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

                                   FORM 10-QSB
                                   -----------

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001.

                           COMMISSION FILE NO. 0-3-222


                        HOMES FOR AMERICA HOLDINGS, INC.
                  ---------------------------------------------
                 (Name of Small Business Issuer in Its Charter)


                                     Nevada
                        ---------------------------------
                         (State or other jurisdiction of
                         incorporation or organization)


                                   88-0355448
                     ---------------------------------------
                     (I.R.S. Employer Identification Number)


              6010 Sherwood Glen Way West Palm Beach, Florida    33415
           -------------------------------------------------   --------
                    (Address of principal executive offices)


                                 (561) 433-3939
                     ---------------------------------------
                           (Issuer's Telephone Number)


              ----------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)


As of March 31, 2001,  there were 10,109,131  shares of common stock,  par value
$.001 per share, issued and outstanding.

Transitional Small Business Disclosure Format (check one) YES [ ] NO [X]

<PAGE>

                               TABLE OF CONTENTS
================================================================================

PART I
------

1.   CONSOLIDATED  FINANCIAL  STATEMENTS  FOR THE  COMPANY FOR THE
     THREE  MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED) ........1

a.   Consolidated Balance Sheets as of March 31, 2001 and 2000 .............1
b.   Consolidated  Statements of Operations for the three
     months ended March 31, 2001 and 2000 ..................................3
c.   Consolidated  Statements of Changes in  Shareholders'
     Equity for the three months ended March 31, 2001 and 2000 .............4
d.   Consolidated  Statements of Cash Flows for the three
     months ended March 31, 2001 and 2000 ..................................5
e.   Notes to Interim Consolidated Financial Statements ....................6


2.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
     CONDITION AND RESULTS OF OPERATIONS ...................................24

a.   Overview ..............................................................24
b.   Results of Operations for the Three Months Ended
     March 31, 2000 Compared to March 31, 2001 .............................25
     i.   Revenues .........................................................25
     ii.  Expenses .........................................................25
     iii. Liquidity and Capital Resources ..................................26


PART II
-------

1.   LEGAL PROCEEDINGS .....................................................28

2.   CHANGES IN SECURITIES .................................................28

3.   DEFAULTS UPON SENIOR SECURITIES .......................................28

4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ...................28

5.   OTHER INFORMATION .....................................................28

6.   EXHIBITS AND REPORTS OF FORM 8-K ......................................28


SIGNATURE PAGE .............................................................29

<PAGE>

                                     PART I
================================================================================


1.   CONSOLIDATED  FINANCIAL  STATEMENTS  FOR THE  COMPANY  FOR THE THREE  MONTH
     PERIODS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)
--------------------------------------------------------------------------------


                        HOMES FOR AMERICA HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
      FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)

                                   - ASSETS -


                                                       Three Months Three Months
                                                           Ended         Ended
                                                          3/31/01       3/31/00
                                                        (Unaudited)  (Unaudited)
--------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents.............................    339,513   $   662,823
Accounts receivable - tenants (Note 2j) ..............     84,272        34,680
Accounts receivable - other fees (Note 2j) ...........    689,374       913,970
Restricted deposits and funded reserves - current
(Note 7) .............................................    816,346     5,701,438
Prepaid expenses and other current assets ............     69,880       459,572
Due from officer (Note 4) ............................     50,500        27,500
Net assets of discontinued subsidiaries (Note 3) .....       --         748,212
                                                      -----------   -----------
TOTAL CURRENT ASSETS .................................  2,049,885     8,548,195
                                                      -----------   -----------

INVESTMENTS IN REAL ESTATE - NET (Notes 2e, 5 and 8).. 39,587,933    35,385,649
                                                      -----------   -----------

FIXED ASSETS - NET (Notes 2e and 6) ..................     43,873        55,050
                                                      -----------   -----------

OTHER ASSETS:
Restricted deposits and funded reserves (Note 7) .....    782,606       529,485
Deferred financing costs - net (Note 2f) .............  1,139,951     1,187,413
Deferred asset management fee - net (Note 2g) ........     70,079       179,162
Pre-acquisition costs (Note 2h) ......................  1,337,021       358,339
Other assets .........................................      6,059       269,373
                                                      -----------   -----------
                                                        3,335,716     2,523,772
                                                      -----------   -----------
                                                      $45,017,407   $46,512,666
                                                      ===========   ===========


                                  -- Page 1 --
<PAGE>

                    - LIABILITIES AND SHAREHOLDERS' EQUITY -


                                                       Three Months Three Months
                                                           Ended         Ended
                                                          3/31/01       3/31/00
                                                        (Unaudited)  (Unaudited)
--------------------------------------------------------------------------------

CURRENT LIABILITIES:
Line of credit - bank (Note 10) ...................$    570,000    $       --
Accounts payable and accrued expenses .............   1,636,727       1,283,929
Tenants security deposits .........................     356,972         374,598
Unearned rent (Note 2j) ...........................      99,181          41,234
Current portion - liabilities applicable to
   investments in real estate (Note 8) ............   3,001,800       3,825,035
Current portion - notes payable ...................     602,872         734,432
Income taxes payable (Note 2i and 13) .............     177,000            --
Net liabilities of discontinued subsidiaries
(Note 3) ..........................................        --              --
                                                    -----------     -----------
TOTAL CURRENT LIABILITIES .........................   6,444,552       6,259,228
                                                    -----------     -----------

LIABILITIES APPLICABLE TO INVESTMENTS IN
  REAL ESTATE (Note 8) ............................  34,452,534      32,330,843
                                                    -----------     -----------

LONG-TERM LIABILITIES - NET OF CURRENT PORTION:
Notes payable          ............................         --          224,532
Deferred income taxes (Notes 2i and 13) ...........     954,600         903,400
                                                    -----------     -----------
                                                        954,600       1,127,932
                                                    -----------     -----------

MINORITY INTERESTS IN SUBSIDIARIES (Note 11) ......     662,014       2,276,008
                                                    -----------     -----------
SERIES A, 8% CUMULATIVE CONVERTIBLE,REDEEMABLE,
PREFERRED STOCK- REDEMPTION VALUE (Note 12) .......         --        1,618,855
                                                    -----------     -----------

COMMITMENTS AND CONTINGENCIES (Note 14)

SHAREHOLDERS' EQUITY (Note 12):

Common stock; $.001 par value; 25,000,000 shares
authorized, 8,702,131 and 8,456,682 shares issued
and outstanding in 2001 and 2000, respectively ....       8,702           8,562

Additional paid-in capital ........................   1,230,848       1,159,743
Retained earnings .................................   2,163,878       1,731,495
Treasury stock, at cost - 123,000 shares ..........    (899,721)            --
                                                    -----------     -----------
                                                      2,503,707       2,899,800


                                                   $ 45,017,407     $46,512,666
                                                   ============    ============


                                  -- Page 2 --
<PAGE>

                        HOMES FOR AMERICA HOLDINGS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
    FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)



                                                       Three Months Three Months
                                                           Ended         Ended
                                                          3/31/01       3/31/00
                                                        (Unaudited)  (Unaudited)
--------------------------------------------------------------------------------
REVENUES:
Rental income (Note 2j) ............................. $ 2,252,424   $ 2,229,929
Real estate development fees ........................        --            --
Interest income .....................................      11,903         3,430
Other income .(Note 9)...............................     100,000        26,979
                                                        ---------     ---------
                                                        2,364,327     2,260,338

EXPENSES:
Administrative expenses .............................     486,019       776,642
Maintenance and operating costs .....................     409,787       302,928
Utilities ...........................................     271,281       154,897
Taxes and insurance .................................     243,512       223,470
Interest expense ....................................     710,081       680,570
Depreciation and amortization .(Note 15).............     373,201       411,707
                                                        ---------     ---------
                                                        2,493,881     2,550,214
                                                        ---------     ---------

(LOSS) INCOME BEFORE MINORITY INTERESTS AND
PROVISION FOR INCOME TAXES ..........................    (129,554)     (289,876)

Minority interests in net loss of consolidated
subsidiaries (Note 11) ..............................     143,810       336,090
                                                        ---------     ---------

INCOME BEFORE PROVISION FOR INCOME TAXES ............      14,256        46,214

Provision for income taxes (Notes 2i and 13) ........        --
                                                        ---------     ---------

INCOME FROM CONTINUING OPERATIONS ...................       14,256        46,214
                                                        ---------     ---------

DISCONTINUED OPERATIONS (NOTE 3):
Income from operations of discontinued subsidiary's
assets (net of income taxes of $42,000 for
2000)................................................        --             --
Gain on sale of operating assets of subsidiary -
(net of income taxes of $160,000 for 2000)...........  $     --     $       --
                                                         ---------     ---------
                                                             --             --


NET INCOME ..........................................  $   14,256 $      46,214
                                                         ---------    ---------

BASIC AND DILUTED INCOME PER SHARE (NOTE 2k)
Continuing operations ............................... $    0.0016 $       0.005
                                                         ---------    ---------
Discontinued operations ............................. $    0.0000 $       0.000
                                                         ---------    ---------
                                                      $    0.0016 $       0.005
                                                        ==========   ==========

                                  -- Page 3 --
<PAGE>



                        HOMES FOR AMERICA HOLDINGS, INC.
            CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY


<TABLE>
<S>                                                <C>            <C>            <C>            <C>            <C>      <C>

                                                 Preferred                     Additional     Retained   Treasury Stock
                                                   Stock       Common Stock  Paid-in Capital  Earnings       at Cost        Total
------------------------------------------------------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1999 ...................         73         8,562     2,778,525      1,685,281          --        4,472,441

Shares issued in lieu of employees' compensation        --            120        80,280           --            --           80,400

Issuance of shares in lieu of payment of
   accrued liabilities .........................       --              30        19,970           --            --           20,000

Surrender and retirement of preferred shares ...        (73)         --      (1,618,782)          --            --       (1,618,855)

Purchase and cancellation of shares ............       --             (10)      (29,145)          --            --          (29,155)

Purchase of shares for treasury ................       --            --            --             --        (884,843)      (884,843)

Net income .....................................       --            --            --          464,342          --          464,342
                                                  ---------   -----------   -----------    -----------   -----------     -----------

BALANCE AT DECEMBER 31, 2000 ...................   $   --     $     8,702   $ 1,230,848    $ 2,149,623   $  (884,843)   $ 2,504,330

Purchase of shares for treasury ................       --            --            --             --         (14,878)       (14,878)

Net Income .....................................       --            --            --           14,256          --           14,256
                                                  ---------   -----------   -----------    -----------   -----------     -----------
Balance at March 31, 2001 ....    ..............   $   --     $     8,702   $ 1,230,848    $ 2,163,879   $  (899,721)    $2,503,707
                                                  =========   ===========   ===========    ===========    ===========    ===========
</TABLE>


                                  -- Page 4 --
<PAGE>



                        HOMES FOR AMERICA HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
    FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)

                                                  Three Months      Three Months
                                                 Ended 3/31/01     Ended 3/31/00
                                                  (Unaudited)       (Unaudited)
--------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (Loss)...................................$   14,256       $   46,214
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization ......................   373,201          411,707
Compensatory shares ................................     --             --
Minority interests .................................  (143,810)        (336,090)
Deferred income taxes ..............................     --             137,030
Decrease in discontinued subsidiary liabilities.....   (57,706)             --
(Increase) decrease in assets:
Accounts receivable - tenants ......................     3,446          (22,345)
Accounts receivable - other ........................   (50,216)        (250,876)
Prepaid expenses and other current assets ..........   249,273          (34,568)
Operating and debt service reserves ................  (545,924)             --
Other assets .......................................    78,606              --
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities ...........    86,699          334,987
Due to related parties .............................       --                 --
Tenant security deposits ...........................   (17,742)         176,987
Unearned rent ......................................     3,991
Real estate taxes payable...........................                     61,474
                                                    ----------       ----------
Net cash provided (used) by operating activities ..     (5,926)         524,520
                                                     ----------       ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real property ........................  (290,898)        (454,048)
Withdrawals from (additions to) replacement
 reserves, net .....................................   424,484           91,789
Pre-acquisition costs, net of reimbursements........    62,868          (78,456)
                                                     ----------       ----------
Net cash (used) by investing activities ........       196,454         (440,715)
                                                     ----------       ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in real estate liabilities .... .......    99,634              --
Purchase of treasury shares ........................   (14,878)             --
Net decrease in notes payable ......................  (503,781)             --
Distributions to minority shareholders .............       --
Net proceeds from short-term loans .................   250,000
Net proceeds from long-term debt refinancing.......        --               --
Payments for financing costs .......................       --
                                                    ----------        ----------
Net cash provided by financing activities ..........  (169,025)
                                                     ----------       ----------

NET (DECREASE) IN CASH AND CASH EQUIVALENTS ........    21,503           83,805

Cash and cash equivalents, beginning of year .......   318,010          579,018
                                                    ----------        ----------

CASH AND CASH EQUIVALENTS, END OF YEAR .............$  339,513       $  662,83
                                                    ----------        ----------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION,
Interest paid ...................................... $ 718,750     $    680,570
Income taxes paid ..................................       --              --


                                  -- Page 5 --
<PAGE>




                        HOMES FOR AMERICA HOLDINGS, INC.
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                  (INFORMATION AS OF AND FOR THE PERIODS ENDED
                      MARCH 31, 2001 AND 2000 IS UNAUDITED)

NOTE 1 - DESCRIPTION OF BUSINESS:

Homes  for  America  Holdings,   Inc.,  a  Nevada  Corporation  ("the  Company")
established in 1996, is engaged in the business of (a) acquiring, rehabilitating
and  managing  select  "Affordable  Housing"   properties;   (b)  acquiring  and
converting  specially  situated,  non-residential  properties  into  residential
rentals or  condominium  sales;  and (c) acquiring  multi-use  residential  real
estate. As to the Affordable Housing portion of the portfolio, the Company sells
partnership interests through newly formed subsidiaries,  including "tax-credit"
benefits,  according  to  Section  42 of the  IRS  Code,  and  depreciation  and
amortization for equity, acquisition and management fees.

The Company's wholly-owned subsidiaries are:

(i)  Glen Hills  Homes for  America,  Inc.,  a Texas  corporation,  which is the
     General Partner in Dallas/Glen Hills L. P. ("Dallas/Glen/Hills")

(ii) Prairie Village-Homes for America,  Inc., an Indiana corporation,  which is
     the General Partner of Middlebury Elkhart, L.P. ("Prairie Village")

(iii)Putnam Homes for America Holdings, Inc., a Connecticut  corporation,  which
     is the General  Partner of TVMJG  1996-Putnam  Square  Limited  Partnership
     ("Putnam")

(iv) BriarMeadows/Homes for America, Inc., a Texas corporation ("BriarMeadows")

(v)  Arlington/Homes for America, Inc., a Texas corporation ("Arlington")

(vi) Lakes Edge Homes Holdings, Inc., a Florida Corporation ("Lakes Edge")

(vii)LEHH, Inc., a Florida Corporation, formed solely to purchase and sell bonds
     in association with the Lake's Edge transaction ("LEHH")

(viii)Country Lake Homes Holdings, Inc., a Florida Corporation, ("Country Lake")

(ix) CLHH, Inc., a Florida Corporation, formed solely to purchase and sell bonds
     in association with the Country Lake transaction ("CLHH") and

(x)  Homes For America Real Estate Services, Inc., a Texas corporation ("RES")

(xi) St.  Charles  Homes For America,  Inc., a Texas  Corporation,  which is the
     General Partner of St. Charles Townhomes Partners, L.P. ("St. Charles")

Glen Hills Homes for America,  Inc.,  Prairie  Village-Homes for America,  Inc.,
Putnam Homes for America Holdings, Inc., and St. Charles Homes For America, Inc.
("the general partners"), have no other operating activities.

On June 30,  1999,  Lakes  Edge  was  acquired  and,  simultaneously  with  this
transaction,  Lakes Edge purchased  certain  Multifamily  Mortgage Revenue Bonds
(issued  by  the  Housing  Finance  Authority  of  Dade  County,   Florida)  and
consequently, all the rights accorded the holder of such bonds. The bonds, which
were purchased with the proceeds of a loan, were immediately sold and Lakes Edge
recognized a gain of $825,000.  The Lakes Edge property,  a 400-unit  affordable


                                  -- Page 6 --
<PAGE>

housing complex is located in Florida.

On November 9, 1999, Country Lake purchased certain Multifamily Mortgage Revenue
Bonds (issued by the Housing  Finance  Authority of Palm Beach County,  Florida)
and  consequently,  all the rights accorded the holder of such bonds.  The bonds
were  purchased  with the  proceeds of a loan.  The Country  Lake  property is a
192-unit affordable housing complex located in Florida.

During 1999, the Company  established a new  subsidiary,  Homes for America Real
Estate  Services,  Inc.,  ("RES").  This new subsidiary will provide  management
services  to the  Company's  other  subsidiaries  as well as to other  unrelated
entities. RES began operations in 2000.

Subsequent  to March 31,  2001,  on November 30,  2001,  the Company  acquired a
controlling general partner interest in St. Charles Townhomes Partners,  L.P., a
Texas  Limited  Partnership.  The  partnership  was formed in 1998 and currently
operates a  252-unit  affordable  apartment  complex  located in Dallas,  Texas.
Pursuant to an Agreement To Invest dated  November 30, 2001,  the Company agreed
to  invest  $400,000  in the  Partnership  for it's  partnership  rights  and an
additional $100,000 for certain operating expenses.

CERTAIN PROVISIONS OF LIMITED PARTNERSHIP AGREEMENTS:

Dallas/Glen Hills, L.P.:

Dallas/Glen  Hills,  L.P.,  (Dallas/Glen  Hills) was formed in October  1995 and
commenced operations in February 1996. The partnership  agreement was amended in
March 1997, to provide for the withdrawal or reduction in ownership  interest of
the existing  partners and the contribution of capital and the admittance of new
partners,  with the general partner being Glen Hills Homes for America,  Inc., a
wholly-owned  subsidiary  of the  Company.  Dallas/Glen  Hills was  organized to
purchase,  rehabilitate  and  operate the Willow Pond  Apartment  Project  ("the
Project")  located in Dallas,  Texas.  The Project received an allocation of low
income  housing tax credits from the Texas  Department  of Housing and Community
Affairs under Section 42 of the Internal  Revenue Code,  which regulates the use
of the  Project as to  occupant  eligibility  and unit gross  rent,  among other
requirements.  As such, the Project is required to lease a minimum of 40% of its
units to families  whose income is 60% or less of the area median gross  income.
The project  must meet the  provisions  of these  regulations  during each of 15
consecutive years in order to remain qualified to receive these credits.

Losses, subject to certain provisions, and tax credits are allocated .01% to the
general partner and 99.99% to the limited partners.  Operating profits,  subject
to certain  provisions,  are allocated first to the extent of losses  previously
allocated then based on cash distributions  already made or to be made. However,
annual  distributable  cash flow is first  utilized to satisfy loans and certain
accrued and unpaid  liabilities,  in accordance with the partnership  agreement,
and  then to  satisfy  various  fees and  obligations  to the  general  partner.
Finally,  any distributable cash flow remaining after the general partner's fees
and obligations are satisfied,  is distributed  50.1% to the general partner and
49.9%  to the  limited  partners.  The  cumulative  effect  of the  distribution
priorities  is  that  the  general  partner  receives  approximately  95% of the
partnership's distribute cash flow, giving it an overwhelming financial interest
in the partnership.  In addition to the general partner's overwhelming financial
interest,  its sole involvement in and responsibility for the financial policies
and  day-to-day  operations  of the  property  and  the  rights  granted  by the
partnership  agreement  to the  general  partner  to manage  the  affairs of the
partnership give the general partner control over the partnership.


Middlebury Elkhart, L.P.:



                                  -- Page 7 --
<PAGE>

Middlebury  Elkhart,  L. P.,  (Prairie  Village)  was formed in July 1997 and in
December  1998,  acquired  a 120-unit  apartment  building  (including  land) in
Elkhart, Indiana, from an unrelated party, for rental to low income tenants. The
original cost of this investment  approximated  $800,000 which was paid in cash.
Rehabilitation of this building was completed in December 2000.  Prairie Village
has received an  allocation  of low income  housing tax credits from the Indiana
Housing Finance Authority under Section 42 of the Internal Revenue Code of 1986,
as amended.  As such,  similar to Dallas/Glen  Hills,  management is required to
lease a minimum of 40% of Prairie Villages units to families whose income is 60%
or less  of the  area  median  gross  income.  Under  the  terms  of an  amended
partnership  agreement dated December 1998,  Prairie  Village-Homes for America,
Inc., became the general partner and has a .1% interest in the partnership.

Profits,  losses and tax credits  generally  are  allocated  to the  partners in
accordance with their ownership  interests.  However,  annual distributable cash
flow is first  utilized  to  satisfy  unpaid  liabilities,  as set  forth in the
partnership  agreement,  then the  remainder is  distributed  80% to the general
partner  and  20%  to  the  limited  partners.  The  cumulative  effect  of  the
distribution  priorities is that the general partner receives  approximately 80%
of  the  partnership's  distributable  cash  flow,  giving  it  an  overwhelming
financial  interest in the  partnership.  In  addition to the general  partner's
overwhelming  financial interest, its sole involvement in and responsibility for
the financial policies and day-to-day  operations of the property and the rights
granted  by the  partnership  agreement  to the  general  partner  to manage the
affairs  of  the   partnership   give  the  general  partner  control  over  the
partnership.


TVMJG 1996-Putnam Square Limited Partnership:

TVMJG  1996-Putnam  Square  Limited  Partnership  (Putnam  Square) was formed in
February 1996 for the purpose of acquiring,  developing and operating an 18-unit
rental  housing  project in  Bridgeport,  Connecticut.  The housing  project has
qualified and been allocated low income housing tax credits  pursuant to Section
42 of the Internal Revenue Code of 1986. The general  partner,  Putnam Homes for
America Holdings, Inc., has a 1% interest in the partnership.

Profits,  losses and tax credits  generally  are  allocated  to the  partners in
accordance with their ownership  interests.  However,  annual distributable cash
flow is first  utilized  to  satisfy  unpaid  liabilities,  as set  forth in the
partnership  agreement,  then the  remainder is  distributed  75% to the general
partner  and  25%  to  the  limited  partners.  The  cumulative  effect  of  the
distribution  priorities is that the general partner receives  approximately 75%
of  the  partnership's  distributable  cash  flow,  giving  it  an  overwhelming
financial  interest in the  partnership.  In  addition to the general  partner's
overwhelming  financial interest, its sole involvement in and responsibility for
the financial policies and day-to-day  operations of the property and the rights
granted by the  partnership to the general  partner to manage the affairs of the
partnership give the general partner control over the partnership.

St. Charles Townhomes Partners, L.P.:

St. Charles Townhomes  Partners,  L.P. (St. Charles) was formed in July 1988 for
the purpose of acquiring,  developing and operating a 252-unit rental affordable
housing  project in Dallas,  Texas.  The housing  project has qualified and been
allocated low income housing tax credits  pursuant to Section 42 of the Internal
Revenue Code of 1986. The general partner, St. Charles Homes For America,  Inc.,
has a 1% interest in the partnership.

Profits,  losses and tax credits  generally  are  allocated  to the  partners in
accordance with their ownership  interests.  However,  annual distributable cash
flow is first utilized to satisfy unpaid operating liabilities,  as set forth in


                                  -- Page 8 --
<PAGE>

the partnership agreement, then the remainder is distributed 100% to the general
partner.  The  cumulative  effect  of the  distribution  priorities  is that the
general  partner  receives 100% of the  partnership's  distributable  cash flow,
giving it an overwhelming financial interest in the partnership.  In addition to
the general partner's  overwhelming  financial interest, its sole involvement in
and responsibility  for the financial policies and day-to-day  operations of the
property and the rights  granted by the  partnership  to the general  partner to
manage the affairs of the partnership  give the general partner control over the
partnership.


General:

The general partners have also entered into guaranty agreements with the limited
partners of each partnership, whereby the general partner has agreed to fund (i)
operating  deficits (as defined in each  agreement)  incurred  during a specific
period and (ii) replacement  reserve escrow accounts to meet replacement reserve
obligations during the guaranty period.

Other than fees earned from tax credit  partnerships  pursuant to Section 42 Tax
Credits as described in Note 2(j) Revenue  Recognition,  fees  received from the
partnerships are eliminated upon consolidation.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a)  Principles of Consolidation:

The  consolidated  financial  statements  are  prepared on the accrual  basis of
accounting in accordance with accounting  principles  generally  accepted in the
United  States of America and include the accounts of the Company and all of its
wholly-owned  subsidiaries  (which  include  the  general  partners).  While the
general  partners  are  generally  entitled  to less than 50% of the profits and
losses of the  limited  partnerships,  under the  partnership  agreements  their
participation in distributable cash flow is always in excess of 75%, giving them
an  overwhelming  financial  interest  in the  partnerships.  In addition to the
general partners'  overwhelming  financial interests,  their sole involvement in
and responsibility  for the financial policies and day-to-day  operations of the
properties and the rights granted by the  partnership  agreements to the general
partners to manage the  affairs of the  partnerships  give the general  partners
control over the partnerships. As such, according to the provisions of Statement
of Position 78-9  "Accounting  for  Investments  in Real Estate  Ventures,"  the
Company,  as the controlling  investor,  accounts for such investments under the
principles of accounting  applicable to  investments in  subsidiaries.  See also
Note 11 regarding Minority Interests.

All   intercompany   balances  and   transactions   have  been   eliminated   in
consolidation.

(b)  Use of Estimates:

In preparing  financial  statements in  accordance  with  accounting  principles
generally  accepted in the United  States of America,  management  makes certain
estimates and assumptions, where applicable, that affect the reported amounts of
assets and liabilities  and disclosures of contingent  assets and liabilities at
the  date  of the  financial  statements,  as well as the  reported  amounts  of
revenues and expenses  during the reporting  period.  While actual results could
differ from those estimates,  management does not expect such variances, if any,
to have a  material  effect on the  Company's  financial  position,  results  of
operations, or cash flows.

(c)  Statements of Cash Flows:

For purposes of the statements of cash flows,  the Company  considers all highly


                                  -- Page 9 --
<PAGE>

liquid  investments  purchased with a remaining maturity of three months or less
to be cash equivalents.

(d)  Comprehensive Income:

SFAS 130 "Reporting  Comprehensive  Income"  prescribes  standards for reporting
other comprehensive income and its components.  Since the Company currently does
not have any items of other  comprehensive  income, a statement of comprehensive
income is not yet required.

(e)  Property and Equipment:

Land,  buildings,  furniture and equipment,  including investment property,  are
recorded at cost.  Depreciation  is computed using the  straight-line  method as
follows:

 Buildings and improvements                         40 years
 Furniture and equipment                            5 and 7 years

Building  improvements are capitalized,  while  expenditures for maintenance and
repairs  are  charged to  operations.  Depreciation  expense for the three month
periods  ended  March  31,  2001  and 2000  aggregated  $356,619  and  $353,652.
respectively.

(f)  Deferred Financing Costs:

Costs  directly  associated  with  obtaining  permanent debt financing have been
deferred and are being amortized on a  straight-line  basis over the term of the
permanent  loans.  Accumulated  amortization  for the three month  periods ended
March  31,  2001  and  2000  aggregated  $157,375  and  $121,546,  respectively.
Amortization  expense for the three month  periods ended March 31, 2001 and 2000
aggregated $14,453 and $34,830, respectively.

(g)  Deferred Asset Management Fee:

The  asset  management  fee  paid to an  affiliate  of the  limited  partner  in
Dallas/Glen  Hills is being  amortized  over the life of the 15-year  agreement.
Accumulated  amortization  for the three month  periods ended March 31, 2001 and
2000 aggregated $34,290 and $27,876, respectively.  Amortization expense for the
three month periods ended March 31, 2001 and 2000 aggregated  $2,129 and $4,290,
respectively.

(h)  Pre-Acquisition Costs:

Costs  incurred in pursuit of new  acquisitions  including,  but not limited to,
professional,  consulting, travel and due diligence expenditures,  are deferred,
pending  either  the  acquisition  of  the  property  or  the  determination  by
management  that a particular  property  will not be acquired.  Certain of these
costs may be reimbursed to the Company upon  acquisition of the property.  Costs
remaining upon the  consummation  of an acquisition  are  capitalized and become
part of the Company's investment in the related entity. Pursuant to the guidance
of EITF 97-11,  internal  costs  associated  with  identifying  and  acquiring a
property  which will be  operating  upon  acquisition  are expensed as incurred.
Internal costs related to  pre-acquisition  activities  incurred to identify and
acquire a property that will be considered as nonoperating upon acquisition, are
capitalized  as  part of the  cost  of  acquisition.  Management  evaluates  the
probability of acquiring  non-operating  properties and  capitalizes the related
internal costs when the  acquisition is reasonably  certain.  Alternatively,  at
such time that  management  determines  that  acquisition of the property is not
feasible, any deferred costs are charged to expense.

(i)  Income Taxes:

                                 -- Page 10 --
<PAGE>

The Company  accounts  for its income  taxes in  accordance  with  Statement  of
Financial  Accounting  Standards  ("SFAS") No. 109, which requires the asset and
liability  approach of accounting  for income taxes.  The objective of the asset
and liability method is to establish deferred tax assets and liabilities for the
temporary differences between the financial reporting basis and the tax basis of
the  Company's  assets and  liabilities  at enacted tax rates  expected to be in
effect when such amounts are realized or settled.  Deferred  income taxes result
principally  from utilizing the accrual basis for financial  reporting  purposes
and the cash basis for income tax purposes. No Federal or state income taxes are
payable by the partnerships, and none have been provided for.

(j)  Revenue Recognition:

Rental income is  recognized,  on a  straight-line  basis,  as rent becomes due.
Rental payments received in advance are deferred until earned.  The Company does
not believe that an allowance for doubtful accounts is necessary at this time.

When the Company acquires a rental property that is eligible for tax credits, it
establishes  a limited  partnership  in which a limited  partner makes a capital
contribution to purchase the use of the credits.  The limited partner, by making
its capital contribution, is eligible for a proportionate share of these credits
represented by its equity interest in the limited partnership.

In 1998,  when the Company  acquired  Prairie  Village,  which was allocated tax
credits in 1998, it established the  Middlebury/Elkhart  Limited Partnership.  A
limited partner paid a capital contribution to the partnership to purchase 99.9%
of the tax credits  and 99.9% of the losses of the  partnership.  In  accordance
with the  amended  partnership  agreement,  after the limited  partner  made its
capital  contribution,  the Middlebury/ Elkhart partnership  subsequently paid a
"Guaranteed Payment" to the Company (through its wholly owned subsidiary Prairie
Village Homes For America,  Inc.) for its services  relating to the development,
construction, and attainment of the tax credits.

When the  Middlebury/Elkhart  limited partnership paid Prairie Village Homes For
America,  Inc. the Guaranteed Payment,  Prairie Village Homes For America,  Inc.
recorded  the payment as income in 1998,  the year the fee was  earned.  Whereas
under  consolidation  such a fee would normally be  eliminated,  pursuant to tax
credit  partnerships  created under Section 42 Tax Credits,  under consolidation
such fees are not eliminated,  for the following reason: Tax credit partnerships
under  Section  42 Tax  Credits  allow for fees to be paid  directly  out of the
partnership to the general partner as an expense to the  partnership,  resulting
in substantive increases, when combined with depreciation,  to the partnership's
losses.  These  losses  are  borne as if by a third  party,  since  the  limited
partner, not the limited  partnership,  always retains in excess of 99% of those
losses.  Conversely,  the general partner always retains less than 1% of the tax
credits and losses, at least 90% of the cash flow from the property and at least
70%  to  90%  of  the  residual   property  value  (after  return  of  capital).
Accordingly,  the general  partner  records  such fees as income and the Company
does not  eliminate  them upon  consolidation.  No such fees were  recognized as
income by the Company subsequent to 1998.

Other than fees earned from tax credit  partnerships  pursuant to Section 42 Tax
Credits as described  above,  fees received from the partnerships are eliminated
upon  consolidation.  Fees from outside  parties and fees earned from tax credit
partnerships  pursuant  to  Section  42  Tax  Credits  as  described  above  are
recognized as earned and are  classified as real estate  development  fee income
from outside third parties.

Interest  earned  on the  Company's  and its  subsidiaries'  bank  accounts  are
recorded as earned and reflected as interest  income.  Other income  consists of
late fees, application fees, commissions etc., and is recorded as earned.

                                 -- Page 11 --
<PAGE>

(k)  Earnings Per Share:

Basic and  diluted  earnings  per  share  have been  computed  according  to the
standards of SFAS No. 128 "Earnings Per Share".  The following schedule presents
the  calculation  of basic  and  diluted  earnings  per share  for  income  from
continuing operations:

                                                  3/31/01      3/31/00
                                               (Unaudited)  (Unaudited)
------------------------------------------------------------------------
Basic/diluted earnings per share:
  Income from continuing operations .........    $   14,256   $  46,214
  Less:  Preferred stock dividend requirement          --           --
                                                 ----------   ----------
Income from continuing operations
  available to common shareholders ..........    $   14,256  $   46,214
                                                 ==========   ==========

Weighted average common stock
  outstanding for basic earnings per share ..     8,702,131    8,456,682
Assumed conversion of cheap warrants ........          --           --
Assumed conversion of convertible
  preferred stock ...........................          --           --
                                                 ----------   ----------
Weighted average common stock
  outstanding for diluted earnings per share      8,702,131    8,456,682
                                                  =========    =========

(l)  Investment in Joint Venture:

During 1999, the Company formed a 50/50 joint venture with another  entity.  The
Company's  investment in this joint  venture,  which has been  established  as a
limited  liability  company,  is being  reflected  under  the  equity  method of
accounting. At December 31, 2000, the Company's investment has been written down
to $-0-.

(m)  Fair Value of Financial Instruments:

The  carrying  amounts  of cash  and  cash  equivalents,  receivables,  accounts
payable,  and accrued  liabilities  approximate  fair value because of the short
maturity of these instruments.  The carrying amount of investments  approximates
fair market  value.  The carrying  amount of  long-term  debt  approximates  the
estimated fair value of debt and is based on borrowing rates currently available
with similar terms and average maturities.

(n)  Recent Pronouncements:

In December  1999, the  Securities  and Exchange  Commission  (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements"
(SAB No.  101).  SAB No. 101  expresses  the views of the SEC staff in  applying
generally accepted accounting  principles to certain revenue recognition issues.
Subsequently,  SAB Nos. 101A and 101B were issued delaying the implementation of
SAB No.  101 to the  fourth  quarter  of 2000.  The  adoption  of SAB 101 had no
material  impact  on  the  Company's   financial  position  or  its  results  of
operations.

(o)  Stock-Based Compensation:

SFAS No. 123 "Accounting for Stock Based Compensation",  requires the Company to
either record  compensation  expense or to provide  additional  disclosures with
respect to stock awards and stock option grants made after December 31, 1994. No


                                 -- Page 12 --
<PAGE>

compensation  expense is recognized pursuant to the Company's stock option plans
under SFAS No. 123, which is consistent with prior treatment under APB No. 25.

In  March  2000,  the  Financial   Accounting   Standards  Board  (FASB)  issued
Interpretation No. 44 (FIN 44), "Accounting for Certain  Transactions  involving
Stock  Compensation,  an Interpretation of APB Opinion No. 25." Fin 44 clarifies
the application of APB No. 25 for certain issues, including the definition of an
employee,  the treatment of the acceleration of stock options and the accounting
treatment for options assumed in business  combinations.  FIN 44 is effective on
July 1, 2000, but is applicable for certain transactions dating back to December
1998.  The  adoption of FIN 44 did not have a material  impact on the  Company's
financial position or results of operations.

(p)  Reclassifications:

Certain  reclassifications  have been made to the 2000  financial  statements to
correspond to the presentation used in the 2001 statements.

(q)  Interim Financial Information

The interim financial data as of March 31, 2001 and 2000 and for the three month
periods ended March 31, 2001 and 2000 is unaudited. The information reflects all
adjustments,  consisting  of only  normal  recurring  adjustments  that,  in the
opinion of management,  are necessary to present  fairly the financial  position
and results of operations of the Company for the periods  indicated.  Results of
operations for the interim periods are not necessarily indicative of the results
of operations for the full year.

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
For further  information,  refer to the  consolidated  financial  statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31, 2000.

NOTE 3 - DISCONTINUED OPERATIONS - SALE OF ASSETS:

On June 30, 2000,  the Company sold the  properties  owned by Briar  Meadows and
Arlington  for  a  purchase  price  of  $4.8  million  to  a  group  of  holders
(collectively,  the "Investors") of its common stock,  preferred stock, warrants
and promissory notes. The two properties were sold for consideration of:

(a)  The Investors'  assumption of the mortgage  obligations on the  properties:
     $1.5 million for BriarMeadows and $1.2 million for Arlington, totaling $2.7
     million

(b)  The  Investors'  surrender  and release to the Company of all common  stock
     (valued  at  $461,093)  (See  note 1  below)  preferred  stock  (valued  at
     $1,618,855)  (see Note  12),  warrants  (valued  at  $645,052)  (See note 2
     below),  and  promissory  notes  totaling  $575,000  issued  to them by the
     Company, valued collectively at $3.3 million, and;

(c)  The Company issued to the Investors a new promissory  note in the amount of
     $1.2  million  bearing  interest  at 9.5% per annum  with a March 15,  2001
     maturity date.  Subsequent to March 31, 2001, this note was paid in full in
     July 2001.

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

(1)  385,000  shares of common stock were valued at $461,093,  or  approximately
     $1.20 per share.  The fair value  determination of $1.20 per share reflects
     the value agreed to by the unrelated third party accredited Investors.

                                 -- Page 13 --
<PAGE>

(2)  30,000  warrants,  which were issued to an unrelated third party accredited
     Investor in 1998 and  exercisable at a price of $1 per share,  were retired
     in  the  June  30,  2000  sale  of  Briar  Meadows  and  Arlington  (land).
     Additionally,  two of the  accredited  Investors  were the  holders  of two
     promissory notes, each in the amount of $225,000, with repayment provisions
     that  included,  in addition to repayment in cash of the full amount of the
     loans, the receipt of options or warrants,  as mutually agreed,  for 75,000
     shares of common  stock  each,  exercisable  at a price of $1 per share and
     expiring  five years from the date of  repayment.  The  Company  valued the
     right to exercise these warrants,  along with the 30,000 warrants issued in
     1998, at $645,052,  or approximately  $3.58 per warrant.  The warrants were
     valued at $3.58  based on the  Company's  then-anticipated  listing  of its
     common stock on a public exchange and expected trading value thereof in the
     range of $4-$5 per share. The Company  believed that the Investors'  future
     exercise of the warrants (at $1 per share) would be  disadvantageous to the
     Company.


Per APB 29, the transfer of a non-monetary  asset to reduce ownership  interests
should be recorded at the fair value of the asset surrendered when that value is
more clearly evident than the fair value of the asset received.  In the June 30,
2000 sale of the Dallas/Briar  Meadows and  Arlington/Royal  Crest properties to
Company  stockholders,  the fair value of the properties is more clearly evident
than the fair value of the consideration  received (in particular the fair value
of the preferred  stock and warrants) and, as per APB 29, the  accounting  basis
was the fair value of the asset surrendered.

The  Company's  Board of  Directors  determined  that the fair  value of the two
properties,  combined  into  one  sale  to a  group  of  unrelated  third  party
investors,  was $4,800,000,  an increase of $490,202 since their  acquisition in
December of 1998.  This value reflects the highest price that the investors were
willing to pay and the lowest price the Company would accept, and was determined
with industry  standard cap rates and buildable unit values.  Additionally,  the
fair value of each property is supported by independent real estate  appraisals.
(While the fair values and the appraised  values vary slightly,  it is important
to note that, as in this case,  multifamily  properties  are rarely sold for the
exact  appraised  amount  due  to the  timing  of the  reports  relative  to the
transaction as well as transaction-specific negotiations.)

The carrying  value of the Arlington land was  $2,683,171.  The sale proceeds of
the property at the time of sale was $1,800,000,  based on the fair value of the
property  surrendered,  determined  as follows:  a value of $8,570 per buildable
unit (based on an industry  standard range of  $8,000-$9,000  per buildable unit
for this type of vacant,  non-operating  land in the Arlington,  Texas area) was
assigned to each of 210 units for which  multifamily  zoning  approval  had been
gained, resulting in a fair value of approximately $1.8 million. This fair value
calculation is also supported by an independent real estate appraisal  conducted
in August of 2000 (a month after the sale) valuing the property at $1,930,000.

The carrying value of Dallas/Briar Meadows was $1,626,627.  The sale proceeds of
the property at the time of sale was $3,000,000,  based on the fair value of the
property  surrendered,  determined  as  follows:  the net  operating  income  of
$296,292 at the time of sale at a cap rate of 10 percent (an  industry  standard
for this type of operating property in Dallas, Texas), resulting in a fair value
of approximately $3,000,000. This fair value calculation is also supported by an
independent real estate appraisal  conducted in May of 1999 valuing the property
at $2,700,000.  (When the property was appraised in May of 1999 (thirteen months
before the sale), the net operating income at Dallas/Briar Meadows was $274,152,
resulting in a value of approximately  $2.7 million at a cap rate of 10 percent.
The  Company  used this  same cap rate to  determine  the fair  value in June of
2000.)

                                 -- Page 14 --
<PAGE>

The  carrying  value of the two  properties  combined was  $4,309,798.  The sale
proceeds for the two properties was the fair value of the properties at the time
of sale,  totaling  $4,800,000.  A gain of  $490,202  (a net gain after taxes of
$330,202) was recorded on the sale of the assets, calculated as follows:

                                  Arlington/      Dallas/
                                  Royal Crest     Briar Meadows     TOTAL
-------------------------------------------------------------------------------
Carrying Value ..............     $ 2,683,171      $ 1,626,627     $ 4,309,798
Sale Proceeds (Fair Value) ..      (1,800,000)      (3,000,000)     (4,800,000)
                                  -----------      -----------      -----------
(Gain) Loss .................         883,171       (1,373,373)       (490,202)
Tax .........................            --            160,000         160,000
                                  -----------      -----------      -----------
Net (Gain) Loss .............     $   883,171      $(1,213,373)     $ (330,202)
                                  ===========      ===========      ===========

Revenues and net income from the  operations  of the Briar Meadows and Arlington
properties were as follows:

                          12/31/00    12/31/99
                         (Audited)    (Audited)
                        ------------------------
Revenues:
         BriarMeadows   $ 707,932    $ 640,303
         Arlington ..        --           --

Net income (loss)
         BriarMeadows     142,083      (24,481)
         Arlington ..     (56,605)        --


NOTE 4 - DUE FROM OFFICER:

As of March 31, 2001, an officer had an outstanding  loan payable to the Company
in the amount of  $50,500.  This loan is due on demand and bears  interest at an
annual rate of 8%.

NOTE 5 - INVESTMENTS IN REAL ESTATE:

Investments in real estate properties,  which are held primarily for development
and  operation,  represent  the rental  properties  owned by the Company and the
limited partnerships and consist of the following:

                                                      3/31/01          3/31/00
                                                    (Unaudited)      (Unaudited)
-------------------------------------------------------------------------------
Buildings and improvements ....................     $31,857,086  $ 28,802,230
Furniture, fixtures and equipment .............       3,049,264     2,535,012
Construction in progress ......................       3,032,249     1,090,869
                                                      ---------     ---------
                                                     37,938,599    32,428,111
Less: accumulated depreciation                       (3,439,230)   (1,891,166)
                                                     ----------    ----------
                                                     34,499,369    30,536,945
Land ....................................... ...      5,088,564     4,848,704
                                                      ---------     ---------
                                                   $ 39,587,932  $ 35,385,649
                                                     ==========    ==========





                                 -- Page 15 --
<PAGE>

In accordance with SFAS 121, "Accounting for the Impairment of Long-Lived Assets
and for  Long-Lived  Assets to be  Disposed  of" the  Company  evaluates,  on an
ongoing basis, the carrying amounts of its investments in real estate (and fixed
assets - see Note 6) to  determine  if there  has been any  impairment  of those
carrying values.  If an impairment is found to exist, it is the Company's policy
to recognize such impairment at that time.


The Company  utilizes  various methods to measure the carrying value of its real
estate assets to determine if an impairment has occurred, including:

a.   Reviewing  the  market  value of a  property  through  the use of  outside,
     independent  appraisals  often  conducted  prior to securing a purchase and
     sale agreement and also upon the refinancing of the Company's acquisitions.
     Appraisals are often required by lenders as a condition of the financing.

b.   Assets are routinely monitored for significant physical changes. Particular
     concern is given to  maintaining  and upgrading the properties to keep them
     competitive in their respective market places. Again, these are issues that
     are of great  concern  to  lenders.  The  Company  expends a great  deal of
     resources in maintaining the physical integrity of the assets and, in fact,
     has  established a variety of  renovation  and  rehabilitation  escrows for
     exactly that purpose.

c.   The Company  monitors the legal,  regulatory and business  climates for any
     events  that  could  have an adverse  impact on the  carrying  value of the
     assets. Examples of these types of events would include the promulgation of
     new  rules by  governmental  agencies,  new laws  requiring  compliance  or
     otherwise  affecting the operation,  or any other  significant  event. When
     such an  event  is  identified,  the  costs  to  comply  or  remediate  are
     determined and their impact on the property is measured.

d.   The Company  continuously  budgets and makes estimates for future operating
     periods,  including  estimates of whether its properties will be profitable
     and produce positive cash flow in future periods.

In the event that any adverse events are identified that, in the judgment of the
Company,  impair the carrying value of the asset, it is the Company's  policy to
determine the carrying  value of the asset by estimating  the sum of future cash
flows  (undiscounted  and without  interest  charges) and measure it against the
current carrying value of the asset. If the sum of the future cash flows is less
than the carrying value of the asset,  then an impairment  loss is recognized in
accordance with the requirements of SFAS 121.

Through March 31, 2001, there has been no such impairment.


NOTE 6 - FIXED ASSETS:

Fixed assets consist of the following:

                                    3/31/01      3/31/00
                                  (Unaudited)  (Unaudited)
----------------------------------------------------------
Office equipment .............     $ 89,499    $ 81,610
Less: accumulated depreciation      (45,626)    (25,560)
                                    -------     -------
                                   $ 43,873    $ 55,050
                                   ========    ========

See also Note 5 regarding impairment.

                                 -- Page 16 --
<PAGE>

NOTE 7 - RESTRICTED DEPOSITS AND FUNDED RESERVES:

The terms of the partnership  agreements require that various escrow accounts be
maintained  in amounts  and for  periods as set forth in each  agreement.  As of
March 31, 2001 and 2000,  restricted deposits and funded reserves consist of the
following:

                                           3/31/01       3/31/00
                                         (Unaudited)   (Unaudited)
----------------------------------------------------------------------

Operating and debt service reserves....     816,346     5,007,420

Replacement/rehabilitation reserves ...     782,606     1,223,503



NOTE 8 - LIABILITIES APPLICABLE TO INVESTMENTS IN REAL ESTATE:

Liabilities applicable to investments in real estate consist of the following:


                                                        3/31/01       3/31/00
                                                      (Unaudited)   (Unaudited)
------------------------------------------------------------------------------
Mortgage loans payable ............................. $ 20,668,413  $ 14,370,283
Bonds payable ......................................   16,184,605    21,105,000
Interest payable ...................................      133,243       110,646
Real estate taxes payable...........................      468,073       105,184
Other...............................................          --        513,517
                                                       ----------    ----------
                                                       37,454,334    36,204,630
Less: Non-current portion ..........................  (34,452,534)  (32,379,595)
                                                       -----------   -----------
Current portion - liabilities applicable
to real estate .....................................    3,001,800     3,825,035


On February 9, 1996,  Dallas/Glen  Hills entered into a mortgage loan  agreement
for $5,350,000.  The mortgage accrued interest at a rate of 8.25% per annum with
monthly principal and interest  payments of $42,182.  The note, with an original
maturity date of March 1, 2011,  was retired  during 2000 upon  refinancing.  In
1996,  Dallas/Glen  Hills also  funded a debt  reduction  escrow  account in the
amount  $1,500,000  to be applied  against the  outstanding  loan  balance  upon
refinancing.  On September 13, 2000,  Dallas/Glen Hills paid a $675,000 mortgage
prepayment  fee from  proceeds  of the  refinancing  transaction,  to retire the
mortgage prior to maturity.

On September 13, 2000,  Dallas/Glen  Hills executed a $6,450,000  loan agreement
(the "Mortgage Loan") with a commercial  lender to refinance the Project's debt.
Commencing November 2000, monthly principal and interest payments of $47,283 are
due until October 12, 2012 (the "Maturity Date"),  when all remaining  principal
and interest is payable in full. Interest accrues at a rate of 7.99% per annum.

Prairie Village,  in December 1998, entered into a $3,236,900 mortgage loan with
a lender  relating to the issuance of a total of $3,230,000 in Mortgage  Revenue
Refunding Bonds, issued by the City of Elkhart, Indiana. The loan bears interest
at an annual rate of 5.85%,  with monthly payments of interest only through June
2000.  Monthly principal and interest payments of $19,096 commenced in July 2000
and are  payable for 30 years  until  final  maturity  on May 1, 2030.  The loan
agreement requires monthly payments of principal and interest sufficient to meet


                                 -- Page 17 --
<PAGE>

sinking fund requirements for payments of amounts due under the bonds,  based on
their varying maturities and interest rates.

Putnam Square is obligated  under two  promissory  notes  aggregating  $400,000.
Monthly  payments of principal and interest,  at 8% per annum, of $3,087 are due
to the extent of surplus  cash as  defined  in the  notes.  The notes  mature in
January  2014 and are  secured  by a  mortgage  on the  Bridgeport,  Connecticut
property.  As of March 31, 2001 and 2000, the outstanding  balance was $400,000.
$200,000  of this note is payable to the  Company  (and has been  eliminated  in
consolidation)  and  the  balance  is due to the  former  general  partner.  The
partnership is also obligated under a promissory note payable to the Company, as
the  general  partner,  in  the  amount  of  $200,000  in  connection  with  the
development  fee (which amount has also been eliminated in  consolidation).  The
note bears interest at an annual rate of 7% per annum,  and is payable from cash
flow as defined in the partnership  agreement.  The note matures on December 31,
2006, and is unsecured.

In September  1999,  Briar Meadows entered into a loan agreement with a bank and
received proceeds in the amount of $1,500,000, with an original maturity date of
January 31, 2001.  The  proceeds  from this loan were used to repay (i) a 15.25%
note in the amount of $500,000,  with an original maturity date of June 17, 2000
and (ii) the balance  outstanding  under a term note in the amount of  $832,463.
The loan accrues interest at the lesser of the "Applicable Rate" or the "Maximum
Lawful Rate", both terms as defined in the agreement.  The $1.5 million note was
assumed by the Investors (see Note 3) when this property was sold in June 2000.

Arlington was  obligated  under a promissory  note in the amount of  $1,200,000,
with an original  maturity date of June 17, 2000. This note accrued  interest at
an annual  rate of 15 1/4% which was  payable  monthly.  The note may be prepaid
under specific conditions as long as three months of interest payments have been
made.  The $1.2 million note was assumed by the Investors (see Note 3) when this
property was sold in June 2000.

In October 1999,  Lakes edge entered into a $14,850,000  loan  agreement  with a
bank to  refinance  the  project's  debt in  connection  with  the  issuance  of
$14,850,000  Non-Taxable  Multifamily Mortgage Revenue Refunding Refunding Bonds
Series 1999D-1  issued by the Housing  Finance  Authority of Miami-Dade  County,
Florida. Monthly interest only payments of $85,388 at 6.9% per annum are payable
until September,  2010, when principal payments  sufficient to meet bond sinking
requirements  commence.  The note  matures  in May 2035  and is  secured  by the
project's rental property.

In October 1999, Lakes Edge entered into a $1,400,000 loan agreement with a Bank
to refinance  the project's  debt in connection  with the issuance of $1,400,000
Taxable  Multifamily  Mortgage Revenue  Refunding Bonds Series 1999D-2 issued by
the Housing Finance Authority of Miami-Dade County,  Florida.  Monthly principal
and interest  payments of $19,026 are payable at the rate of 11% per annum.  The
note  matures in August 2010 and is secured by the  project's  rental  property.
Proceeds  are held in escrow and  released as  rehabilitation  work is completed
during 2000 and 2001.

In November  1999,  Country Lakes entered into a loan  agreement with a mortgage
company and  received  proceeds in the amount of  $1,800,000.  Interest  accrued
monthly at the rate of 16% per annum,  and  principal  payments  of $25,000  per
month began in May 2000.  The note,  which matured in May 2001, was paid in full
from proceeds of the Lakes Edge Mezzanine Loan transaction on December 5, 2001.

Country Lakes entered into an loan agreement with a financial  institution for a
term loan in the amount of $2,540,000. Interest on this loan accrued at the rate
of 13% per annum until the loan  matures on July 1, 2018.  This loan was paid in
full on June 21, 2001 from  proceeds of the  $3,775,000  Fannie Mae  Multifamily
Note.

                                 -- Page 18 --
<PAGE>

Subsequent  to March 31,  2001,  on June 21,  2001,  Country  Lakes  executed  a
$3,775,000  Fannie  Mae  Multifamily  Note  to  refinance  the  project's  debt.
Commencing July 2001, monthly principal and interest  installment of $32,683 are
payable until June 2011,  when all remaining  principal and interest is due. The
note accrues interest at an annual rate of 7.45% and is secured by the project's
rental property.

Subsequent  to March  31,  2001,  on June 1,  2001,  Country  Lakes  executed  a
$6,255,000  Multifamily  Note to refinance the project's debt in connection with
the issuance of $6,255,000  Multifamily Housing Mortgage Revenue Refunding Bonds
Series 2001 issued by the Authority.  Interest only monthly  payments of $30,701
(initially  at 5.89% per annum)  commence in June 2001 and are payable until May
2011.  Commencing June 2011,  principal and interest payments are payable in 240
monthly installments at a mortgage note interest rate then in effect. All unpaid
principal and interest is due May 2031. The mortgage is secured by the project's
rental property.

Subsequent  to March 31,  2001,  on  December  5,  2001,  the  Company  executed
Mezzanine Loan Agreements  with a mezzanine  lender in the amounts of $4,200,000
for Lakes Edge and $1,000,000 for Country Lake(the "Mezzanine Loans").  Proceeds
of the Mezzanine Loans were used to retire the $1,800,000  Country Lake mortgage
and provide operating capital for the rental properties.

The mezzanine loans are secured by pledged ownership and distribution  interests
of the respective subsidiaries and Company officer guarantees. Additionally, the
Company  has  executed  Mezzanine  Cash  Management  Agreements  whereby  excess
distributable operating cash is swept into collateral accounts controlled by the
mezzanine lender.  All mezzanine loan security  interests are subordinate to the
first and second mortgage loans on Country Lake and Lakes Edge.

The mezzanine loans accrue  interest at 12.51%,  are amortized over 25 years and
mature  June 2011 and June  2013 for the  Lakes  Edge and  Country  Lake  loans,
respectively.  On January 2, 2002,  monthly  principal and interest  payments of
$45,281 and $10,911 commence on the Lakes Edge and Country lake mezzanine loans,
respectively.

The aggregate  maturities of mortgage loans payable  (exclusive of bonds payable
and excluding  current year's  mortgage debt retired of $1,608,270) for the next
five years are $241,771; $259,935; $282,439; $305,479; $330,509 and $ 17,640,010
thereafter.

NOTE 9 - OTHER INCOME

In the  first  quarter  of  2001  the  Company  filed  an  insurance  claim  for
reimbursement  for damages  resulting  from a fire at the Lakes Edge property in
the amount of $677,192. Subsequent to March 31, 2001, a net gain of $327,192 was
recognized in September, 2001 when the claim was settled and the related expense
for repairs was determined.

Included  in other  income is a $100,000  consulting  fee  received in the first
quarter of 2001 from a related party.

NOTE 10 - BANK CREDIT LINE:

In November 2000, the Company  entered into an unsecured line of credit with its
bank which  provides for maximum  borrowings  of $750,000.  This line of credit,
which  expires on  November  1, 2001,  bears  interest at an annual rate of 10%.
Outstanding  borrowings  under this line of credit were $570,000 as of March 31,
2001.  Subsequent  to March 31,  2001,  this line of credit  was paid in full in
December 2001.



                                 -- Page 19 --
<PAGE>

Subsequent  to March  31,  2001,  in July  2001,  the  Company  entered  into an
unsecured  loan  agreement  with a Bank in the amount of  $250,000,  which bears
interest at an annual rate of 5.75%.

NOTE 11 - MINORITY INTERESTS:

Four  wholly-owned  subsidiaries of the Company are the general partners of four
separate  limited  partnership  entities  (see Note 1).  The  partnerships  were
established for the purpose of acquiring rental  properties which are controlled
and managed by the Company.  For  financial  reporting  purposes,  the financial
statements   of  the   partnership   entities  are  included  in  the  Company's
consolidated  financial  statements  due to the control over these entities (see
Note 2a).

The minority  interests  represent the equity investment by the investor limited
partners in the limited  partnerships  that own specific  properties.  Under the
terms of the various partnership agreements,  the limited partners are typically
allocated  99% of the  taxable  income or loss.  Cash flow from the  partnership
property is allocated 75% or more to the general partner,  and residual value is
allocated 80% or more to the general partner. In each case, operating control of
the property rests with the general partner.  The limited partners' interests in
the  partnerships  have been recorded as minority  interest  liabilities (net of
offsets for the limited partners' investment cost to be eligible for tax credits
(see Note 2j)).

NOTE 12 - SHAREHOLDERS' EQUITY:

The Company's  authorized capital consists of 25,000,000 shares of common stock,
$.001 par value.

In September  1998, the Company adopted the 1998 Employee Stock Option Plan (the
"Plan"),  which  provides  for the grant of  options to  purchase  up to 750,000
shares  of  Company  common  stock.  Options  granted  under  this  plan  may be
designated  as incentive  stock  options and the exercise  price of such options
shall  not be less  than the fair  market  value on the date of  grant.  Options
designated as  non-incentive  stock  options may be granted at exercise  prices,
which are less than the fair market value. As of March 31, 2001, no options have
been granted under this plan.

Also in September  1998, the Company  adopted the  Non-Executive  Director Stock
Plan (the  "Director  Plan"),  which  provides  for the issuance of a maximum of
400,000  shares of common stock upon the exercise of options  granted under this
plan.  The exercise  price of options  granted  under the Director Plan shall be
equal to the fair market value on the date of grant.  As of March 31,  2001,  no
options have been granted under this plan.

The Company  granted  options to purchase  100,000  shares of common stock to an
officer of the Company.  These  options,  which were not granted under either of
the  plans  described  above,  and were to be  reflected  under APB 25 (see Note
2(o)),  vested quarterly in the first year of the officer's  employment and were
exercisable at $1.00 per share.  These options were cancelled in 2000,  prior to
the  issuance of year end  December  31,  1999  financial  statements,  when the
officer's employment with the Company was terminated. Accordingly, proforma data
under SFAS 123 is not required.

During 1999, the Company issued 24,998 shares of its common stock as payment for
accrued  liabilities  to unrelated  third parties in the amount of $24,998.  The
Company  also  issued  185,000  shares  of its  common  stock as  payment  to an
unrelated third party for professional fees in the amount of $185,000. Under the
guidance of FASB 123, the two equity transactions described above were accounted
for using the fair  value  method and the common  shares  were  valued at $1 per
share based upon the  consideration  received.  Subsequently  during  1999,  the


                                 -- Page 20 --
<PAGE>

Company sold 72,900 shares of Series A Convertible  Redeemable  Preferred  Stock
(2.43 units of 30,000 preferred shares each) to unrelated third party accredited
investors for net proceeds in the amount of $1,618,855  (or $22.20 per preferred
share).  The Series A Preferred  shares had conversion,  redemption and dividend
features referred to below. This equity  transaction was accounted for using the
fair value method.  The fair value of the preferred  stock was  determined by an
unrelated third party placement agent and was confirmed with the purchase of the
securities by unrelated third party accredited investors for the price set forth
above.

The preferred  shares were  convertible  at the option of the holder at any time
after 30 days from the date of the Closing of any  underwritten  public offering
by the Company  into a number of shares  equal to $25 divided by the  conversion
price. The conversion price was equal to the lower of (i) $15.00; or (ii) 80% of
the average of the last  reported  sales  prices of the Common Stock for the ten
trading days  immediately  preceding the date of  Conversion  (but not less than
$10.00) subject to certain  anti-dilution  adjustments.  The conversion price of
the preferred  stock was determined by an unrelated  third party placement agent
and was confirmed with the purchase of the  securities by unrelated  third party
accredited  investors.  There was no beneficial conversion feature as defined by
EITF 98-5.  Redemption  of the  Series A  Preferred  stock was at the  Company's
option, upon 30 to 60 days notice to the holders, at a redemption price equal to
$25 plus accrued and unpaid  dividends.  Quarterly  dividends which accrued from
the date of original  issue were payable in cash when  declared by the Company's
Board of  Directors.  Dividends in arrears as of December  31, 1999,  aggregated
$2,285.

In June of 2000, the Company retired the preferred shares issued in the December
1999  private  placement  for the same  price  at  which  they  were  issued  in
connection  with a sale by the Company and a purchase  by the  Investors  of two
properties located in Texas (see Note 3).

During 2000,  the Company  purchased  an  aggregate  of 507,550  shares from its
shareholders,  of which 10,000 were cancelled. The 507,550 shares were purchased
from  unrelated  third parties for an aggregate  cost to the Company of $913,998
(approximately $1.80 per share).  Despite valuations of $1.00 per share in 1999,
the Company was willing to pay approximately $1.80 per share because the Company
desired to reduce third party stock holdings  prior to a potential  listing on a
public  exchange.  (The  Company  had  recently  filed  an  amended  Form  10-SB
registration  statement and anticipated to be soon traded on a public exchange).
Moreover,  the fair value  determination  of $1.80 per share  reflects the value
agreed to by the unrelated  third party  shareholders.  In accordance  with GAAP
guidance (FTB 85-6)  regarding  the purchase of treasury  stock in excess of the
current market price, since there is no unstated  consideration  received by the
Company in addition to the treasury stock,  the entire purchase price ($1.80 per
share)  is  accounted  for as the cost of  treasury  shares.  As a result of the
retirement,  none of these unrelated third parties owns any Company stock,  with
the exception of one shareholder who still holds 35,000 shares.

In December 2000, the Company issued 30,000 shares of common stock In settlement
of $20,000 of accrued  liabilities.  The shares issued in this  transaction were
valued at $0.67/share  based on the fair value of  consideration  received (FASB
123). Under FASB 123 guidance,  the Company issued equity instruments to acquire
services from an unrelated third party.  The fair value  determination  of $0.67
per share to settle  accrued  liabilities  reflects  the value  agreed to by the
unrelated third party.

Also in December  2000, the Company issued 120,000 shares of its common Stock as
bonuses to certain employees.  The shares issued in this transaction were valued
at $0.67 per share (or an aggregate of $80,400) and were accounted for using the
fair value method at the date of  issuance.  This fair value  determination  was
made by the Company's  Board of Directors  and reflects the value  acceptable to


                                 -- Page 21 --
<PAGE>

the  employees  relating  to  bonuses  earned  in 1997 and  1998.  The  Board of
Directors  concluded  that  $0.67 per share was the fair  value of these  shares
because  that was the  value  acceptable  to the  unrelated  third  party in the
transaction  described in the preceding  paragraph,  whereby the Company  issued
30,000 shares of common stock to settle $20,000 of accrued liabilities.

NOTE 13 - INCOME TAXES:

The provision for income taxes on income from continuing  operations consists of
the following:


                                    3/31/01      3/31/00
                                  (Unaudited)  (Unaudited)
----------------------------------------------------------
Current tax expense ............   $   --     $   --

Deferred tax expense:
    Federal ....................        --         --
    State ......................        --         --
                                     ------     ------
                                        --         --
                                   ========   ========

No  provision  for income  taxes was made for the three  months  ended March 31,
2001.

The  following  is a summary  of the  significant  components  of the  Company's
deferred tax assets and liabilities:

                                    3/31/01      3/31/00
                                  (Unaudited)  (Unaudited)
--------------------------------------------------------
Deferred asset:
Net operating loss ............    $    --      $    --

Deferred liability:
Conversion of accrual to cash      (954,600)    (903,400)
                                   ----------   ----------

Net deferred liability ........    $(954,600) $ (903,400)
                                  ===========  ===========



NOTE 14 - COMMITMENTS AND CONTINGENCIES:

(a)  Consulting Agreements:

The Company has entered  into a  five-year  agreement  with a corporate  entity,
which owns 1,674,500  shares of the Company's  common stock,  for services to be
provided by an employee of this entity. This individual also serves as the Chief
Operating  Officer of the Company,  primarily  responsible  for  identifying and
consummating  new  acquisitions.  Under the terms of the  consulting  agreement,
which  commenced  August 1, 1998 and continues to July 31, 2003, the monthly fee
is $15,000 through  December 31, 1998, with annual increases of not less than 5%
effective in January of each year.  This  agreement is renewable  annually  upon
expiration, at similar terms.

(b)  Employment Agreements:

The Company has entered into a five-year employment agreement with an individual


                                 -- Page 22 --
<PAGE>

for his services as Chief Executive Officer.  The agreement  commenced August 1,
1998 and  continues  to July 31,  2003.  Under the terms of the  agreement,  the
monthly compensation is $15,500 through December 31, 1998, with annual increases
of not less than 5% effective in January of each year thereafter. The individual
has chosen to have such payments made to a corporation controlled by him.

(c)  Operating Deficit Guarantees:

The  Company,  through its General  Partner  subsidiaries,  is obligated to make
loans to various  Partnerships  as necessary to fund  operating  expenses,  debt
service  payments,   reserve  and  escrow  accounts,  capital  improvements  and
maintenance  expenses  that  occur  during  certain  periods,  as defined in the
Partnership  agreements.  Such  loans  bear no  interest  and are  repayable  in
accordance with the provisions of the Partnership Agreements.

The  operating  deficit  guaranty of $150,000 in the  Dallas/Glen  Hills limited
partnership was released in November of 2000.

In the TVMJG 1996 - Putnam  Square  limited  partnership,  the  General  Partner
provided an operating  deficit  guaranty in an unlimited amount until break-even
operations, defined in the partnership agreement as the date following the first
three  consecutive  months in which cash revenue exceeds  operational  expenses.
Upon  breakeven,  which  occurred on September 1, 2000,  the  operating  deficit
guaranty is limited to $60,000.  The guaranty is to be released five years after
breakeven, or September 1, 2005.

In the Middlebury Elkhart limited  partnership,  the General Partner provided an
operating  deficit guaranty in an unlimited amount until break-even  operations,
defined in the  partnership  agreement as the date following any month for which
revenues equal or exceed operating obligations.  Upon breakeven,  which occurred
on March 1, 1999,  the  guaranty is limited to  $120,000.  The guaranty is to be
released three years after Rental Achievement has been made. (Rental Achievement
occurs after three months in which (1) the permanent  financing phase has begun,
(2) legal occupancy is secured for all units,  and (3) at least 90% of the units
are occupied.)

(d)  Legal Matters:

In January  2001,  a mortgage  broker  commenced  an action  against the Company
alleging  damages in the  approximate  amount of $250,000 in claims of breach of
contract,  fraud and related  claims.  Counsel to the Company has answered  this
complaint  and the Company  intends to defend  itself  vigorously  against these
allegations.

A shareholder has demanded that the Company repurchase, at a substantial profit,
certain  shares of the Company's  stock that she purchased  approximately  three
years ago. She has alleged, though not yet in formal pleadings, that because the
Company has repurchased the shareholdings of other shareholders, it is obligated
to treat her in the same manner.  The Company  believes this position is without
legal  merit.  The Company has brought an action  against this  shareholder  for
repayment of a promissory  note  executed in the  Company's  favor.  The Company
anticipates that, if the Company's action is not resolved,  the shareholder will
assert a claim of entitlement to the  re-purchase of her shares.  In that event,
the Company will defend itself vigorously.

NOTE 15 - Change in Accounting Estimate

Beginning  in  2001  the  Company  changed  the  useful  life of its  West  Palm
Beach/Country  Lake and  Miami/Lake's  Edge  realty from 27 years to 40 years to
more  accurately   reflect  the  properties'   reasonable  useful  life.  Excess
depreciation  recorded  prior to 2001 in the amount of $353,652 ($.04 per share)
is being  amortized  over the  remaining  useful  life of 38 years.  This change
results in a cumulative  net income  adjustment of $2,327 ($.0003 per share) for
the three months ended March 31, 2001.


                                 -- Page 23 --
<PAGE>

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

2(a) Overview
-------------

Homes for America Holdings,  Inc. was organized on January 9, 1996 and commenced
operations  in  April  of 1996 as a real  estate  operating  company  formed  to
acquire,  develop,  rehabilitate and manage  Affordable  Housing and Market Rate
properties  throughout  the United  States.  Properties  are  purchased  through
traditional  methods of real  estate  financing  as well as through a variety of
government-sponsored  financing  arrangements  made  exclusively  available  for
Affordable Housing properties, including Tax Exempt Bonds and Low Income Housing
Tax  Credits.  The  Company's  portfolio  consists  of five  affordable  housing
properties and no market rate housing  properties.  The five affordable  housing
properties  are  Willow  Pond  (Dallas,   Texas),   Putnam  Square  (Bridgeport,
Connecticut),  Prairie Village (Elkhart, Indiana), Lake's Edge (Miami, Florida),
and Country Lake (West Palm Beach,  Florida).  Two previously owned  properties,
Royal Crest,  a Market Rate parcel of undeveloped  land in Arlington,  Texas and
Briar Meadows, a Market Rate housing property in Dallas, Texas were sold in June
of 2000.

Additionally,  the Company has entered into a purchase and sale  agreements  for
the Amalfi (formerly known as "Billy's Creek"). The Amalfi is a 2.83 acre parcel
of undeveloped,  non-operating  waterfront land in Fort Myers,  Florida on which
the Company plans to construct 118 Market Rate units.  Although no assurance can
be given, the Company expects that eventually approximately 70% of its portfolio
will be affordable housing and 30% will be market rate properties.

The Company generates revenue and profit from the net rental income derived from
its properties  and the  realization of  transactional  fees.  Rental income and
related  revenues  (vending,  parking,  late fees, etc.) result from the ongoing
operation of the Company's rental  properties.  Cash receipts from these sources
occur on a relatively steady basis throughout the year, though  fluctuations may
occur.  Depending  on whether the  property is owned  directly by the Company or
through a limited partnership,  the Company may earn various  transactional fees
associated with the acquisition, rehabilitation, management and possible sale of
its  properties.  These fees may include a Builders and Sponsors Profit and Risk
Allowance,  or  BSPRA,  Contractor's  Fee,  Acquisition  Fee,  Developer's  Fee,
Supervisor/Incentive  Management  Fee, and Management  Fee. The Company may also
generate revenue from the possible sale of its properties.

The  Company  was  formed in 1996.  In 1997,  the  Company  acquired  a 386-unit
affordable  housing property,  Willow Pond, in Dallas,  Texas. In November 1997,
the Putnam Square  apartment  complex in Bridgeport,  Connecticut  was acquired,
though  operations  there did not actually begin until January 1998. In December
1998,  the Company  acquired  three  additional  properties:  the 118-unit Briar
Meadows apartments in Dallas,  Texas; a 120-unit  affordable housing property in
Elkhart,  Indiana,  and the 17.7 acre Arlington,  Texas site,  where approval to
construct 210 market rate units was secured. In June, 1999, the Company acquired
the 400-unit Lake's Edge apartments in North Miami,  Florida.  In November 1999,
the Company  acquired the 192-unit  Country Lake  apartments in West Palm Beach,
Florida. On June 30, 2000, Arlington/Royal Crest (land) and Dallas/Briar Meadows
were sold.

                                 -- Page 24 --
<PAGE>

The following  discussion  should be read in conjunction  with the  consolidated
financial  statements  appearing in Part I, Item 1 of this form.  In  accordance
with SFAS 131, the Company  aggregates the  operations of its various  operating
properties  into a single  segment for  financial  reporting  purposes.  Certain
statements in this "Management's  Discussion and Analysis of Financial Condition
and Results of  Operations"  and elsewhere in this form may  constitute  forward
looking  statements  within the meaning of Section 27A of the  Securities Act of
1933 and  Section  21E of the  Securities  Exchange  Act of 1934.  Although  the
Company  believes  that  the  expectations  reflected  in such  forward  looking
statements are based on reasonable  assumptions,  such statements are subject to
risks and  uncertainties  that could cause  actual  results to differ from those
projected.  Moreover, as we have been in operation only since 1996, there can be
no  assurance  we  will  continue  to be a  commercially  viable  or  profitable
business. We have a limited operating history and there can be no assurance that
we will be successful in the future.


2(b) Results of  Operations  for the  Three  Months  Ended  March 31,  2000
     Compared to March 31, 2001
--------------------------------------------------------------------------------

2(b)(i) Revenues
----------------

Revenues  of  $2,260,338  for the three  months  ended  March 31, 2000 are fully
reported in the Consolidated  Statement of Operations,  and reflect three months
of rental and other operating income from seven properties:  Dallas/Willow Pond,
Bridgeport/Putnam Square,  Elkhart/Prairie Village, Miami/Lake's Edge, West Palm
Beach/Country Lake, Dallas/Briar Meadows and Arlington/Royal Crest (land).

Revenues of $2,364,237 for the three months ended March 31, 2001, an increase of
$103,899 (4.7%) from the same period in 2000, are fully reported in the attached
Consolidated  Statement of  Operations  and reflect  rental and other  operating
income from the following five properties: Dallas/Willow Pond, Bridgeport/Putnam
Square,  Elkhart/Prairie Village,  Miami/Lake's Edge and West Palm Beach/Country
Lake.


2(b)(ii) Expenses
-----------------

Expenses  of  $2,550,214  for the three  months  ended  March 31, 2000 are fully
reported in the attached Consolidated Statement of Operations, and reflect three
months   of   operating   costs  at  seven   properties:   Dallas/Willow   Pond,
Bridgeport/Putnam   Square,    Elkhart/Prairie   Village,   Miami/Lake's   Edge,
Dallas/Briar  Meadows and  Arlington/Royal  Crest  (land),  as well as corporate
administrative expenses.

Expenses of $2,493,881  for the three months ended March 31, 2001, a decrease of
$56,333  (2.2%) from the same period in 2000, are fully reported in the attached
Consolidated  Statement of  Operations,  and include the costs of operating five
properties:   (Dallas/Willow  Pond,  Bridgeport/Putnam  Square,  Elkhart/Prairie
Village,  Miami/Lake's  Edge  and  West  Palm  Beach/Country  Lake),  as well as
corporate administrative expenses.

Depreciation  and  amortization of $411,707 for the three months ended March 31,
2000 reflect three months of expenses on seven properties:  Dallas/Willow  Pond,
Bridgeport/Putnam   Square,    Elkhart/Prairie   Village,   Miami/Lake's   Edge,
Dallas/Briar  Meadows  and  Arlington/Royal   Crest  (land).   Depreciation  and
amortization  of $373,201  for the three months ended March 31, 2001, a decrease
of $38,506 (9.4%) over the same period in 2000, reflect three months of expenses


                                 -- Page 25 --
<PAGE>

on   five   properties:    Dallas/Willow   Pond,    Bridgeport/Putnam    Square,
Elkhart/Prairie Village, Miami/Lake's Edge and West Palm Beach/Country Lake. See
Note 15 regarding change in depreciable lives in 2001.

The Company utilizes accelerated methods of depreciation over five (5) and seven
(7) year life for personal property.  Realty is depreciated by the straight-line
method over 40 years.

Interest  expenses of $680,570 for the first three months of 2000 reflects three
months   of   interest   incurred   seven   properties:    Dallas/Willow   Pond,
Bridgeport/Putnam   Square,    Elkhart/Prairie   Village,   Miami/Lake's   Edge,
Dallas/Briar  Meadows  and  Arlington/Royal  Crest  (land),  as well as interest
incurred on debt at the corporate level.  Interest  expenses of $710,081 for the
first three months of 2001,  an increase of $29,511  (4.3%) from the same period
in 2000,  include  interest  related to the  mortgages on five of the  Company's
properties  (Dallas/Willow  Pond,   Bridgeport/Putnam  Square,   Elkhart/Prairie
Village,  Miami/Lake's  Edge and West Palm  Beach/Country  Lake),  and  interest
incurred on debt at the corporate level.


2(b)(iii) Liquidity and Capital Resources
-----------------------------------------

Unrestricted  cash on hand was  $662,823 at March 31, 2000 and $339,513 at March
31,  2001,  a  decrease  of  $323,310   (48.8%).   This  decrease  is  primarily
attributable  to  continued   investments  in  real  property  improvements  and
pre-acquisition  costs. (Please see the Consolidated  Statement of Cash Flows in
Part I, Item 1.)

Liquidity  demands on a short-term  basis tend to fluctuate  with the  Company's
acquisition  cycles.  Typically,  when the Company  acquires new properties,  it
incurs significant  expenditures,  including  pre-acquisition costs (such as due
diligence  expenses and deposits on new  acquisitions)  and  acquisition  costs.
Subsequently,  the Company receives fees and  reimbursements  earned at closing,
and working  capital is  replenished.  Long-term  demands on  liquidity  include
working capital to develop and support the Company  infrastructure  and multiple
simultaneous transactions in the future, as well as mortgages,  bonds, and notes
payable, interest payable, taxes payable, and capitalized leases payable. Future
growth  depends  upon the  Company's  ability  to  secure  adequate  capital  to
consummate  acquisitions.  While there can be no  guarantee  that these  capital
needs  will be met,  the  Company  believes  that  bond  financing,  sale of tax
credits,  stock issues and traditional sources of equity and debt financing will
be adequate to meet its capital requirements.

In addition to the impact of the Company's  acquisition cycles on short and long
term  liquidity,  there are a number of  factors  that  could  have an impact on
liquidity.  The  rise and fall of  interest  rates  and the  ability  to  obtain
mortgages with favorable  terms could have a considerable  impact on our ability
to purchase,  sell, or refinance assets. An economic  recession could affect our
ability to rent apartments.  Finally,  increases in insurance rates,  utilities,
and taxes could also have a material impact on liquidity.

There are a number of known events that have or are reasonably  likely to have a
material  impact on  short-term or long-term  liquidity,  including the sales of
Dallas/Briar   Meadows  and  Arlington/Royal   Crest  (land)  and  the  proposed
acquisition of Fort Myers/Amalfi (formerly "Fort Myers/Billy's Creek").


SALE OF ARLINGTON/ROYAL CREST (LAND) AND DALLAS/BRIAR MEADOWS

On June 30, 2000,  the Company  sold  Dallas/Briar  Meadows and  Arlington/Royal
Crest  (land)  (See  Part I,  Item 1,  Note 3  Discontinued  Operations/Sale  of


                                 -- Page 26 --
<PAGE>

Assets.)  Operations  of these  subsidiaries  ceased  June 30,  2000.  The Briar
Meadows and Arlington  properties were sold for a purchase price of $4.8 million
to a group of holders  (collectively,  the "Investors") of certain common stock,
preferred stock, warrants, and promissory notes issued by the Company.

The two properties were sold for consideration of:

(a)  The Investors'  assumption of the mortgage  obligations on the  properties:
     $1.5 million for Briar  Meadows and $1.2 million for Royal Crest,  totaling
     $2.7 million;

(b)  The  Investors'  surrender  and release to the Company of all common  stock
     (valued at  $461,093)  preferred  stock  (valued at  $1,618,855),  warrants
     (valued at  $645,052)  and  promissory  notes issued to them by the Company
     (valued at $575,000), valued collectively at $3.3 million, and;

(c)  The Company's  issuing to the Investors a new promissory note in the amount
     of $1.2  million  bearing  interest at 9.5% per annum with a March 15, 2001
     maturity date.  Subsequent to March 31, 2001, this note was paid in full in
     July of 2001.

The Company reported a net gain of $330,202 on the sale of these assets in 2000,
calculated as follows:

                                  Arlington/      Dallas/
                                  Royal Crest     Briar Meadows     TOTAL
-------------------------------------------------------------------------------
Carrying Value ..............     $ 2,683,171      $ 1,626,627     $ 4,309,798
Sale Proceeds (Fair Value)...      (1,800,000)      (3,000,000)     (4,800,000)
                                  -----------      -----------      -----------
(Gain) Loss .................         883,171       (1,373,373)       (490,202)
Tax .........................            --            160,000         160,000
                                  -----------      -----------      -----------
Net (Gain) Loss .............     $   883,171      $(1,213,373)     $ (330,202)
                                  ===========      ===========      ===========

Please see Part I, Item 1, Note 3: Discontinued  Operations - Sale of Assets for
further detail.


PROPOSED ACQUISITION OF THE AMALFI

The Company  anticipates  total capital  expenditures  for the  acquisition  and
development of Fort Myers/The  Amalfi (formerly "Fort  Myers/Billy's  Creek") of
$30,748,287,  including a purchase price for the vacant,  non-operating  land of
$1,320,000,  unit construction  costs of $16,328,250,  miscellaneous  site work,
common area and parking construction costs of $2,921,560,  architect/engineering
costs of $577,494,  general conditions of $1,031,717,  an Insurance/Bonds/Profit
to Builder of $2,028,153,  interest of 2,730,132,  and sales/marketing  costs of
$3,810,981.  The Company anticipates securing  approximately 90% financing:  80%
from a  construction  loan  of  $24,598,287,  and  9.8%  from a  $3,000,000  tax
increment rebate. The Company anticipates investing, or joining in a partnership
for an  equity  investment  of,  approximately  10.2%  equity  in the  deal,  or
$3,150,000, from Company funds.


                                 -- Page 27 --
<PAGE>


                                    PART II
================================================================================

1.  LEGAL PROCEEDINGS
--------------------------------------------------------------------------------

The Company is not a party to any material legal proceedings.


2.  CHANGES IN SECURITIES
--------------------------------------------------------------------------------

(a) NONE
(b) NONE
(c) NONE


3.  DEFAULTS UPON SENIOR SECURITIES
--------------------------------------------------------------------------------

NONE


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

NONE


5.  OTHER INFORMATION
--------------------------------------------------------------------------------

NONE


6.  EXHIBITS AND REPORTS OF FORM 8-K
--------------------------------------------------------------------------------

(a)  EXHIBITS

NONE

(b)  REPORTS ON FORM 8-K

NONE



                                 -- Page 28 --
<PAGE>


                                 SIGNATURE PAGE
================================================================================



In accordance with the  requirements of the Exchange Act, the registrant  caused
this  form  to be  signed  on its  behalf  by the  undersigned,  thereunto  duly
authorized.



                    Homes For America Holdings, Inc.
                    --------------------------------
                    (Registrant)


                    By:    /s/ Robert A. MacFarlane
                    --------------------------------
                    Name:  Robert A. MacFarlane
                    Title: President


                    July 15, 2002
                    --------------------------------
                    Dated





                                 -- Page 29 --