcing brokers unless it becomes a licensed broker and/or purchases an
interest in a broker. No sourcing broker is under a contractual agreement to
refer policies to our Provider, and none is prohibited from referring policies
to our competitors. Sourcing brokers tend to be relatively small independent
businesses with limited capital resources. Therefore, no assurance can be given
that relationships with sourcing brokers can be established or that existing
sourcing brokers will remain in business. In the event that our Provider is not
licensed or our Provider's relationships with the sourcing brokers are not
established or cease, our operations could be adversely affected.

We will have limited assets other than insurance policies.

      The Fund does not have any assets nor will it purchase any insurance
policies prior to completing the Offering. The Fund will not be permitted to
have any assets other than interests in life insurance policies and temporary
investments. Therefore, members of the Fund must rely on policies beneficially
owned by the Fund maturing and paying proceeds in order to receive
distributions.

The failure of an insurance company to pay proceeds will reduce distributions to
members.

      The value of the collateral of the Fund, which are assignments of life
insurance policies and beneficial interests in the proceeds of such policies, is
directly dependent upon the financial stability of the life insurance companies.
While the Fund intends to purchase life insurance policies only from life
insurance companies rated A- or better by A.M. Best, an established insurance
company may fail or not have enough money to pay the Fund the proceeds upon the
death of the insured. The number of life insurance company insolvencies has been
increasing in recent years, mainly due to poor investment results, inadequate
underwriting or reinsurance, a lack of diversified investments and fraud. If the
insurance company that has issued a policy acquired by the Fund becomes bankrupt
or otherwise defaults in payment to the Fund, the Fund would have less income to
make distributions. Most states have insurance guaranty funds to help liquidate
the obligations of a terminated insurance company, but there can be no assurance
that those funds will be adequate in any one instance.

Delays in payment and non-payment of policy proceeds will reduce potential
profits and distributions to members.

      A number of arguments may be addressed by former beneficiaries under a
life insurance policy or by the insurance company issuing a policy to deny or
delay payment to the Fund of the proceeds of a policy following an insured's
death, including arguments related to lack of mental capacity of the insured or
applicable periods of contestability or suicide provisions. Delays for


                                       39
<PAGE>

any reason in the Fund's collection of the face value of a life insurance policy
following the death of the insured could have an adverse effect on the Fund's
profits and distributions. If the death of an insured cannot be verified and no
death certificate can be produced, the insurance company may not pay the
proceeds of a policy until after the passage of a statutory period (usually five
to seven years) for the presumption of death without proof.

Negative effect of increase in interest rates will reduce our profitability.

      Changes in interest rates and expectations about changing interest rates
will affect the Fund's business. The Fund's profitability is dependent to a
significant degree on the difference or the spread between the cost of the life
settlements and the face value of its portfolio of policies. An increase in
interest rates may affect the price that our Manager is willing to pay for the
life insurance policies. Any substantial increase in interest rates will result
in either a decrease in the purchase price that our Manager is willing to pay
for insurance policies or a lower spread. If the Fund's purchase prices were to
become significantly lower than its competitor's purchase prices, the number of
policies available to the Fund could decrease. In addition, due to current and
proposed regulations in several states which provide minimum purchase prices for
life insurance policies, our Manager may be unable to decrease its purchase
prices to fully account for the increase in interest rates.

Our compliance with minimum purchase price requirements may significantly reduce
our profitability.

      Sixteen states have adopted and others are considering the adoption of
legislation that regulates the minimum purchase prices to be paid for life
settlements. The Fund and our Manager will comply with any and all legislation
enacted. Compliance with minimum purchase price requirements may significantly
reduce the Fund's profitability and ability to make distributions. Because
minimum purchase price requirements may prevent the Fund from earning an
acceptable profit margin on the life settlements in its portfolio, such
requirements may force the Fund not to purchase life insurance policies in
states imposing such restrictions.

Delays in purchasing life settlements will reduce our profitability and the
return to members.

      The gross proceeds raised from the Offering will be invested in low risk
eligible investments until utilized to purchase life settlements. Such
investments are expected to provide an estimated rate of return of 1-2% per
annum, or a substantially lower rate of return than the Fund anticipates can be
obtained through our procurement of life settlements. Therefore, the Fund
believes that any delays in investing funds allocated to the purchase of life
settlements will reduce our profitability and the return to the members.

Our inability to track the insured may adversely affect the Fund's financial
performance.

      After the Fund has purchased a life settlement from a policy owner,
through our Provider, it must monitor or "track" the insured until he passes
away and obtain documents establishing the insured's death in order to collect
under the life insurance policy. Our Manager will require each


                                       40
<PAGE>

insured to furnish information that should enable adequate tracking and that
obligates such insured to inform our medical review service company periodically
of changes in his health status, and immediately notify our Manager of any
change in the insured's residence. Nevertheless, there is a risk that an insured
with whom our Provider has entered into a contract may become "missing," or that
there may be a delay in ascertaining that an insured has passed away or in
obtaining required documentation needed to claim the insured's death benefit.
Either could have a material adverse effect on the Fund's financial performance.
Where permitted by law, our Manager has hired a consultant, 21st Holdings, LLC,
an affiliate of 21st Services, one of our medical review service companies, to
track each insured on a monthly basis. However, some states further limit the
frequency with which the Fund through its tracking firm may contact the insured
or obtain his medical records.

Possible costs relating to and delays attributable to government regulation will
reduce our profitability.

      Our Provider will be required to comply with the laws of each state which
regulates the purchase of life insurance policies. In addition, our Underwriter
is registered with the NASD and is regulated by the NASD.

      The life settlements industry has been tainted by fraud. Accordingly,
industry groups including the National Association of Insurance Commissioners
(NAIC) and the North American Securities Administrators Association (NASAA)
perceived there to be an industry void and passed a Viatical Settlements Model
Act and subsequent Guidelines Regarding Viatical Investments. A summary of the
provisions of the Viatical Settlements Model Act appear in this report under the
heading "Government Regulation of Life Settlements." In addition to the states
which adopt the NASAA guidelines, other states which license insurance purchases
follow many of the provisions of the Viatical Settlements Model Act. Since the
SEC does not regulate life settlements, except in an offering such as this one
in which the policies are securitized, some states treat the sale of life
settlements to individuals as the sale of securities and require registration in
such states.

      In any event, we will comply with any and all applicable rules and
regulations. At present, we have no reason to believe that we will not be able
to comply with the regulatory and licensing requirements of any particular
jurisdiction. There can be no assurance that in the future there will not be
periods when we are not in compliance with state regulations. Most states
regulate life settlements through their insurance departments, while some states
regulate life settlements through securities administrations. As the Fund enters
the marketplace in states having such regulations, it will incur significant
compliance costs. See "Government Regulation of Life Settlements" above.

We may be unable to prevent certain fraudulent activities including
clean-sheeting.

      One of the fraudulent practices in the life settlements industry has been
referred to as "clean-sheeting." This is when either an insured or his agent
submits an original application for insurance containing false or misleading
information. The Fund does not intend to purchase any life insurance policy
prior to the end of the time period in which an insurance company can


                                       41
<PAGE>

contest a policy or during the suicide period for which an insurance company
does not have to pay the claim, both of which are typically two years.
Notwithstanding that fact, in the event of fraud, if an insurance company will
refuse to pay the claim on a policy which the Fund purchases, the members would
lose part of their investment which would adversely affect the rate of return of
the Fund.

      Notwithstanding the Fund's above stated policy, there can be no guarantee
to protect members of the Fund from "clean-sheeting." Accordingly, the Fund has
established a written internal anti-fraud policy and an education program for
the Fund's employees to perform proper due diligence to ensure that
clean-sheeting and other fraud has not been committed. If the Fund's employees
suspect possible fraud in the application for an insurance policy or in the
insured's medical records, they will not purchase such policy and are instructed
to report such impropriety to the appropriate insurance authorities. See
"Government Regulation of Life Settlements" above.

Our failure to comply with federal or state securities laws could have a
material adverse effect on the Fund.

      Almost all state securities regulators have begun to regulate interests in
life settlements as securities. Some state securities regulators have taken the
position that the sale of an interest in a life settlement is an "investment
contract" that falls within the definition of a "security" under state
securities acts. Some state legislatures have amended state securities acts to
specifically add viatical settlements to the definition of a "security."

      With respect to federal law, the D.C. circuit, as well as certain other
circuits, held that interests in viatical and other life settlements are not
securities because profits do not derive predominantly from the efforts of
people other than the investors themselves. S.E.C. v. Life Partners, Inc., 87
F.3d 536 (D.C. Cir. l996). However, by our forming a pool of insurance policies
and offering an undivided interest in the pool, rather than reselling the life
insurance policy itself, we believe the units offered in the Offering would be
deemed to be a security. Our failure to comply with applicable federal or state
securities laws may have a material adverse impact on the Fund. Securities
regulators may impose civil fines or penalties on the Fund and, under certain
circumstances, may require it to make a rescission offer to some or all of its
investors, as a result of which the Fund's financial position could be
materially adversely affected.

Privacy laws and other factors may limit the information the Fund receives about
the insured.

      Federal and state privacy laws may limit the information the Fund receives
about the insured after investors invest in the Fund, such as the insured's
current medical condition. In addition, other factors, such as the insured's
unwillingness to cooperate, may limit the information the Fund receives after
investors invest in the Fund.


                                       42
<PAGE>

Being a beneficiary of a policy and not also an owner carries special risks.

      The person who buys a life insurance policy is the owner of the policy and
decides who the beneficiaries of the policy will be, that is, who will receive
the death benefit when the owner dies. If the owner sells that policy to our
Provider who then assigns it to the Fund, the members become the owners and
therefore, are entitled to receive the death benefit when the insured dies. Some
states however, will only allow a provider to directly purchase a life insurance
policy and become the owner of the policy, where the Fund would become an
irrevocable beneficiary of the policy.

Group policies carry special risks.

      A group policy insures the members of a specific group of people, usually
the employees of a company. The biggest risk for someone who invests in a group
policy is that the policy can be terminated by the employer or the insurance
company. The Fund intends to only purchase group policies of retired Federal
Employees Group Life Insurance (FEGLI).

Sale and transfer of the units is severely restricted and may cause members to
forego the use of their invested funds.

      Members are not permitted to sell their units, and members will only be
permitted to withdraw their investment from the Fund commencing one year after
they are accepted as a member in the Fund, at a 15% discount to the principal
amount of their investment. Accordingly, members of the Fund must be prepared to
forego the use of their invested funds until we return members' investments. We
cannot make any distributions to members prior to the maturity of any life
insurance policy which will affect members' liquidity. The timing and frequency
of distributions will depend on the size and scope of the pool of life insurance
policies. Transfer of the units is restricted by the Fund's Operating Agreement.
Members of the Fund may not transfer the units:

      o     to persons who do not meet the investor suitability requirements
            pursuant to the Offering;

      o     unless the transfer is approved by our Manager in its sole
            discretion; or

      o     in violation of the securities laws or if the transfer would cause
            the Fund to be a publicly traded partnership.

Investors cannot revoke their subscription and will not have use of their
invested funds.

      Once an investor signs the subscription documents and forwards such
documents together with payment for a unit, he will not be able to revoke his
subscription. The offering period can be held open until April 17, 2004, unless
extended, without any subscriptions being accepted if subscriptions in the
amount of the minimum offering are not achieved before then. Accordingly, if an
investor subscribes before we close on the minimum offering, his subscription
amount will be held in escrow, earning a low rate of return and will not be
available to him.


                                       43
<PAGE>

No public market exists for the units and transfer restrictions prevent
assignment of the units.

      There is no public market for the units. Therefore, it may not be possible
for members to liquidate their investment in the Fund. In addition, members of
the Fund cannot privately sell, gift, pledge or otherwise transfer their units
without the prior written consent of our Manager. Although a member will be
permitted to withdraw his investment at a 15% reduction to the principal amount
of his investment (less any distributions paid to such member) commencing one
year after such person/entity is accepted as a member of the Fund, such member
will not be able prior to such one year period to sell his units promptly in the
event of a financial emergency or at the price he wants and such member may not
be able to use his units as collateral for a loan. Investors should purchase the
units only with the intent of holding the units until we return their
investments.

Risk of fraud by insureds may adversely affect our operating results.

      Although we are required to conduct certain due diligence in advance to
buying a life insurance policy, there is a risk that we will be defrauded. Among
other types of fraud that may exist, an insured may misrepresent the status of
his illness, may fail to disclose all beneficiaries or may sell a policy to more
than one purchaser. In the event that brokers submit inaccurate life settlement
information to our Provider, we may not be able to uncover the presence of
defects through our due diligence. There will be no provisions in the viatical
settlement contracts for any repurchases of policies owned by the Fund and we
may incur losses as a result of such breaches of warranties. If the Fund is
subject to such fraud, our operating results would be expected to be adversely
affected.

Some decisions will be approved by less than all members of the Fund.

      A member may be outvoted by other members of the Fund on some key
decisions. Set forth below are actions that require the approval of members,
but, except as indicated, do not require unanimous approval. There may
accordingly be significant changes in our capital structure or management of
which all members do not approve.

      o     Amendment to the operating agreement requires the approval of
            members with aggregate capital accounts that are a majority of the
            capital accounts of all members, except for (i) admission of
            additional members, which does not require the approval of the
            members, or (ii) changes that would increase members liabilities or
            decrease their interest in the Fund's income, gains or
            distributions, and (iii) early termination of the Fund, which
            require approval of all the members.

      o     Removal of our Manager in the case of commission of a felony, gross
            negligence or willful misconduct requires the approval of members
            with aggregate capital accounts that are a majority of the capital
            accounts of all members, or removal of our Manager after our Manager
            has received distributions from the Fund that equal 125% of the
            aggregate expenses incurred by our Manager, Provider and


                                       44
<PAGE>

            Underwriter requires the approval of members whose capital accounts
            exceed two-thirds of all members' capital accounts.

      o     Approval of the recapitalization, sale of substantially all of the
            Fund's assets, restructuring of the Fund or merger of the Fund with
            or into another entity, that in each case adversely affects the
            members requires a vote of the members whose total capital accounts
            exceed two-thirds of the total of all members' capital accounts at
            such time.

      o     Election of a successor manager, after our Manager has been removed
            or has resigned requires the approval of members with aggregate
            capital accounts that are a majority of the capital accounts of all
            members.

Our Manager can dissolve the Fund at any time, even if the insurance policies
are sold below cost.

      Our Manager can dissolve the Fund at any time. Members can lose a
significant part of their investment if our Manager decides to terminate the
Fund when many of the insurance policies are still outstanding. Our Manager will
sell the insurance policies to be able to distribute cash to the members and it
may have to sell the insurance policies at significant losses.

Tax Risk Factors

General tax risks.

      Before making a decision to invest in the Fund, potential investors should
assess the tax risks and their willingness and ability to comply with ongoing
federal income tax filing and compliance requirements. The tax consequences set
forth below are general in nature. Each potential investor should consult with
his own tax professional to assess the tax impact of an investment in the Fund.

There are risks of loss of tax benefits by investment of IRA funds in exchange
for units.

      Investing money held in an Individual Retirement Account ("IRA") involves
special risks. We offer investors the option of using funds from their IRAs to
purchase interests in life settlements. Section 408(a)(3) of the Internal
Revenue Code of 1986, as amended, requires that "no part of the trust [IRA]
funds will be invested in life insurance contracts." We are not aware of any
ruling or judicial decision concerning the investment of IRA funds in life
settlements. Therefore, because the question is not settled, there is the
possibility that the Internal Revenue Service ("IRS") will not allow investors
the tax benefits of their IRA on funds invested in life settlements. There is
also the possibility that the IRS would not allow investors the tax benefits of
any portion of their IRA accounts if any part of the IRA funds are invested in
viatical or senior settlements.

      In addition, there are certain IRS rules pertaining to minimum
distributions from IRAs for persons who are age 70 1/2 or older. The Internal
Revenue Code requires that persons begin


                                       45
<PAGE>

receiving distributions from their IRAs by a "required beginning date" (April 1
following the calendar year in which a person reaches age 70 1/2 ) and then
again by December 31 of the same year and every year thereafter. The minimum
distribution is calculated on the aggregate value of all IRA accounts; however,
the minimum total amount may be distributed from any one account rather than
from each individual account. Because death benefits under a life insurance
policy are not payable until the insured dies, investors with large percentages
of their IRA funds invested in life settlements may not have sufficient funds in
any other IRA account(s) from which they may satisfy the Internal Revenue Code
requirements while awaiting the payment of death benefits. Substantial penalties
may be assessed if these minimum distribution requirements are not met.

If we lose our "partnership" status we would be taxed as a corporation and
deductions otherwise available won't be deductible.

      Our legal counsel, Snow Becker Krauss P.C., has given the opinion that we
will be treated as a "partnership" for federal income tax purposes and that we
will not be treated as an association taxable as a corporation subject to the
publicly-traded partnership rules discussed below. Counsel notes that a
partnership will be taxed as an association taxable as a corporation if we have
more than 100 members and were a publicly traded partnership. In such event, we
would be taxed on our taxable income at rates of up to 35% for federal income
tax purposes and would thus incur double taxation. It is counsel's opinion that
if the provisions in the Fund's operating agreement are enforced, they would
prevent us from being a publicly traded partnership and we will be subject to
tax as a partnership. All items of our income, gain, loss, deduction and credit
would be reflected only on our tax returns and would not be passed through to
members. If we were treated as a corporation, distributions to members would be
ordinary dividend income to the extent of our earnings and profits, and the
payment of such dividends would not be deductible by us.

The IRS may challenge our allocations of income, gain, loss, and deduction.

      The Fund's Operating Agreement provides for the allocation of income,
gain, loss and deduction among the members. The rules regarding partnership
allocations are complex. It is possible that the IRS could successfully
challenge the allocations in the operating agreement and reallocate items of
income, gain, loss or deduction in a manner which reduces benefits or increases
income allocable to members.

Members may be taxed on income which exceeds the cash distributions made to
them.

      In any year in which we report income or gain in excess of expenses, each
member of the Fund will be required to report his share of such net income on
his personal income tax returns even though such member may have received total
cash distributions which are less than the amount of net income he must report.


                                       46
<PAGE>

The state or locality in which a member is a resident or in which we own
properties may impose income or other taxes on us or on such member's share of
our taxable income.

      Although we have been advised by our tax counsel that we should be taxed
as a partnership for federal income tax purposes, some jurisdictions in which we
may do business may impose an entity based tax on our operations. Also, many
states have implemented or are implementing programs to require entities taxed
as partnerships to withhold and pay state income taxes owed by nonresident
members. We may be required to withhold state taxes from cash distributions
otherwise payable to members. These collection and filing requirements at the
state or local level, and the possible imposition of state or local income,
franchise or other taxes on the Fund, may result in increases in our
administrative expenses which would reduce cash available for distribution to
members. Members' tax return filing obligations and expenses may also be
increased as a result of expanded state and local filing obligations. We
encourage potential investors to consult with their own tax advisor on the
impact of applicable state and local taxes and state tax withholding
requirements.

      All losses from "passive activities" are generally not deductible by a
non-corporate taxpayer, a Subchapter S corporation or a personal service
corporation, except against income derived from "passive activities" of the tax
payer. "Passive activities" are those business activities in which a taxpayer
does not materially participate. A member's investment in the Fund would be
treated as a "passive activity" for purposes of this limitation. Accordingly, so
long as the member maintains his investment in the Fund, such member's share of
the Fund's losses will not be deductible against his salary, active business
income, income from dividends, interest, royalties, and capital gains from
non-business properties. However, Fund losses, if any, generally will be
deductible from such a member's gain and income from the Fund or from other
passive activities.

Members may deduct losses only to the extent of amounts "At Risk."

      Under section 465 of the Internal Revenue Code, losses from certain
activities may be deducted by a taxpayer only to the extent to which the
taxpayers is "at risk" in the activity. Accordingly, the "at risk" rules will
apply to a member's share of the losses from the Fund. Each member initially
will be "at risk" only to the extent of the amount of capital that he
contributes to the Fund. In future years, such amount will be increased to the
extent the member recognizes income from his investment in the Fund or
contributes additional cash to the Fund, and reduced to the extent he has
deducted losses or receives cash distributions from the Fund.

Members will receive partner information tax returns on Form K-1 which could
increase the complexity of their tax returns.

      The partner information tax returns on Form K-1, which we will distribute
to members, will contain information regarding the income items and expense
items of the Fund. If a member has not received K-1s from other investments,
such member may find that preparing his tax return may require additional time,
or it may be necessary for him to retain an accountant or other tax preparer, at
an additional expense to him, to assist him in the preparation of his return.


                                       47
<PAGE>

Conflicts of Interest

      The relationships among the Fund, our Manager, Provider, Underwriter, and
John Tooke, may result in various conflicts of interest. Our Manager, Provider
and Underwriter are each controlled by John Tooke. Our Manager and its officers
and directors, in their capacity as such, are required to exercise their
fiduciary duties to the Fund and its members in a manner they believe will
preserve and protect the rights of the Fund's members. Mr. Tooke has no
intention to purchase life settlements for his own account or for the account of
others, other than the Fund, except on a non-securitized basis.

      The paragraphs below describe material conflicts of interest of which we
are aware that may arise in the course of the Fund's operation of our business.

1. Payment of Fees and Expenses. Our Manager, Provider and Underwriter will
receive substantial fees in connection with the Offering and our ongoing
operations.

2. Purchase of Life Insurance Policies from our Provider. The officers and
directors of our Manager, which is controlled by John Tooke through AmeriFirst,
will make all final decisions regarding the life insurance policies we will
purchase. Our Provider is also controlled by John Tooke through AmeriFirst.
Accordingly, although a purchase will be made on terms no more favorable to our
Provider and Underwriter than to other persons, we may face a conflict of
interest in determining whether a life insurance policy is appropriate for our
portfolio. We will acquire many of our life insurance policies from or through
our Provider, either directly from insureds, when it is licensed or not required
to be licensed, or from other licensed Providers, or from a broker network. Our
Manager and Provider will each receive their fees based on a percentage of the
gross proceeds of the Offering, regardless of whether the insured dies within
the estimated life expectancy, whereas the members' return on investment will
depend on the insured dying within his estimated life expectancy. Although we
have no agreement or understanding to acquire an ownership interest in a broker,
certain states permit a Provider or its affiliates to have an ownership interest
and we may acquire such an interest in the future. Our Provider is in compliance
with the laws of the State of Georgia to conduct life settlement business and
will comply with the laws of all other states which regulate the purchase and/or
sale of insurance policies by the Fund. The brokers will earn brokerage fees on
life insurance policies our Provider purchases through them or from them.
Accordingly, since John Tooke controls our Manager and our Provider, he will
face a conflict of interest in determining whether the life insurance policies
meet our guidelines and are appropriate investments.

3. Non-Arm's Length Agreements. Our agreements and arrangements for compensating
our Manager, Provider and Underwriter and the interest of our Manager in
managing the Fund are not the result of arm's-length negotiations. Additionally,
none of the directors of our Manager, Provider and Underwriter are independent.

4. Competition for the Time and Services of John Tooke. We will rely on our
Manager, Provider and Underwriter and their directors and officers for the
management of our operations. The directors and officers of our Manager,
Provider and Underwriter will devote such time to our


                                       48
<PAGE>

affairs and as they determine in good faith and in compliance with their
fiduciary obligations to us and to our members, to be necessary for our benefit.

      Our Manager believes it has sufficient staff to be capable of discharging
its responsibility to us. Our Manager, Provider, Underwriter and their
affiliate, AmeriFirst, had an aggregate of 22 employees as of December 15, 2003,
including John Tooke, a senior software architect, an executive assistant,
in-house legal staff, accounting staff, insurance review, insurance analyst,
medical review, policy administration, computer and data processing personnel,
customer service, medical administration and administrative assistants, all of
whom are full-time employees. For purposes of calculating the foregoing number
of aggregate employees, John Tooke, an employee of each of our Manager,
Provider, Underwriter and AmeriFirst, was regarded as one employee, and Dawn
Arnett, an employee of both our Provider and our Underwriter was regarded as one
employee. Mr. Tooke has in excess of 25 years of experience in selling mortgage
backed securities and other securities. He began to research the life settlement
industry in April 2001, however, he has no actual experience in purchasing and
securitizing life settlement policies. The staff of our Manager includes one
person with 33 years of insurance experience, a nurse with 36 years of
experience in the medical industry and three other persons with between four and
six years of experience in the life settlements industry. Virtually all of our
Manager's employees will devote all of their business time to the Fund's affairs
until such time as the offering is completed.

5. Provider Resells the Life Insurance Policies. Our Provider may also retain or
sell existing life insurance policies purchased by our Provider for itself, or
to other clients on a non-securitized basis, because this satisfies the
objectives of our Provider. Our Provider will base the decision on factors such
as the amount of funds available for investment, yield, portfolio
diversification between terminally ill, chronically ill and senior citizens,
insurance carriers, or other transaction terms. The Fund and our Provider have
entered into an agreement that our Provider may sell policies to entities other
than our Fund only on a non-securitized basis.

6. Lack of Separate Representation. We are represented by the same counsel as
our Manager, Provider and Underwriter and we anticipate that this multiple
representation by our attorneys will continue in the future. If a dispute arises
between us and our Manager, Provider or Underwriter, they will either obtain
separate counsel or facilitate our retaining separate counsel for such matters.
However, we do not anticipate obtaining separate counsel should there be a need
in the future to negotiate or prepare contracts or other agreements between us
and our Manager for services including those set forth in this report, and as a
result these agreements will not reflect arm's length bargaining.

ITEM 2. DESCRIPTION OF PROPERTY.

      The Fund does not have its own employees or offices. The employees of our
Manager and Provider and their parent, AmeriFirst, Inc., will carry out our
operations at their offices or will outsource and oversee the services performed
by a third party servicer.

      Our Manager, Underwriter and AmeriFirst sublease their executive offices,
located at 814 North Highway A1A, Suite 300, Ponte Vedra Beach, Florida 32082;
telephone number (904)


                                       49
<PAGE>

373-3034, at a current monthly rental of $15,000. The sublease is with a
non-affiliate for 18 months ending on February 28, 2004. The facility consists
of approximately 7,349 square feet of office space.

      Our Provider leases its offices located at 1712-H Osborne Road, St. Marys,
Georgia 31558; telephone number 912-673-9100, at a current monthly rental of
$900. The lease is with a non-affiliate for five years ending on December 31,
2008. The facility consists of approximately 1,440 square feet of office space.
The Fund's principal office is located at this Georgia office.

ITEM 3. LEGAL PROCEEDINGS.

      None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      No matter was submitted to a vote of the members of the Fund, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended September 30, 2003.


                                       50
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

      a. There is no established public trading market for the trading of our
units.

      b. There were 0 unit holders as of December 15, 2003.

      c. Each member is entitled to his or her proportionate beneficial interest
in the income to be generated from the pool of life insurance policies. However,
we must first raise a minimum of $2,500,000 in the Offering before we can
commence operations and purchase life insurance policies. The proceeds of the
Offering will be held in an interest bearing escrow account with SouthTrust Bank
until we raise the $2,500,000 minimum. If the minimum amount is not received
within six months of the Effective Date of the Offering, unless extended for an
additional six months until October 17, 2004, then all subscription amounts
(including interest) will be returned to all subscribers. Only when we acquire
the proceeds from life insurance policies will members receive a distribution
consisting of their proportionate share of such proceeds. As of September 30,
2003, we have not made any distributions of income since we have not yet
commenced operations.

      d. We do not have any compensation plans, including compensation
arrangements under which units of the Fund are authorized for issuance.

Use of Proceeds

      On May 14, 2003, our Registration Statement on Form S-1 (Registration No.:
333-98651), as amended by Post-Effective Amendment No. 2 on October 17, 2003,
was declared effective with the SEC for the initial public offering of up to a
maximum of 100,000 units of ownership interest in the Fund at $1,000 per unit
for an aggregate purchase price of $100,000,000. Our Underwriter, an NASD
licensed broker-dealer, who is also an affiliate of our Manager, is offering and
selling the units, but it may also engage other NASD broker-dealers and foreign
dealers who agree to abide by the NASD rules to sell our units. Our Underwriter
will receive selling commissions at the time of purchase of life insurance
polices equal to 2.5% of the gross proceeds of the sale of units by our
Underwriter. Our Underwriter may also negotiate fees to be paid to selected
dealers on units sold by them. The total selling commissions to our Underwriter
and selected dealers cannot exceed 10% of the gross proceeds of units sold,
which is the maximum fee permitted by the NASD. As of December 15, 2003, no
units have been sold.

      The proceeds of the Offering will be held in an interest bearing escrow
account with SouthTrust Bank until we raise a minimum of $2,500,000. We must
receive the $2,500,000 minimum offering before we can commence operations and
purchase life insurance policies. The gross proceeds of the Offering will be
used to: purchase life insurance policies for less than the face amount of the
policy, pay the referring broker's fee, establish a premium escrow account to
make premium payments on the policies and the balance to pay for all services
required in connection with the policies, including all related fees and all
sales commissions on the units


                                       51
<PAGE>

offered in the Offering. Funds that have not yet been used to make or acquire
life insurance policies will be deposited in an interest-bearing operating
escrow account. Investors will be entitled to a pro-rata share of the short-term
interest earned in the operating escrow account.

      AmeriFirst, the holding company controlled by John Tooke, has agreed
pursuant to the Expense Agreement to pay at its own expense, all organizational
and offering expenses of the Offering including without limitation, legal and
accounting expenses, photocopy costs, selling expenses, and filing fees paid to
the SEC and state securities commissions. Accordingly, the Fund will receive all
proceeds from the Offering.

      During the fiscal year ended September 30, 2003, an aggregate of $326,509
in expenses were incurred on the account of the Fund in connection with the
registration statement for the sale of the units, as well as subsequent filings
with the SEC, including without limitation, legal and accounting expenses,
photocopy costs and filing fees paid to the SEC and state securities
commissions. All of such expenses were paid directly to the applicable entities
by AmeriFirst, Inc. on behalf of the Fund pursuant to the Expense Agreement.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Forward Looking Statements

      Statements in this Item 6 "Management's Discussion and Analysis or Plan of
Operation" and elsewhere in this Report are certain statements which are not
historical or current fact and constitute "forward-looking statements" within
the meaning of such term in Section 27A of the Securities Act of l933 and
Section 21E of the Securities Act of l934. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that could
cause the actual financial or operating results of the Fund to be materially
different from the historical results or from any future results expressed or
implied by such forward-looking statements. Such forward looking statements are
based on our best estimates of future results, performance or achievements,
based on current conditions and our most recent results. In addition to
statements which explicitly describe such risks and uncertainties, readers are
urged to consider statements labeled with the terms "may," "will", "potential,"
"opportunity," "believes," "belief," "expects," "intends," "estimates,"
"anticipates" or "plans" to be uncertain and forward- looking. The
forward-looking statements contained herein are also subject generally to other
risks and uncertainties that are described from time to time in the reports and
registration statements of the Fund filed with the SEC.

Background

      The Fund was formed in the State of Delaware in April 2002 and
reincorporated in Florida in September 2002 as a Florida limited liability
company. The Fund was formed solely for the restricted, limited purpose of
purchasing life insurance policies at a discount to face value from terminally
ill and chronically ill persons of all ages and senior citizens, age 65 and
older, with estimated life expectancies based solely on actuarial tables, to
create a pool of life insurance policies. We are offering a minimum of 2,500
units and up to a maximum of 100,000 units at


                                       52
<PAGE>

$1,000 per unit. Each member of the Fund is entitled to his or her proportionate
beneficial interest in the income to be generated from the life insurance
policies. The Fund only recently began its operations in October 2003, and since
such time, it has not had any revenues from operations. Accordingly, set forth
below is the Fund's plan of operation for the next twelve months in lieu of a
discussion and analysis of the financial condition and results of operations of
the Fund.

Twelve Month Plan of Operation

      As of September 30, 2003 and 2002, the Fund had $326,509 and $187,718,
respectively, of assets consisting of deferred financing costs and had not
commenced operations. Total liabilities of $218,100 as of September 30, 2002,
owed by the Fund for organizational and offering expenses to AmeriFirst, the
holding company controlled by John Tooke, were forgiven by AmeriFirst on
February 13, 2003, and recorded as contributed capital. This occurred pursuant
to the Expense Agreement under which AmeriFirst agreed to pay at its own
expense, all organizational and offering expenses of the Offering including
without limitation, legal and accounting expenses, photocopy costs, selling
expenses, and filing fees paid to the SEC and state securities commissions.
Accordingly, the Fund will receive all proceeds from the Offering. The Fund had
total liabilities of $13,159 as of September 30, 2003, consisting of accrued
expenses. As a result of the foregoing, the Fund had total liabilities and
members' equity of $326,509 at September 30, 2003 as compared with $183,718 at
September 30, 2002. Total contributed capital from April 22, 2002 (Inception)
through September 30, 2003, was $405,499. During the next 12 months, if we raise
at least $2,500,000, we plan to purchase a pool of life insurance policies,
created by the purchase of insurance policies at a discount from the face amount
of the policies from terminally ill and chronically ill persons of all ages and
senior citizens, age 65 and older, with estimated life expectancies based solely
on actuarial tables. Upon raising $2.5 million and the release of such funds
from escrow, our Manager will create a pool of life insurance policies.

      Our auditors have qualified their report as there is substantial doubt as
to the Fund's ability to continue as a going concern. The ability of the Fund to
continue as a going concern is dependent upon the success of the Fund to raise
the $2,500,000 minimum subscription needed within the specified time pursuant to
the Fund's operating agreement. The financial statements do not include any
disclosures that might be necessary should the Fund be unable to continue as a
going concern.

      John Tooke, Chief Executive Officer and controlling shareholder of our
Manager, Provider and Underwriter, has extensive experience in investment
banking and selling mortgage backed securities. Although he has no actual
experience in purchasing life settlement policies, he has researched the life
settlements industry since at least April 2001 and conducted all organizational
activities necessary for the Fund. Our Manager intends to service the insurance
policies with experienced employees it has hired, as described below. However,
our Manager may outsource any or all of the non-financial services of servicing
the life insurance policies to an unaffiliated third party servicer to assist us
in reviewing each policy, closing the purchases of such policies, monitoring
life status of the insureds and filing death benefit claims. Our Manager has
entered into agreements with four unaffiliated organizations to conduct its
medical due


                                       53
<PAGE>

diligence review to determine estimated life expectancies and with one of such
companies to track the status of the insured. See "Item 1. Description of
Business--Medical and Insurance Due Diligence Review." Neither the Fund nor our
Manager, Provider or Underwriter has entered into any other arrangements,
agreements or understandings with any third parties to act as our servicer. If
it did enter into such an agreement, the Fund would be dependent upon the
services of third parties for its overall success.

      We do not anticipate hiring any employees or acquiring any fixed assets
like office equipment or furniture, or incurring material office expenses during
the next twelve (12) months because we will be utilizing our Manager's and its
affiliate's personnel and office equipment. As of December 15, 2003, our Manager
and its affiliate, AmeriFirst, Inc., employed 18 persons, including John Tooke,
a senior software architect, in-house legal staff, accounting staff, insurance
review, insurance analyst, medical review, policy administration, computer and
data processing personnel, customer service, medical administration and
administrative assistants. For purposes of calculating the foregoing number of
aggregate employees of our Manager and AmeriFirst, John Tooke, an employee of
each of our Manager and AmeriFirst, was regarded as one employee. Our Manager
occupies approximately 7,349 square feet of office space in Florida, and also
occupies space at the Fund's offices in St. Marys, Georgia. This facility is
equipped with office furniture, telephones, fax machines, photo copiers,
multiple computers in a server system and whatever else will be needed to
operate. See "Item 1. Description of Business--Our Servicer" for additional
information on our back-up computer system. The fees which we will pay our
Manager as compensation will be in lieu of all other payments for operating
expenses.

      The Fund has not committed itself to purchase any life insurance policies,
and has not entered into any arrangements or other transactions other than with
our Underwriter of the Offering and other affiliates, and four unaffiliated
medical review service companies, the latter of which are terminable without
penalty after 90 days. We do not intend to incur any indebtedness at the
commencement of our operations, although we may later establish a line of credit
for future use.

Critical Accounting Policy

Recognition For Purchased Life Insurance Policies

      We will record our investment in life insurance policies pursuant to
Financial Accounting Standards Board Technical Bulletin 85-4 "Accounting for
Purchases of Life Insurance" ("FTB 85-4"). FTB 85-4 requires the amount to be
realized (the policy's cash surrender value) under the insurance contract to be
recorded as an asset. The change in cash surrender value during the period will
be recorded as an adjustment of premiums paid in determining the expense or
income to be recognized for the period.

      The purchase price for life insurance policies (which includes all related
acquisition costs) is expected to be higher than the cash surrender value. We
will record the cash surrender value of the policy as an asset and not the
amount of cash invested in such policy. This accounting policy will have a
negative effect on our balance sheet and an operating loss will be recorded on
the initial purchase of the policy. We expect operating losses during the early
life of


                                       54
<PAGE>

the Fund until the benefits under such policies become payable. This accounting
policy should have no effect on the Fund's cash flows and estimated rate of
return per individual insurance policy.

ITEM 7. FINANCIAL STATEMENTS.

      The information required under this Item appears in a separate section
following Item 13 of this report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

      None.

ITEMS 8A. CONTROLS AND PROCEDURES

      As of September 30, 2003, the Fund's management, including our Manager's
Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness
of the design of the Fund's disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based
on that evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that the Fund's disclosure controls and procedures were effective, in
all material respects, to ensure that the information required to be disclosed
in the reports the Fund files and submits under the Exchange Act is recorded,
processed, summarized and reported as and when required.

      There have been no significant changes (including corrective actions with
regards to significant deficiencies and material weaknesses) in the Fund's
internal controls or in other factors that could significantly affect these
controls subsequent to September 30, 2003.


                                       55
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS PROMOTER AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT.

Officers and Directors of the Fund and Our Manager

      We do not have any directors or officers. We are managed by AmeriFirst
Financial Services, Inc. The following persons are the executive officers and
directors of our Manager.

        Name                    Age                      Office
        ----                    ---                      ------
John Tooke                       62      Chief Executive Officer and Director
Brittany M. Ellis                29       President, Secretary and Director

      John Tooke has been Chief Executive Officer, director and, through
AmeriFirst, Inc., controlling shareholder of our Manager since its predecessor's
formation in June 2002. Mr. Tooke also acted as President of our Manager from
June 2002 to November 2003. Since April 2002, when the predecessor of our
Provider was formed, Mr. Tooke has been Chief Executive Officer and director of
our Provider, AmeriFirst Funding Group, Inc. Since October 2002, Mr. Tooke has
been chief executive officer and director of our Underwriter, AmeriFirst Capital
Corp. In addition, Mr. Tooke is Chief Executive Officer, director and a
controlling shareholder of AmeriFirst, Inc., the parent company of our Manager,
Provider and Underwriter. Mr. Tooke has been engaged in negotiations and
start-up activities for the Fund and researching the life settlements industry
commencing in April 2001. From 1996, when Mr. Tooke formed the predecessor to
Global Express Securities, Inc. (previously known as First Florida Securities,
Inc.), a member of the NASD, until he sold it in March 2002, he was President
and a director of Global Express Securities, Inc. This firm is a regional NASD
regulated broker-dealer originally located in Florida which relocated to Nevada
in 1999. The firm specializes in the placement of high yield collateralized
investment products through the sale of public and private securities both to
the retail market and to individual clients. The firm's sole public offering
which closed after Mr. Tooke left such company, was a best efforts offering
under the name Global Express Capital Real Estate Investment Fund I, LLC, of
fractional units in a fund to make loans, or purchase entire or fractional
interest in loans secured by mortgages or deeds of trust.

      From 1991-1996, Mr. Tooke was employed as a private investor in commercial
real estate projects as a principal for his own account. While he was an
investment banker, Mr. Tooke originated and produced commercial mortgages and
sold them to investors. Any relevant prior performance data of Mr. Tooke's
experience is more than 10 years old and not in his possession. From 1989 to
1991, Mr. Tooke was Senior Vice President of Security Pacific Merchant Bank,
responsible for the entire investment banking group, which originated and
securitized product for the bank. From 1985 to 1989, Mr. Tooke was Senior Vice
President of Sales and Trading for Drexel Burnham Lambert which sold and traded
multi-family and commercial mortgages and portfolios in the secondary markets.
From 1984 to 1985, Mr. Tooke was Vice President of Sales and Trading of Morgan
Stanley & Co. where he worked in all aspects of mortgage finance proposals such
as CMO's, mortgage backed bonds and private placements. From 1981 to 1984, Mr.
Tooke was a Vice President of Sales and Trading of Merrill Lynch where he traded
whole loans, participation and conventional mortgage backed securities and
analyzed and structured all securitized products. Mr. Tooke holds NASD Series 7,
Series 24, Series 28 and Series 63 securities licenses. Mr. Tooke is a qualified
securities principal. In addition, he is licensed in Nevada, California and
Florida for the sale of real estate


                                       56
<PAGE>

mortgages and securities.

      Brittany M. Ellis has served as President of our Manager since November
2003 and as Secretary and a Director of our Manager since its inception in
September 2002. Ms. Ellis is responsible for the management of the Fund,
including overseeing the activities of underwriting and servicing the insurance
policies. Ms. Ellis is also Secretary and a director of AmeriFirst, Inc. since
its inception in August 2002. In addition, Ms. Ellis is Secretary and a member
of the Boards of Directors of AmeriFirst Funding Group, Inc., and AmeriFirst
Capital Corp. Ms. Ellis graduated from Florida Coastal School of Law in May 2002
and is a member of the Florida bar. Ms. Ellis received her Bachelors degree from
the University of Southern Mississippi in 1997. Prior to her legal career, she
worked in managed services for the Aramark Corporation and Maidpro, Inc. in
Massachusetts. Ms. Ellis holds a NASD Series 7 securities license.

Officers and Directors of AmeriFirst, Inc.

      All of the capital stock of our Manager, Provider and Underwriter is owned
by AmeriFirst, Inc. John Tooke owns 50% of the common stock, and Irving
Strickstein and Denise Mugerdichian Lachman each beneficially own 25% of the
common stock. See "Item 12. Certain Relationships and Related Transactions." The
following persons are the officers and directors of AmeriFirst.

<TABLE>
<CAPTION>
Name                  Age     Officer
----                  ---     -------
<S>                   <C>     <C>
John Tooke            62      Chief Executive Officer and Director; Chief Executive
                              Officer and Director of each of AmeriFirst Financial
                              Services, Inc., AmeriFirst Funding Group, Inc., and
                              AmeriFirst Capital Corp.

Brittany Ellis        29      Secretary and Director; President, Secretary and
                              Director of AmeriFirst Financial Services, Inc.

Dawn Arnett           28      Director; President of AmeriFirst Funding Group, Inc.,
                              and Managing Director of AmeriFirst Capital Corp.

Thomas M. Kann        57      Director; Senior Vice President of AmeriFirst Funding
                              Group, Inc., and Managing Director of AmeriFirst Capital
                              Corp.

Irving Strickstein    74      Chairman of the Board of Directors
</TABLE>

      See "Officers and Directors of the Fund and Our Manager" above for the
biographies of John Tooke and Brittany M. Ellis.

      Dawn N. Arnett has served as a director of AmeriFirst since November 2002.
She is also serving as the compliance officer and Managing Director for our
Underwriter, AmeriFirst Capital Corp. since October 2002. Ms. Arnett is also
President of our Provider, AmeriFirst Funding Group, Inc., since May 2003, and
was Senior Vice President from January 2003 through April 2003, where she will
manage policy origination for the Fund. From April 2002 to October 2002, Ms.
Arnett worked as a registered sales representative for Vestin Capital, Las
Vegas, Nevada, a securities company specializing in real estate investments.
From March 2001 to April 2002, Ms. Arnett acted as compliance officer and
registered representative for Global Express


                                       57
<PAGE>

Securities, Inc., Las Vegas, Nevada, a securities company also specializing in
real estate investments. From January 2000 until February 2001, she served as a
research assistant at John Quillen East Tennessee State University Medical
School. From August 1999 until January 2000, Ms. Arnett was a Registered Sales
Representative with Prudential Securities. From September 1997 until August
1998, Ms. Arnett served as an Investment Associate and Marketing Representative
with Merrill Lynch, where she received her securities licenses to manage
investor relationships for new and existing clients. Ms. Arnett holds Series 7,
Series 24 and Series 66 securities licenses and will be licensed in each state
in which the Fund intends to sell its securities. In 1997, Ms. Arnett received
her Bachelors Degree in Economics and Biology from Simmons College in Boston,
Massachusetts. From 1993 to 1997, she worked at Harvard Medical School doing
clinical research where she had several papers published. At that same time, Ms.
Arnett was interning at Walden Capital Management, a socially-responsible
investment firm.

      Thomas M. Kann has served as a director of AmeriFirst since November 2002.
He is also serving as Managing Director of AmeriFirst Capital Corp. since
October 2002. He is also Senior Vice President of AmeriFirst Funding Group since
November 2002. Prior thereto, from April 2001 to March 2002, he was a registered
sales representative of Global Express Securities, Inc., Las Vegas, Nevada. From
October 1992 to October 2001, Mr. Kann was founder and President of World Access
Telecom, Inc., a full-service telecommunications business, from the startup
stages through full development. His experience as President of World Access
Telecom, as well as Raleigh Enterprises, spans the international sector having
serviced clients in over 50 countries. His more than 25 years' of experience on
Wall Street encompass expertise as a trader and institutional salesman in fixed
income securities with UBS Securities, Morgan Stanley & Co., Smith Barney, Loeb
Rhoades, Shearson, First Interstate Bank of California and Bache & Co. Mr. Kann
holds NASD Series 7, Series 22, Series 24 and Series 63 securities licenses and
will be licensed in each state in which the Fund intends to sell its securities.
Mr. Kann is a licensed life and variable annuity insurance agent in the States
of Florida and Delaware. Mr. Kann received his Bachelor of Arts Degree in
Finance from Colorado Alpine College. In addition to being a charter member of
the Republican Presidential Task Force since 1989, he is a fluent speaker of
Hungarian, his native language.

      Irving Y. Strickstein has been Chairman of the Board of Directors and a
shareholder of AmeriFirst since November 2002. Since February 1954, Mr.
Strickstein has been a part-owner, officer and director of National Lumber
Company in Warren, Michigan.

Compliance with Section 16(a) of the Exchange Act

      The Fund is not subject to Section 16(a) of the Securities Exchange Act of
1934, as amended.

Code of Ethics

      The Fund has not adopted a Code of Ethics as of date of this report. We
only recently began our operations in October 2003, and we are presently
conducting an offering of ownership interest in the Fund and will continue to do
so until we raise the maximum of $100,000,000.

ITEM 10. EXECUTIVE COMPENSATION.

      Our Manager is entitled to receive compensation fees for servicing the
policies and monitoring the insureds on behalf of the Fund equal to 5% of the
gross proceeds of the Offering.


                                       58
<PAGE>

      In addition, AmeriFirst Inc. is paying John Tooke a salary of $8,000 per
month which will not be reimbursed from proceeds of the Offering. Mr. Tooke is
employed by our Underwriter under a 3-year employment agreement ending July 31,
2005, pursuant to which he agreed not to compete with our Underwriter or its
affiliates for a two-year period following termination of employment.

      No other compensation will be paid to our Manager or John Tooke in
connection with the Fund.

      Neither our Manager nor its affiliates has received any compensation
during our fiscal year ended September 30, 2003.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

      As of December 15, 2003, no person or entity beneficially owns more than
5% of the ownership interest in the Fund. Our Manager made a $10 contribution to
the Fund, but owns no interest in the Fund. The Fund will be entirely owned by
investors. In addition, Florida law requires that there be one member in
connection with the formation of the Fund as a Florida limited liability company
and therefore, John Tooke was named as a member of the Fund. However, Mr. Tooke
does not own any interest in the Fund and he is not entitled or subject to the
rights and obligations of the investors as members of the Fund as provided in
the Operating Agreement, including, but not limited to, the right to receive
distributions or voting rights.

      All of the capital stock of our Manager, Provider and Underwriter is
beneficially owned by AmeriFirst. The following table sets forth the persons
known to be the beneficial owners of more than 5% of the issued and outstanding
common stock of AmeriFirst as of December 15, 2003.

<TABLE>
<CAPTION>
                                    Shares of Common Stock     Percent of Common Stock
Name and Address                    Beneficially Owned         Beneficially Owned*
----------------                    ------------------         -------------------
<S>                                        <C>                         <C>
John Tooke                                 1,000                       50%
Irving Strickstein                           500(1)                    25%
Denise Mugerdichian Lachman                  500                       25%
</TABLE>

----------
* Based on 2,000 shares of common stock of AmeriFirst issued and outstanding as
of December 15, 2003

(1) From these 500 shares beneficially owned by Irving Strickstein, (a) 150
shares are held in the Irving Y. Strickstein Revocable Living Trust dated U/T/A
dated September 13, 1984, for which Mr. Strickstein is the Trustee and has sole
voting power, and (b) 350,000 shares are held in the name of his four adult
children; Mr. Strickstein has voting power as to all 350 shares pursuant to a
Shareholders' Agreement dated October 27, 2003 by and among Irving Y.
Strickstein, Trustee of the Irving Y. Strickstein Revocable Living Trust dated
U/T/A dated September 13, 1984, as amended, Robert C. Strickstein, Susan J.
Sadley, Scott D. Strickstein and Tara N. Strickstein.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      Certain relationships exist among the Fund, our Manager, our Provider and
our Underwriter, and the officers, directors and other affiliates of our
Manager, Provider and


                                       59
<PAGE>

Underwriter which may result in various conflicts of interest. See "Item 1.
Description of Business--Conflicts of Interest."

      AmeriFirst is a Delaware holding company incorporated on August 19, 2002,
50% of whose capital stock is owned by John Tooke, 25% is beneficially owned by
Irving Strickstein and 25% is beneficially owned by Denise Mugerdichian Lachman.
AmeriFirst owns all of the capital stock of our Manager, Provider and
Underwriter.

      On February 13, 2003, as restated on December 23, 2003, AmeriFirst entered
into the Expense Agreement with the Fund whereby AmeriFirst agreed to forgive
approximately $218,000 of expenses which were incurred on the Fund's behalf. In
addition, AmeriFirst agreed that the Fund would not have to repay any additional
offering expenses paid by AmeriFirst, as well as expenses incurred for
subsequent filings of the Fund with the SEC.

      On October 28, 2002, Irving Strickstein, through his corporation, I.Y.S.
III, LLC entered into a loan agreement with AmeriFirst Inc. evidenced by a
promissory note in the principal amount of $500,000. In consideration of the
loan, I.Y.S. received 500 shares (25%), as amended, of the common stock of
AmeriFirst and a proportionate equity interest in any affiliates or subsidiaries
of AmeriFirst, but not the net operating income of the Fund.

      On October 28, 2002, Denise Mugerdichian Lachman, through her corporation
Dow Ridge Associates, LLC, entered into a loan agreement with AmeriFirst
evidenced by a promissory note in the principal amount of $500,000. In
consideration of the loan, Dow Ridge received 500 shares (25%), as amended, of
the common stock of AmeriFirst and a proportionate equity interest in any
affiliates or subsidiaries of AmeriFirst, but not the net operating income of
the Fund.

      The payment of principal and interest of all notes are to be re-paid
solely from the net operating income of AmeriFirst Inc., as it becomes available
and based on the discretion of John Tooke and the ongoing capital reserve
requirements of AmeriFirst Inc. All notes bear interest at 1% over the prime
rate charged by Comerica Bank.

      Although each of our Manager, Provider and Underwriter will have their own
independent employees, John Tooke is the sole director of our Provider and
Underwriter, and is also one of two directors of our Manager, neither of which
are independent. Only the parent company, AmeriFirst, has independent directors
serving on its board of directors.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

      (a)   Exhibits

      Exhibit No.      Description of Exhibit
      -----------      ----------------------

      3.1              Articles of Organization. (1)

      4.1              Operating Agreement of AmeriFirst Fund I, LLC, dated as
                       of May 13, 2003. (2)

      10.1             Subscription Escrow Agreement by and among AmeriFirst
                       Fund I, LLC, AmeriFirst Capital Corp. and SouthTrust
                       Bank. (1)


                                       60
<PAGE>

      10.2             Employment Agreement between AmeriFirst Capital Corp.
                       and John Tooke. (3)

      10.3             Form of Viatical Settlement Contract. (1)

      10.4             Sublease Agreement effective September 4, 2002 by and
                       between Life Settlements Service Corp. and AmeriFirst
                       Capital Corp. (1)

      10.5             Letter Agreement between AmeriFirst Fund I, LLC and
                       AmeriFirst Funding Group, Inc. dated December 26, 2002.
                       (1)

      10.6             Consulting Agreement between AmeriFirst Financial
                       Services, Inc. and 21st Services, dated as of November
                       1, 2002. (4)

      10.7             Consulting Agreement between AmeriFirst Financial
                       Services, Inc. and Fasano Associates, Inc., dated as of
                       November 1, 2002. (4)

      10.8             Consulting Agreement between AmeriFirst Financial
                       Services, Inc. and Systems for Advanced Risk Analysis,
                       L.P., dated as of November 1, 2002. (4)

      10.9             Consulting Agreement between AmeriFirst Financial
                       Services, Inc. and American Viatical Services, dated
                       February 12, 2003. (4)

      10.10            Servicing Agreement dated May 14, 2003 by and between
                       AmeriFirst Financial Services, Inc. and 21st Holdings,
                       LLC. (5)

      10.11            Amendment No. 1 dated as of December 23, 2003, to
                       Subscription Escrow Agreement by and among AmeriFirst
                       Fund I, LLC, AmeriFirst Capital Corp. and SouthTrust
                       Bank.*

      10.12            Restated Expense Agreement dated as of December 23, 2003
                       by and between AmeriFirst Fund I, LLC and AmeriFirst,
                       Inc.*

      31.1             Certification of the Chief Executive Officer and Chief
                       Financial Officer required by Rule 13a-14(a) or Rule
                       15d-14(a).*

      32.1             Certification of the Chief Executive Officer and Chief
                       Financial Officer required by Rule 13a-14(b) or Rule
                       15d-14(b) and 18 U.S.C. 1350.*

----------
* Filed Herewith.

(1)   Filed with Amendment No. 2 to Registrant's Registration Statement on Form
      S-1, filed on January 15, 2003.

(2)   Filed as Exhibit B to Registrant's 424b(3) Prospectus in connection with
      Registrant's Registration Statement on Form S-1, filed on November 17,
      2003.

(3)   Filed with Registrant's Registration Statement on Form S-1, filed on
      August 23, 2002.


                                       61
<PAGE>

(4)   Filed with Amendment No. 3 to Registrant's Registration Statement on Form
      S-1, filed on February 20, 2003.

(5)   Filed with Post-Effective Amendment No. 1 to Registrant's Registration
      Statement on Form S-1, filed on May 15, 2003.

(b)   Reports on Form 8-K

      None.


                                       62
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated: December 29, 2003             AMERIFIRST FUND I, LLC

                                     By: AmeriFirst Financial Services, Inc.,
                                         Manager


                                           /s/ John Tooke
                                        -------------------------------
                                           John Tooke
                                           Chief Executive Officer
                                           (Principal Executive Officer and
                                           Principal Financial Officer)

      In accordance with the Exchange Act, this report has been signed below by
the following person on behalf of the registrant and in the capacities and on
the date indicated.


<TABLE>
<S>                                 <C>                                         <C>
    /s/ John Tooke                  Chief Executive Officer,                    December 29, 2003
------------------------            Chief Financial Officer
    John Tooke                      (Principal Executive Officer
                                    and Principal Financial Officer)
                                    and Director of Manager

 /s/ Brittany M. Ellis              President, Secretary and Director           December 29, 2003
------------------------            of Manager
Brittany M. Ellis
</TABLE>


                                       63
<PAGE>

                                                          AMERIFIRST FUND I, LLC
                                                   (A Development Stage Company)

                                                                        CONTENTS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                  Page
                                                                                  ----
<S>                                                                               <C>
PART I - FINANCIAL INFORMATION

INDEPENDENT AUDITORS' REPORT                                                         1

FINANCIAL STATEMENTS

  Balance Sheets as of September 30, 2003 and 2002                                   2
  Statements of Operations and Member's Equity
   for the Year Ended September 30, 2003, the Period from April 22, 2002
   (inception) through September 30, 2002 and Cumulative from April 22, 2002
   (inception) through September 30, 2003                                            3
  Statements of Cash Flows for the Year Ended September 30, 2003, the Period
   from April 22, 2002 (inception) through September 30, 2002 and Cumulative
   from April 22, 2002 (inception) through September 30, 2003                        4

NOTES TO FINANCIAL STATEMENTS                                                      5-8
</TABLE>

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
AmeriFirst Fund I, LLC

We have audited the accompanying balance sheets of AmeriFirst Fund I, LLC ("the
Fund") (a development stage company) as of September 30, 2003 and 2002, and the
related statements of operations, member's equity, and cash flows for the year
ended September 30, 2003, the period from April 22, 2002 (inception) through
September 30, 2002 and cumulative from April 22, 2002 (inception) through
September 30, 2003. These financial statements are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AmeriFirst Fund I, LLC as of
September 30, 2003 and 2002, and the results of their operations and their cash
flows for the year ended September 30, 2003, the period from April 22, 2002
(inception) through September 30, 2002 and cumulative from April 22, 2002
(inception) through September 30, 2003 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Fund
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Fund is a development stage company and has not yet begun
operations nor raised any funds to fund such operations. These conditions raise
substantial doubt about the Fund's ability to continue as a going concern. The
financial statements do not include any disclosures that might result from the
outcome of this uncertainty.


/s/ Marcum & Kliegman LLP

November 26, 2003, except for Note 4(B), which is December 23, 2003
New York, NY


                                       1
<PAGE>

                                                          AMERIFIRST FUND I LLC.
                                                   (A Development Stage Company)

                                                                  BALANCE SHEETS

                                                     September 30, 2003 and 2002
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                     ASSETS

                                                                     2003          2002
                                                                   -----------------------
<S>                                                                <C>           <C>
Current assets                                                     $     --      $      --
Deferred offering costs                                             326,509        183,718
                                                                   --------      ---------

         TOTAL ASSETS                                              $326,509      $ 183,718
                                                                   ========      =========

                    LIABILITIES AND MEMBER'S EQUITY (DEFICIT)

Accrued expenses                                                   $ 13,159      $      --
Due to related party                                                     --        218,100
                                                                   --------      ---------

         TOTAL LIABILITIES                                           13,159        218,100

COMMITMENTS AND CONTINGENCIES

MEMBER'S EQUITY (DEFICIT) ACCUMULATED DURING
 THE DEVELOPMENT STAGE                                              313,350        (34,382)
                                                                   --------      ---------

         TOTAL LIABILITIES AND MEMBER'S EQUITY                     $326,509      $ 183,718
                                                                   ========      =========
</TABLE>

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


                                        2
<PAGE>

                                                          AMERIFIRST FUND I LLC.
                                                   (A Development Stage Company)

                                    STATEMENTS OF OPERATIONS AND MEMBER'S EQUITY

                            For the Year Ended September 30, 2003 and the Period
                       April 22, 2002 (Inception) Through September 30, 2002 and
                                      Cumulative From April 22, 2002 (Inception)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                        Year      Period April 22, 2002    Cumulative
                                       Ended       (inception) through        From
                                    September 30,      September 30,     April 22, 2002
                                        2003               2002            (Inception)
                                    ---------------------------------------------------
<S>                                  <C>                 <C>                <C>
REVENUES FROM POLICIES
 HELD IN TRUST                       $      --           $     --           $      --

EXPENSES                                57,767             34,382              92,149
                                     ---------           --------           ---------

         NET LOSS                      (57,767)           (34,382)            (92,149)

MEMBER'S (DEFICIT) EQUITY -
 Beginning                             (34,382)                --                  --

  Contribution of Capital              405,499                 --             405,499
                                     ---------           --------           ---------

MEMBER'S EQUITY (DEFICIT) -
 Ending                              $ 313,350           $(34,382)          $ 313,350
                                     =========           ========           =========
</TABLE>

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


                                        3
<PAGE>

                                                          AMERIFIRST FUND I LLC.
                                                   (A Development Stage Company)

                                                        STATEMENTS OF CASH FLOWS

                            For the Year Ended September 30, 2003 and the Period
                       April 22, 2002 (Inception) Through September 30, 2002 and
                                      Cumulative From April 22, 2002 (Inception)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                            Year         Period April 22, 2002       Cumulative
                                                            Ended         (inception) through       From April 22,
                                                        September 30,         September 30,             2002
                                                            2003                  2002               (Inception)
                                                        ----------------------------------------------------------
<S>                                                       <C>                   <C>                   <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES
  Net loss                                                $ (57,767)            $ (34,382)            $ (92,149)
  Changes in operating assets and liabilities:
    Accrued expenses                                         13,159                    --                13,159
                                                          ---------             ---------             ---------

         NET CASH USED IN
          OPERATING ACTIVITIES                              (44,608)              (34,382)              (78,990)
                                                          ---------             ---------             ---------

CASH FLOWS FROM INVESTING
 ACTIVITIES                                                      --                    --                    --
                                                          ---------             ---------             ---------

CASH FLOWS FROM FINANCING
 ACTIVITIES
  Contribution of Capital                                   187,399                    --               405,499
  Advance from Related Party                                     --               218,100                    --
  Deferred offering costs                                  (142,791)             (183,718)             (326,509)
                                                          ---------             ---------             ---------

         NET CASH PROVIDED BY
          FINANCING ACTIVITIES                               44,608                34,382                78,990
                                                          ---------             ---------             ---------

         NET INCREASE IN CASH AND
          CASH EQUIVALENTS                                       --                    --                    --

CASH AND CASH EQUIVALENTS -
 Beginning                                                       --                    --                    --
                                                          ---------             ---------             ---------

CASH AND CASH EQUIVALENTS -
 Ending                                                   $      --             $      --             $      --
                                                          =========             =========             =========
</TABLE>

Non Cash Investing and Financing Activities

On February 13, 2003, the Fund converted $218,100 due to a related party to
contributed capital pursuant to an expense agreement (See Note 4).

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


                                        4
<PAGE>

                                                          AMERIFIRST FUND I, LLC
                                                   (A Development Stage Company)

                                         NOTES TO CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1 - Formation, Nature of Business, and Management Plans

      AmeriFirst Fund I, LLC (the "Fund") was organized on April 22, 2002 to
      offer units in a securitized pool of life insurance policies. The Fund
      will provide living benefits to terminally ill and chronically ill persons
      of all ages and senior citizens, age 65 and older with life expectancies
      based solely on actuarial tables in exchange for ownership of their life
      insurance policies. A life settlement is the payment of cash in return for
      an assignment of ownership or beneficial interest in, and the right to
      receive the face value of a life insurance policy. The Fund will purchase
      life insurance policies from AmeriFirst Funding Group, Inc. (the
      "Provider"), a related party. The Provider will assign and/or transfer
      beneficial interest to the Fund.

      The Provider will originate policy purchases directly from the insured if
      licensed as a broker, through other providers, or through an unaffiliated
      broker network and transfer ownership or irrevocable beneficial interest
      to the Fund. In addition, the Fund's principal offices will be located at
      the principal offices of the Provider.

      The Fund's Manager, AmeriFirst Financial Services, Inc. (the "Manager"),
      along with the Provider or other licensed providers, will determine the
      amount paid for an insurance policy based on various factors, including
      the estimated life expectancy of the insured, the estimated premiums
      payable under the policy over the expected life of the insured and certain
      other costs of the life settlement. The Fund's existence ends on December
      31, 2027, unless liquidated sooner.

NOTE 2 - Significant Accounting Policies

      Income Taxes

      The Fund is a Florida limited liability company ("LLC"). The members of an
      LLC are taxed on their proportionate share of the Fund's taxable income.
      Accordingly, no provision or liability for Federal income taxes has been
      included in the financial statements.

      Use of Estimates

      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 and disclosure of contingent 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.

      Deferred Offering Costs

      Deferred offering costs in the amount of $326,509 include incremental
      costs directly attributable to the public offering discussed in Note 1.
      These costs will be charged directly to member's equity (deficit) against
      the gross proceeds of the offering. If the offering is not completed then
      the Fund will charge the costs to its operations.


                                       5
<PAGE>

                                                          AMERIFIRST FUND I, LLC
                                                   (A Development Stage Company)

                                         NOTES TO CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 2 - Significant Accounting Policies, continued

      Revenue Recognition for Investment in Insurance Policies

      The Company recognizes revenue on its investment in life insurance
      policies in accordance with the Financial Accounting Standards Board
      Technical Bulletin 85-4 "Accounting for Purchases of Life Insurance" ("FTB
      No. 85-4"). At the acquisition date of a policy the difference between the
      cost of the policy (including all related acquisition cost) and the
      policy's cash surrender value will be expensed. Premiums on such policies
      will be charged to expense as incurred. Revenue will be recognized upon an
      increase in the policies' cash surrender value. When a policy's benefit
      becomes payable, the Company will recognize revenue for the difference
      between the benefit to be received and cash surrender value. At September
      30, 2003 and 2002, the Fund held no investments in life insurance
      policies.

      New Accounting Pronouncements

      In May 2003, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standard ("SFAS") No. 150, "Accounting
      for Certain Financial Instruments with Characteristics of Both Liabilities
      and Equity" ("SFAS 150"), which is effective for financial instruments
      entered into or modified after May 31, 2003, and otherwise is effective at
      the beginning of the first interim period beginning after June 15, 2003.
      SFAS 150 establishes standards for how an issuer classifies and measures
      certain financial instruments with characteristics of both liabilities and
      equity. It requires that an issuer classify a financial instrument that is
      within its scope as a liability. The adoption of SFAS 150 did not have a
      material effect on the Company's financial statements.

      In January 2003, FASB issued FASB Interpretation No. 46, "Consolidation of
      Variable Interest Entities" ("FIN 46"), an interpretation of Accounting
      Research Bulletin No. 51. FIN 46 expands upon and strengthens existing
      accounting guidance that addresses when a company should include in its
      financial statements the assets, liabilities and activities of another
      entity. A variable interest entity is any legal structure used for
      business purposes that either does not provide sufficient financial
      resources for the entity to be consolidated by a company if that company
      is subject to a majority of the risk of loss from the variable interest
      entity's activities or entitled to receive a majority of the entity's
      residual returns or both. The consolidation requirements of FIN 46 apply
      immediately to variable interest entities created after January 31, 2003.
      The consolidation requirements apply to older entities in the first fiscal
      year or interim period beginning after June 15, 2003. However, on October
      8, 2003, FASB deferred the latest date by which all public entities must
      apply FIN 46 to the first reporting period ended after December 15, 2003.
      The Fund is still evaluating the effect of this new accounting
      pronouncement on the Fund's financial statements.


                                       6
<PAGE>

                                                          AMERIFIRST FUND I, LLC
                                                   (A Development Stage Company)

                                         NOTES TO CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 3 - Going Concern

      The Fund has not commenced principal operations as of November 26, 2003.
      The Fund will be offering and selling to the public a minimum of 2,500
      units and up to a maximum of 100,000 units at $1,000 per unit, with an
      initial minimum investment of 100 units (the "Offering"). The units are
      being distributed on a "best efforts" basis by AmeriFirst Capital Corp.,
      an affiliate of the Manager and Provider. The proceeds of this offering
      will be held in escrow with a Bank until the $2,500,000 minimum amount is
      received. If the minimum amount is not received within six months from the
      effective date (October 17, 2003) of the Offering, unless extended for an
      additional six months until October 17, 2004, then all subscription
      amounts (including interest), will be returned to all subscribers. The
      Fund has not raised any monies from this Offering. These factors raise
      substantial doubt as to the Fund's ability to continue as a going concern.
      The ability of the Fund to continue as a going concern is dependent upon
      the success of the Fund to raise the $2,500,000 minimum subscription
      needed within the specified time pursuant to the Fund's operating
      agreement. The financial statements do not include any disclosures that
      might be necessary should the Fund be unable to continue as a going
      concern.

NOTE 4 - Related Parties

      (A)   As discussed in Note 1, AmeriFirst, Inc. ("AmeriFirst") through its
            wholly owned subsidiaries, AmeriFirst Funding Group, Inc. and
            AmeriFirst Financial Services, Inc., will be the Fund's Provider of
            insurance policies and Manager, respectively. The Provider will
            originate policy purchase directly from the insured if licensed as a
            broker, through other providers, or through an unaffiliated broker
            network and transfer ownership or irrevocable beneficial interest to
            the Fund. The Manager will negotiate the Provider's fees for
            providing policies to the Fund at the time of each transaction.

            AmeriFirst, through its wholly owned subsidiary AmeriFirst Capital
            Corp. (the Underwriter") will act as the primary underwriter of the
            Offering (See Note 3).

            John Tooke is the Chief Executive Officer and controlling
            shareholder of our Manager, Provider and Underwriter and may be
            deemed to be a founder and /or promoter of the Fund.

      (B)   On February 13, 2003, the Fund and AmeriFirst entered into an
            expense agreement, as restated on December 23, 2003 (the
            "Agreement"). Such Agreement provides that the Fund is not required
            to repay amounts due to AmeriFirst arising from organizational and
            offering expenses incurred on its behalf by AmeriFirst, or for
            services rendered by AmeriFirst to the Fund through the date of the
            Agreement. In


                                       7
<PAGE>

                                                          AMERIFIRST FUND I, LLC
                                                   (A Development Stage Company)

                                         NOTES TO CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 4 - Related Parties, continued

            addition, AmeriFirst will not charge the Fund for organizational and
            offering expenses incurred on its behalf by AmeriFirst for services
            rendered to the Fund subsequent to February 13, 2003.The Fund
            recorded the cumulative effect of this Agreement as a contribution
            to capital in the amount of $405,499 through September 30, 2003.
            Subsequent to September 30, 2003 the Fund received $23,479 of
            contributions from AmeriFirst for organizational and offering
            expenses and deferred financing costs incurred by the Fund. The Fund
            recorded the monies received as contributed capital.


                                       8