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, 2002.

                           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, 2002,  there were  8,310,031  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, 2002 AND 2001 (UNAUDITED) ........1

a.   Consolidated Balance Sheets as of March 31, 2002 and 2001 .............1
b.   Consolidated  Statements of Operations for the three
     months ended March 31, 2002 and 2001 ..................................3
c.   Consolidated  Statements of Changes in  Shareholders'
     Equity for the three months ended March 31, 2002 and 2001 .............4
d.   Consolidated  Statements of Cash Flows for the three
     months ended March 31, 2002 and 2001 ..................................5
e.   Notes to Interim Consolidated Financial Statements ....................6


2.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
     CONDITION AND RESULTS OF OPERATIONS ...................................25

a.   Overview ..............................................................25
b.   Results of Operations for the Three Months Ended
     March 31, 2001 Compared to March 31, 2002 .............................26
     i.   Revenues .........................................................26
     ii.  Expenses .........................................................26
     iii. Liquidity and Capital Resources ..................................27


PART II
-------

1.   LEGAL PROCEEDINGS .....................................................30

2.   CHANGES IN SECURITIES .................................................30

3.   DEFAULTS UPON SENIOR SECURITIES .......................................30

4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ...................30

5.   OTHER INFORMATION .....................................................30

6.   EXHIBITS AND REPORTS OF FORM 8-K ......................................30


SIGNATURE PAGE .............................................................31


<PAGE>


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


1.   CONSOLIDATED FINANCIAL  STATEMENTS  FOR THE  COMPANY  FOR THE  THREE  MONTH
     PERIODS ENDED MARCH 31, 2002 AND 2001 (UNAUDITED)
--------------------------------------------------------------------------------



                        HOMES FOR AMERICA HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
      FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2002 AND 2001 (UNAUDITED)

                                   - ASSETS -


                                                       Three Months Three Months
                                                           Ended        Ended
                                                         3/31/02       3/31/01
                                                       (Unaudited)   (Unaudited)
--------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents .............................. $  195,914  $   339,513
Accounts receivable - tenants (Note 2l) ................     88,097       84,272
Accounts receivable - other fees (Note 2l) .............  1,555,051      689,374
Restricted deposits and funded reserves -
current (Note 6) .......................................  1,520,137      816,346
Prepaid expenses and other current assets ..............     86,607       69,800
Due from officer (Note 3) ..............................     54,540       50,500
                                                        -----------  -----------
TOTAL CURRENT ASSETS ...................................  3,500,346    2,049,885
                                                        -----------  -----------

INVESTMENTS IN REAL ESTATE - NET (Notes 2a, 2g, 4 and 7) 45,953,491   39,587,933
                                                        -----------  -----------

FIXED ASSETS - NET (Notes 2g and 5) ....................     26,734       43,873
                                                        -----------  -----------

OTHER ASSETS:
Restricted deposits and funded reserves (Note 6) .......    639,553      782,606
Deferred financing costs - net (Note 2h) ...............  2,249,275    1,139,951
Deferred asset management fee - net (Note 2i) ..........     67,950       70,079
Pre-acquisition costs (Note 2j) ........................  1,293,094    1,337,021
Other assets ...........................................      9,702        6,059
                                                        -----------  -----------
                                                          4,259,574    3,335,716
                                                        -----------  -----------
                                                        $53,740,145  $45,017,407
                                                        ===========  ===========

See Accompanying Notes.

                                  -- Page 1 --
<PAGE>



                    - LIABILITIES AND SHAREHOLDERS' EQUITY -


                                                       Three Months Three Months
                                                           Ended        Ended
                                                         3/31/02       3/31/01
                                                       (Unaudited)   (Unaudited)
--------------------------------------------------------------------------------

CURRENT LIABILITIES:
Lines of credit - bank (Note 8) ..................  $     --      $    570,000
Accounts payable and accrued expenses ............     818,814       1,636,727
Tenants security deposits ........................     440,876         356,972
Unearned rent (Note 2l) ..........................      70,657          99,181
Current portion - liabilities applicable to
investments in real estate (Note 7) ..............   1,334,220       3,001,800
Current portion - notes payable (Note 21) ........     158,563         602,872
Income taxes payable (Note 11) ...................       5,000         177,000
Deferred repair expenses .........................      30,000            --
Due to minority partners (Note 17) ...............     154,523            --
                                                  ------------    ------------
TOTAL CURRENT LIABILITIES ........................   3,012,653       6,444,552
                                                  ------------    ------------


LONG-TERM LIABILITIES - NET OF CURRENT PORTION:
Liabilities applicable to investments in
real estate (Note 7) .............................  46,646,535      34,452,534
Notes payable  (Note 21) .........................      64,006            --
Deferred income taxes (Notes 2k and 11) ..........     547,174         954,600
                                                  ------------    ------------
                                                    47,257,715      35,407,134
                                                  ------------    ------------

MINORITY INTERESTS IN SUBSIDIARIES (Note 9) ......     219,705         662,014
                                                  ------------    ------------

COMMITMENTS AND CONTINGENCIES (Note 12)

SHAREHOLDERS' EQUITY (Note 10):

Common stock; $.001 par value; 25,000,000
shares authorized, 8,310,031 and
8,702,131 shares issued and outstanding in 2002
and 2001, respectively ...........................       8,310           8,702

Additional paid-in capital .......................   1,230,848       1,230,848
Retained earnings ................................   2,954,510       2,163,878
Treasury stock, at cost ..........................    (943,596)       (899,721)
                                                  ------------    ------------
                                                     3,250,072       2,503,707

                                                  $ 53,740,145    $ 45,017,407
                                                  ============    ============

See Accompanying Notes.

                                  -- Page 2 --
<PAGE>


                        HOMES FOR AMERICA HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
      FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2002 AND 2001 (UNAUDITED)

                                                       Three Months Three Months
                                                           Ended        Ended
                                                         3/31/02       3/31/01
                                                       (Unaudited)   (Unaudited)
--------------------------------------------------------------------------------
REVENUES:
Rental income (Note 2l) ..............................$ 2,475,856  $ 2,252,424
Real estate development fees, subsidies
   and other income (Notes 14 and  15). ..............    118,824       100,000
Interest income ......................................      4,070        11,903
                                                        ---------     ---------
                                                        2,598,750     2,364,327

EXPENSES:
Administrative expenses ..............................    469,134       486,019
Maintenance and operating costs .....................     436,020       409,787
Utilities ............................................    223,676       271,281
Taxes and insurance ..................................    439,578       243,512
Interest expense .....................................    959,778       710,081
Depreciation and amortization (Note 13)...............    427,643       373,201
                                                        ---------     ---------
                                                        2,955,829     2,493,881
                                                        ---------     ---------
INCOME (LOSS) BEFORE MINORITY INTERESTS AND
PROVISION FOR INCOME TAXES ...........................   (357,079)     (129,554)

Minority interests in net loss of consolidated
subsidiaries (Note 9) ................................    207,222       143,810
                                                        ---------     ---------

INCOME (Loss) BEFORE PROVISION FOR INCOME TAXES ......   (149,857)       14,256

Provision for income taxes-current (Note 11) .........         --            --
Provision (benefit) for income taxes-deferred (Note 11)    56,043            --
                                                        ---------      --------

NET INCOME (Loss)..................................... $ (205,900)   $   14,256
                                                        ---------      --------

BASIC AND DILUTED INCOME (LOSS) PER SHARE (Note 2m)
Continuing operations ................................ $  (0.0247)   $   0.0016
                                                        ---------     ---------
Discontinued operations .............................. $   0.0000    $   0.0000
                                                        ---------     ---------
                                                       $  (0.0247)   $   0.0016
                                                       ===========    =========


See Accompanying Notes.

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

Cancellation of shares ........................       --           (392)          --             --            --              (392)

Purchase of shares for treasury ...............       --            --            --             --         (48.753)        (48,753)

Net Income (Loss) .............................       --            --            --        1,010,787          --         1,010,787
                                                  ---------   -----------   -----------    -----------   -----------    -----------

Balance at December 31, 2001 ..................       --     $    8,310    $ 1,230,848    $ 3,160,410  $   (933,596)     $3,465,972

Purchase of treasury stock ....................       --            --            --             --          (10,000)       (10,000)

Net Income (Loss) .............................       --            --            --         (205,900)         --          (205,900)

                                                  ---------   -----------   ------------    ----------   -----------    ------------
Balance at March 31, 2002 .....................       --    $     8,310   $  1,230,848    $ 2,954,510   $  (943,596)     $3,250,072
                                                  =========   ===========   ===========    ===========    ===========    ===========


</TABLE>
See Accompanying Notes.


                                  -- Page 4 --
<PAGE>
                        HOMES FOR AMERICA HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
      FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2002 AND 2001 (UNAUDITED)

                                                       Three Months Three Months
                                                           Ended        Ended
                                                         3/31/02       3/31/01
                                                       (Unaudited)   (Unaudited)
--------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (Loss)...................................    $ (205,900)  $   14,256
Adjustments to reconcile net income (loss) to net cash
Provided (used) by operations:
Depreciation and amortization ......................       427,643      373,201
Minority interests .................................      (207,222)    (143,810)
Deferred income taxes ..............................        56,046           --
Decrease in discontinued subsidiary liabilities.....            --      (57,706)
(Increase) decrease in assets:
Accounts receivable - tenants ......................        (3,893)       3,446
Accounts receivable - other ........................       (92,853)     (50,216)
Prepaid expenses and other current assets ..........       (36,281)     249,273
Operating and debt service reserves ................      (188,378)    (545,924)
Other assets .......................................            --       78,606
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities ...........        80,700       86,699
Tenant security deposits ...........................        22,887      (17,742)
Unearned rent ......................................            --        3,991
Deferred repair expenses.......... .................       (79,609)          --
Short term operating real estate liabilities .......      (416,773)      99,634
                                                         ----------   ----------
Net cash provided (used) by operating activities          (643,633)      93,708
                                                         ----------   ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real property ........................    (1,568,080)    (290,898)
Withdrawals from (additions to) replacement
reserves, net ......................................        58,444      424,484
Pre-acquisition costs, net of reimbursements........      (267,256)      62,868
                                                         ----------   ----------
Net cash provided(used) by investing activities ....    (1,776,892)     196,454
                                                         ----------   ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury shares ........................       (10,000)     (14,878)
Net decrease in notes payable ......................       (95,199)    (503,718)
Net proceeds (payments) on line of credit...........      (250,000)     250,000
Mortgage principal payments ........................       (96,286)          --
Proceeds from land acquisition loan.................     1,750,000           --
Payments for financing costs .......................      (192,700)          --
                                                        ----------    ----------
Net cash provided (used) by financing activities....     1,105,815     (268,659)
                                                         ----------   ----------

NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS.    (1,314,710)      21,503

Cash and cash equivalents, beginning of period......     1,510,624      318,010
                                                        ----------    ----------

CASH AND CASH EQUIVALENTS, END OF PERIOD............    $  195,914   $  339,513
                                                        ==========    =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION,
Interest paid ......................................    $  906,309   $  718,750
                                                        ==========    =========

See Accompanying Notes.

                                  -- Page 5 --
<PAGE>



                        HOMES FOR AMERICA HOLDINGS, INC.
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                  (INFORMATION AS OF AND FOR THE PERIODS ENDED
                      MARCH 31, 2002 AND 2001 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
rental or  condominium  units;  and (c)  acquiring  multi-use  residential  real
estate. As to the Affordable  Housing portion of the portfolio,  the Company may
sell  limited  partnership  interests  through  newly formed  subsidiaries.  The
limited  partnership   interests  are  purchased  by  third  party  real  estate
syndicators  (the "minority  interest")  primarily for the Section 42 tax credit
benefits and tax losses generated for their investors.

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

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

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

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

(viii) Homes For America Real Estate Services, Inc., a Texas Corporation ("RES")

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

(x)  Briar  Meadows/Homes  for  America,   Inc.,  a  Texas  Corporation  ("Briar
     Meadows") (dissolved in 2001)

(xi) Arlington/Homes  for  America,  Inc.,  a  Texas  Corporation  ("Arlington")
     (dissolved in 2001)

(xii)MD-BI, LLC, a Delaware Corporation, formed in connection with the mezzanine
     loans made on the Lake's Edge and Country Lake properties, and

(xiii) MD-MGR,  Inc.,  a Delaware  Corporation,  formed in  connection  with the
     mezzanine loans made on the Lake's Edge and Country Lake properties.

                                  -- Page 6 --
<PAGE>

(xiv)Beau Rivage Homes for America,  LLC, a Florida  limited  liability  company
     ("Beau  Rivage"),  formed to  develop  and  operate a 21 story  condominium
     project in Ft. Myers, Florida


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. The Lakes
Edge property, a 400-unit affordable 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.

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
housing 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


                                  -- Page 7 --
<PAGE>

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  distributable  cash flow, giving it a dominant financial interest
in the  partnership.  In addition to the general  partner's  dominant  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 exclusively  manage the affairs
of the partnership give the general partner control over the partnership.

Middlebury Elkhart, L.P.:

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 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 a  dominant  financial  interest  in  the
partnership.  In addition to the general partner's dominant 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  exclusively  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 a dominant  financial
interest in the  partnership.  In addition  to the  general  partner's  dominant
financial interest, its sole involvement in and responsibility for the financial
policies and day-to-day operations of the


                                  -- Page 8 --
<PAGE>

property and the rights  granted by the  partnership  to the general  partner to
exclusively  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 partnership  agreement was amended on December 1, 2001
to  provide  for  the  withdrawal  of  the  existing  general  partner  and  the
contribution  of capital  and the  admittance  of the new general  partner,  St.
Charles Homes for America,  Inc., a wholly owned subsidiary of the Company.  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
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 a dominant financial  interest in the partnership.  In addition to the
general  partner's  dominant  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(l) (Revenue  Recognition),  all fees paid to the
general partner have been eliminated upon consolidation.


NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a)      Real Estate

Real estate is recorded at cost. Costs related to the acquisition,  development,
construction and improvement of properties are  capitalized.  Interest costs are
capitalized until construction is substantially complete.  During 2001, $452,775
of interest  was  capitalized  related to the  rehabilitation  of Lakes Edge and
Country Lakes. No interest was  capitalized  during the first quarter of 2002 as
the  rehabilitations  were  substantially  completed.  When retired or otherwise
disposed of, the related  asset cost and  accumulated  depreciation  are removed
from the respective  accounts and the net  difference,  less any amount realized
from disposition,  is reflected in income. Ordinary repairs and maintenance that
do not extend the life of the asset are expensed as incurred.


(b)      New Accounting Pronouncements

The  Company  has  adopted  Statement  of  Financial  Accounting  Standards  No.
133--Accounting for Derivative  Instruments and Hedging Activities (SFAS 133) as


                                  -- Page 9 --
<PAGE>

of  January 1, 2001.  The  Company  owns no  derivative  instruments  and is not
involved in hedging  activities,  thus the  adoption of SFAS 133 has not had any
impact on the  Company's  financial  position,  results of  operations,  or cash
flows.

On June 29, 2001,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial  Accounting  Standards  No.  141 (SFAS  141),  Business
Combinations,  and No. 142 (SFAS 142), Goodwill and Other Intangible Assets. The
provisions of SFAS 141 require the use of purchase  accounting  for all business
combinations and the separate  allocation of purchase price to intangible assets
if specific  criteria are met. The  provisions of SFAS 142 provide that goodwill
and intangible  assets with indefinite  useful lives should not be amortized but
rather  tested at least  annually for  impairment.  Intangible  assets that have
finite useful lives should continue to be amortized over their estimated  useful
lives.  SFAS 142 also  provides  specific  guidance  for  testing  goodwill  and
intangible  assets for  impairment.  The Company does not anticipate  that these
standards  will have a  material  impact on the  Company's  financial  position,
results of  operations,  or cash flows.  The provisions of SFAS 141 apply to all
business  combinations  initiated  after June 30, 2001.  The Company has adopted
SFAS 142 effective January 1, 2002.

In October 2001, the FASB issued Statement of Financial  Accounting Standard No.
144,  "Accounting  for the Impairment or Disposal of Long-Lived  Assets",  which
addresses  financial  accounting and reporting for the impairment or disposal of
long-lived assets.  This standard  harmonizes the accounting for impaired assets
and  resolves  some of the  implementation  issues of SFAS 121.  It retains  the
fundamental  provisions of Statement 121 for (a)  recognition and measurement of
the impairment of long-lived  assets to be held and used and (b)  measurement of
long-lived  assets  to be  disposed  of by  sale.  It  also  retains  the  basic
provisions for presenting  discontinued  operations in the income  statement but
broadens the scope to include a component of an entity  rather than a segment of
a business. The Company has adopted this standard effective January 1, 2002. The
Company  does not expect  this  pronouncement  to have a material  impact on the
Company's financial position, results of operations, or cash flows.

(c)      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  partnerships in which a subsidiary of
the Company is the general partner).  While the general partners are 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 in
excess of 75%, giving them a dominant financial interest in the partnerships. In
addition to the  general  partners'  dominant  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  exclusively  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 9 regarding Minority Interests.

All material  intercompany  balances and  transactions  have been  eliminated in
consolidation.

(d)      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


                                 -- Page 10 --
<PAGE>

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.

(e)      Statements of Cash Flows:

For purposes of the statements of cash flows,  the Company  considers all highly
liquid  investments  purchased with a remaining maturity of three months or less
to be cash equivalents.

(f)      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.

(g)      Property and Equipment:

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

                  Buildings and improvements                    27.5--40 years
                  Furniture and equipment                       5--10 years
                  Land improvements                             15 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,  2002  and  2001   totaled   $398,232  and  $356,619
respectively.

(h)      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. When a permanent loan is refinanced,  all remaining unamortized
costs  related to the  previous  financing  are charged to expense.  Accumulated
amortization  as of March 31, 2002 and 2001  aggregated  $179,674 and  $157,375,
respectively.  Amortization  expense for the three month periods ended March 31,
2002 and 2001 aggregated $27,282 and $14,453, respectively.

(i)      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 as of March 31, 2002 and 2001  aggregated  $42,806 and
$34,290,  respectively.  Amortization  expense for the three month periods ended
March 31, 2002 and 2001 totaled $2,129.

(j)      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 Emerging Issues Task Force 97-11,  internal costs associated with identifying


                                 -- Page 11 --
<PAGE>

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.

At March 31, 2002 and 2001, the Company's  pre-acquisition costs were as follows
with respect to the pending acquisition of the following properties:

                                            3/31/02      3/31/01
                                           (Unaudited)  (Unaudited)
-------------------------------------------------------------------
Billy's Creek, Florida ....................  $   --       $ 258,531
Brick Yard, New York ......................   203,119       122,449
Amherst Gardens, New York .................   129,378       113,587
Yonkers Waterfront, New York ..............   729,373       245,711
Odessa, Texas .............................      --          25,000
Lake Crystal, Florida .....................      --         118,636
Villa Americana, Texas ....................   199,159       200,458
Haverford, Kentucky .......................      --         152,714
Mandarin Pines, Florida ...................      --          61,734
Elkhart, Indiana ..........................    31,932         --
Seven Oaks, Virginia ......................      --          38,200
Kew Gardens, New York .....................       133         --
                                          -----------   -----------
                                           $1,293,094   $ 1,337,020
                                          ===========   ===========

(k)      Income Taxes:

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.

(l)      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  Section  42 tax  credits  and tax losses
generated  by  depreciation.   The  limited  partner,   by  making  its  capital
contribution,  is eligible for a  proportionate  share of these  credits and tax
losses 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


                                 -- Page 12 --
<PAGE>

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.  Under
consolidation such a fee would normally be eliminated.  However,  fees paid from
the partnership to the general  partner as an expense to the partnership  result
in substantive  increases 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 75% 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.


(m)      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:


                                                  3/31/02      3/31/01
                                               (Unaudited)  (Unaudited)
------------------------------------------------------------------------
Basic/diluted earnings per share:
  Income from continuing operations .........    $ (205,900)   $  14,256
  Less:  Preferred stock dividend requirement          --           --
                                                 ----------   ----------
Income from continuing operations
  available to common shareholders ..........    $ (205,900)  $   14,256
                                                 ==========   ==========

Weighted average common stock
  outstanding for basic earnings per share ..     8,310,031    8,702,131
Assumed conversion of cheap warrants ........          --           --
Assumed conversion of convertible
  preferred stock ...........................          --           --
                                                 ----------   ----------
Weighted average common stock
  outstanding for diluted earnings per share      8,310,031    8,702,131
                                                  =========    =========

(n)      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, were reflected under the equity method of accounting.
As of December 31, 2000, the Company's investment had been written down to $-0-.


                                 -- Page 13 --
<PAGE>


(o)      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.

The partnership  estimates that the fair value of all its financial  instruments
does  not  differ  materially  from  their  aggregate  carrying  values  in  the
accompanying  balance  sheets.  The  estimated  fair  value  amounts  have  been
determined by the partnership using available market information and appropriate
valuation  methodologies.  Considerable  judgment  is  necessarily  required  in
interpreting   market  data  to  develop  the  estimates  of  fair  value,  and,
accordingly,  the estimates are not  necessarily  indicative of the amounts that
the  Partnership  could  realize  in a  current  market  exchange.  None  of the
financial instruments are held for trading purposes.

(p)      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
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 was 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.

(q)      Reclassifications:

Certain  reclassifications  have been made to the 2001  financial  statements to
correspond to the presentation used in the 2002 statements.

(r)      Interim Financial Information:

The interim financial data as of March 31, 2002 and 2001 and for the three month
periods ended March 31, 2002 and 2001 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, 2001.


                                 -- Page 14 --
<PAGE>


NOTE 3--DUE FROM OFFICER:

As of March 31, 2002, an officer had an outstanding  loan payable to the Company
in the amount of  $54,540.  This loan is due on demand and bears  interest at an
annual rate of 8%.


NOTE 4--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:

                                                      3/31/02          3/31/01
                                                    (Unaudited)      (Unaudited)
-------------------------------------------------------------------------------
Buildings and improvements ....................     $40,192,834  $ 31,857,086
Furniture, fixtures and equipment .............       3,315,222     3,049,264
Construction in progress ......................             --      3,032,249
                                                      ---------     ---------
                                                     43,508,056    37,938,599
Less: accumulated depreciation                       (5,581,335)   (3,439,230)
                                                     ----------    ----------
                                                     37,926,721    34,499,369
Land ....................................... ...      8,026,770     5,088,564
                                                      ---------     ---------
                                                   $ 45,953,491  $ 39,587,932
                                                     ==========    ==========


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 to
determine  if there  has been  any  impairment  of  those  carrying  values.  If
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 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.

(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  markets.  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 has established a
     variety of renovation and rehabilitation escrows for 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.

                                 -- Page 15 --
<PAGE>

(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,  the  Company's  policy is 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, 2002, there has been no such impairment.

NOTE 5--FIXED ASSETS:

Fixed assets consist of the following:

                                    3/31/02      3/31/01
                                  (Unaudited)  (Unaudited)
----------------------------------------------------------
Office equipment .............     $ 89,500    $ 89,500
Less: accumulated depreciation      (62,766)    (45,626)
                                    -------     -------
                                   $ 26,734    $ 43,874
                                   ========    ========

See also Note 4 regarding impairment.

NOTE 6--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, 2002 and 2001,  restricted deposits and funded reserves consist of the
following:


                                           3/31/02       3/31/01
                                         (Unaudited)   (Unaudited)
----------------------------------------------------------------------

CURRENT ASSETS:
Operating and debt service reserves .....$1,490,137   $  816,346

OTHER ASSETS:
Replacement and rehabilitation reserves..   639,553      782,606
                                         ----------   ----------
TOTAL ...................................$2,159,690   $1,598,952
                                         ==========   ==========


                                 -- Page 16 --
<PAGE>

NOTE 7--LIABILITIES APPLICABLE TO INVESTMENTS IN REAL ESTATE:

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


                                            3/31/02          3/31/01
                                          (Unaudited)      (Unaudited)
-----------------------------------------------------------------------
Mortgage loans payable .................   $ 21,562,552    $ 11,230,004
Bond mortgage loans payable ............     25,513,723      25,623,014
.........................................   ------------    ------------
Total mortgages and bonds payable ......     47,076,275      36,853,018
Less: Non-current portion ..............    (46,623,416)    (34,452,434)
.........................................   ------------    ------------
Current portion of long term debt ......        452,859       2,400,584
Accrued interest payable ...............        390,272         133,243
Accrued Real estate taxes and insurance         491,089         468,073
                                           ------------    ------------
Current portion - liabilities applicable
to real estate .........................   $  1,334,220    $  3,001,800
                                           ============    ============


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 of $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
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. As of March 31, 2002, the
Partnership  has not  had  sufficient  operating  cash  flow  to make  principal
payments.  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


                                 -- Page 17 --
<PAGE>

is  payable  from cash flow as defined in the  partnership  agreement.  The note
matures on December 31, 2006, and is unsecured.

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 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.

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
on December 5, 2001 from proceeds of the Lakes Edge Mezzanine  Loan  transaction
described below.

Country Lakes entered into a loan agreement with a financial  institution  for a
term loan in the amount of $2,540,000. Interest on this loan accrues 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 described below.

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.

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.  During 2001, Country Lakes paid a $250,200  prepayment fee to retire
the previous  mortgage and  recorded  the fee as interest  expense  during 2001.
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.

On December 5, 2001,  the Company  executed  Mezzanine  Loan  Agreements  with a
mezzanine  lender in the amounts of $4,150,000 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 to service the respective  properties' first,  second and third
mortgages.  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.


                                 -- Page 18 --
<PAGE>

On February 19, 2002,  the Company  executed a $1,750,000  loan agreement with a
commercial  lender in conjunction with its Ft. Myers,  Florida land acquisition.
Interest only monthly payments of $24,422 at 16% per annum commenced in February
2002 and are payable  until May 19, 2003 when all unpaid  interest and principal
are due. The mortgage is secured by the land.

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 $452,859; $2,218,764; $514,759; $563,986; $618,212, respectively,
and are $42,707,693 thereafter.


NOTE 8--BANK CREDIT LINES:

In November  2000,  the Company  entered into an unsecured line of credit with a
bank,  which provides for maximum  borrowings of $750,000.  This line of credit,
which  expired 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. This line of credit was repaid in full in December 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%. This
line of credit was repaid in full in January 2002.

NOTE 9--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 its entities.

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.  Operating  control  of the
properties  rests  solely  with the  general  partners.  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).


NOTE 10--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, 2002, no options have


                                 -- Page 19 --
<PAGE>

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,  2002,  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(p)),  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,  pro forma
data as required by SFAS 123 is not provided.

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 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.

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.

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


                                 -- Page 20 --
<PAGE>

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
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 11--INCOME TAXES:

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

                                    3/31/02      3/31/01
                                  (Unaudited)  (Unaudited)
----------------------------------------------------------
Current tax expense ............         --         --

Deferred tax expense:
    Federal ....................  $  56,043         --
    State ......................       --           --
                                     ------     ------
                                  $  56,043         --
                                   ========   ========



                                 -- Page 21 --
<PAGE>

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


                                               3/31/02        3/31/01
                                             (Unaudited)    (Unaudited)
----------------------------------------------------------------------
Current deferred tax asset-conversion
 of accrual to cash.......................     $ 269,790            --
                                               ---------    ----------
Total current deferred tax assets                269,790            --

Current deferred tax liability-conversion
 of accrual to cash.......................      (672,582)    $(954,600)
Non-current deferred tax liability
Tax over book depreciation................      (144,382)           --
                                               ----------   -----------
Total deferred tax liabilities                  (816,964)     (954,600)
                                               ---------    -----------
Net deferred tax liability                     $(547,174)    $(954,600)
                                               ==========   ===========



NOTE 12--COMMITMENTS AND CONTINGENCIES:

(a)      Consulting and Employment Agreements-Officers:

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. During 2001, and the quarter ended March 31, 2002,
the Company  capitalized  $161,456 and $70,355,  respectively of consulting fees
paid to this  related  party  (into  pre-acquisition  costs on the  accompanying
balance sheet) for services related to the acquisition of the Ft. Myers, Florida
property. These preacquisition costs were reclassified to land acquisition costs
when the land acquisition was closed in the first quarter of 2002. Additionally,
this related party entity earned  consulting  fees totaling  $80,975 during 2001
and  $46,350  during  the first  quarter  of 2002 for  services  related  to the
mezzanine loan transactions  which have been capitalized into deferred financing
costs on the accompanying consolidated balance sheet.

The Company has entered  into a five-year  employment  agreement  with its Chief
Executive  Officer for his services as such. 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 11, 1998, with annual increases
of not less than 5% effective in January of each year.  The executive has chosen
to have such  payments  made to a  corporation  controlled  by him.  The Company
capitalized  $170,177  in 2001  and  $65,673  in the  first  quarter  of 2002 of
consulting  fees  paid to this  corporation  (into  pre-acquisition  costs)  for
services  related to the  acquisition of the Yonkers,  New York  property.  This
corporation  earned  additional  consulting  fees  totaling  $88,475 in 2001 and
$46,350  during the first quarter of 2002 for services  related to the mezzanine
loan transactions  which have been capitalized into deferred  financing costs on
the accompanying balance sheet.

(b)      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 expenses.  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.)

In the St. Charles Townhomes limited  partnership,  the Company may be obligated
to make  credit  deficit  payments  to the  limited  partner  in the  event  the
scheduled amount of low-income  housing tax credits  projected are not delivered
to the  limited  partner  through  the  2009  tax  year.  The  Company  does not
anticipate any tax credit  shortfalls.  Additionally,  the Company may be liable
for payment of up to $100,000 for  operating  trade  accounts  payable  incurred
prior to the admittance of the Company as general partner.

(c)      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  answered  this
complaint, the Company defended itself vigorously against these allegations, and
subsequent to December 31, 2001,  reached a final settlement to the plaintiff in
the amount of $12,000.

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.


                                 -- Page 22 --
<PAGE>

NOTE 13--CHANGE IN ACCOUNTING ESTIMATE

Beginning  in December  2001,  the Company  changed the useful lives of its West
Palm  Beach/Country  Lake and  Miami/Lake's  Edge properties from 27 years to 40
years and its furniture, fixtures and equipment from 5 or 7 years to 10 years in
order to more accurately  reflect the assets'  reasonable  useful lives.  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 and $61,115 ($.007
per share) is being amortized over the remaining  useful life of 8 years.  These
changes  result in a cumulative  net income  adjustment  of $4,118  ($.00049 per
share) for the three months ended March 31, 2002.


NOTE 14--OTHER INCOME

In the  first  quarter  of 2001,  the  Company  filed  an  insurance  claim  for
reimbursement  for roof damages  sustained at the Lakes Edge property from which
proceeds in the amount of $677,192 were received in November 2001. A net gain of
$315,689  was  recognized  in 2001 when the claim was  settled  and the  related
expense  for  repairs  was  determined.  During the first  quarter of 2002,  the
Company received insurance proceeds totaling $165,013 related to fire damages at
the Country Lakes and Lakes Edge  properties.  The Company has recognized  gains
totaling $114,324 during the first quarter of 2002 after the related expense for
repairs  was  determined.  These  gains are not of an unusual  nature  given the
environment  in which the company  operates  and have been  classified  as other
income on the accompanying consolidated statement of operations.

NOTE 15--DEVELOPMENT UBSIDIES

From  time to time in the  normal  course  of  business,  the  Company  may earn
development grants or other subsidies and fees related to developing projects in
designated redevelopment areas.

In  December  2001,  the  Company  received a  $1,000,000  Economic  Development
Initiative  Grant ("EDI  Grant")  from the City of Yonkers (New York) for use in
the  development  of the Station  Plaza  Office  Building in the City of Yonkers
Urban  Renewal  Project.  Under  terms  of a Land  Disposition  and  Development
Agreement  (LDDA  Agreement),  proceeds  of the  grant  are to be  used  for any
appropriate hard or soft costs incurred during the pre-development,  development
and construction of the project. The Grant is not conditioned upon or subject to
the  fulfillment or completion of the obligations of the Company as set forth in
the LDDA Agreement.  The Company has recorded the $1,000,000 grant receivable as
income in 2001 under the  guidance of FASB 116,  "Accounting  for  Contributions
Received and Contributions Made".


NOTE 16--FT. MYERS LAND PURCHASE

On February 19, 2002, the Company purchased for $1,320,000,  land to be used for
the  development of a 21-story  condominium  project in Ft. Myers  Florida.  The
project  ("Billy's  Creek" or "Beau Rivage") will be developed by a newly formed
wholly owned subsidiary, Beau Rivage-Homes for America, LLC. Concurrent with the
closing of the property, the Company executed a $1,750,000 loan agreement with a
commercial lender to finance the purchase.  The note matures on May 19, 2003 and
accrues interest at a rate of 16%. At closing the lender disbursed $228,105 to a
reserve account to fund the first six months of interest. The note is guaranteed
by Homes for America Holdings, Inc. and is secured by the property.

In  December  2001,  the  Company  executed  a  Development  Agreement  with The
Community  Redevelopment  Agency of the City of Ft. Myers,  Florida  whereby the
Company is eligible to receive tax increment  rebates  totaling up to $3,000,000


                                 -- Page 23 --
<PAGE>

over a 15 year  period as an  inducement  to develop in a  designated  community
redevelopment area.


NOTE 17--DUE TO MINORITY PARTNERS

Due  to  minority  partners  as  of  March  31,  2002  represents   $154,523  of
administrative  management fees and cash flow/refinancing  distributions payable
to  minority  limited   partners  in  accordance  with   Partnership   Agreement
provisions.


NOTE 18--NOTES PAYABLE:

Notes payable consists of the following:

                                                        3/31/02      3/31/01
                                                     (Unaudited)  (Unaudited)
-----------------------------------------------------------------------------
9% installment note payable secured by the
ownership rights in Dallas/Glen Hills
payable in monthly installments of $6,772,
including interest, maturing in 2004 ...............  $  133,911  $  299,191

Lake's Edge PAC loan ...............................        --        55,496

Trade acceptance drafts payable ....................      29,658     189,185

8% notes payable to Company officers ...............        --        59,000
                                                      ----------  ----------
                                                         163,569     602,872
Less  current maturities ...........................     (99,563)   (602,872)
                                                      ----------  ----------
                                                      $   64,006  $     --
                                                      ==========  ==========


The aggregate  maturities of notes payable as of December 31, 2001, for the next
five  years  are  $235,935  in  2002,  $77,037  in 2003,  $4,796  in 2004 and $0
thereafter.



                                 -- Page 24 --
<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 as a real
estate operating company to acquire, develop,  rehabilitate/construct and manage
residential and multi-use properties throughout the United States. The Company's
primary objective is to identify and purchase undervalued  properties,  which it
renovates/constructs, operates and manages as affordable housing and market rate
residential  and mixed use  properties.  These  properties  are  purchased  with
traditional   financing   arrangements   as  well  as   through  a  variety   of
government-sponsored  financing arrangements available for properties qualifying
as affordable  housing  and/or  located in designated  redevelopment  areas.  In
addition to the net rental income derived from its portfolio of properties,  the
Company  earns a  portion  of  revenues  and  profits  from  transactional  fees
associated  with  the  acquisition,  financing,  rehabilitation,   construction,
operation and possible sale of its acquisitions.

The Company's operations commenced in April 1996. As of the date of this filing,
the Company's  portfolio  consists of six affordable  housing properties and one
market rate housing property.  The six affordable  housing properties are Willow
Pond (Dallas, Texas), Putnam Square (Bridgeport,  Connecticut),  Prairie Village
(Elkhart, Indiana), Lake's Edge (Miami, Florida), Country Lake (West Palm Beach,
Florida) and St.  Charles  Townhomes,  a recently  acquired  252 unit  apartment
complex in Dallas,  Texas.  The market  rate  property,  Beau  Rivage  (formerly
"Amalfi"), is a recently acquired 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.  Two  additional  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.

In  addition,  the Company has entered  into a purchase  and sale  agreement  to
acquire  the  Yonkers   Station   Plaza,   a  .36  acre  parcel  of  undeveloped
non-operating land in Yonkers,  New York on which the Company plans to construct
a 70,817 square foot market rate office  building.

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  development fees related to projects in
designated  redevelopment  areas,  a  Builders  and  Sponsors  Profit  and  Risk
Allowance,  or  BSPRA,  Contractor's  Fee,  Acquisition  Fee,  Developer's  Fee,
Supervisor/Incentive  Management  Fee, or  Management  Fee. The Company may also
generate revenue from the possible sale of its properties.


                                 -- Page 25 --
<PAGE>

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. On November 30, 2001, the Company acquired St. Charles  Townhomes,  a
252 unit affordable housing complex in Dallas,  Texas. On February 19, 2002, the
Company  acquired  Beau  Rivage  (formerly  "Amalfi"),  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.

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, 2001 Compared to
     March 31, 2002

2(c)(i) Revenues
----------------

Rental revenues of $2,252,424 for the three months ended March 31, 2001 are
fully reported in the 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.

Rental  revenues of  $2,475,856  for the three months  ended March 31, 2002,  an
increase of $223,432  (9.9%) from the same period in 2001, are fully reported in
the attached  Consolidated  Statement of Operations and reflect rental and other
operating  income  from  the  following  six  properties:   Dallas/Willow  Pond,
Bridgeport/Putnam Square,  Elkhart/Prairie Village, Miami/Lake's Edge, West Palm
Beach/Country Lake and Dallas/St. Charles.


2(c)(ii) Expenses
-----------------

Operating  expenses of $2,493,881  for the three months ended March 31, 2001 are
fully reported in the attached Consolidated Statement of Operations, and reflect
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.

                                 -- Page 26 --
<PAGE>

Operating  expenses of $2,955,829  for the three months ended March 31, 2002, an
increase of $461,948 (18.5%) from the same period in 2001, are fully reported in
the  attached  Consolidated  Statement of  Operations,  and include the costs of
operating  six  properties   (Dallas/Willow  Pond,   Bridgeport/Putnam   Square,
Elkhart/Prairie  Village,  Miami/Lake's  Edge, West Palm  Beach/Country Lake and
Dallas/St.  Charles), as well as corporate administrative expenses. The increase
is mostly  attributable to operating expenses of $332,180 at Dallas/St.  Charles
for the three months ended March 31, 2002,  compared to no operating expenses at
St. Charles for the three months ended March 31, 2001.

Depreciation  and  amortization of $373,201 for the three months ended March 31,
2001 reflect three months of expenses on five  properties:  Dallas/Willow  Pond,
Bridgeport/Putnam  Square,  Elkhart/Prairie Village,  Miami/Lake's Edge and West
Palm Beach/Country Lake. Depreciation and amortization of $427,643 for the three
months ended March 31, 2002, an increase of $54,442 (14.6%) over the same period
in 2001, reflect three months of expenses on six properties: Dallas/Willow Pond,
Bridgeport/Putnam Square,  Elkhart/Prairie Village, Miami/Lake's Edge, West Palm
Beach/Country Lake and Dallas/St.  Charles.  The increase is mostly attributable
to depreciation and amortization  expenses of $46,171 at Dallas/St.  Charles for
the  three  months  ended  March  31,  2002,  compared  to no  depreciation  and
amortization at St. Charles for the three months ended March 31, 2001.

The Company primarily utilizes  straight-line  methods of depreciation over five
(5),  seven  (7) and ten  (10)  year  life  for  personal  property.  Realty  is
depreciated by the straight-line method over 27.5 and 40 years.

Interest  expenses of $710,081 for the first three months of 2001 reflects three
months of interest incurred on 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.  Interest  expenses of $959,778 for the first three
months of 2002,  an increase of $249,697  (35.1%)  from the same period in 2001,
include interest  related to the mortgages on seven of the Company's  properties
(Dallas/Willow  Pond,   Bridgeport/Putnam   Square,   Elkhart/Prairie   Village,
Miami/Lake's Edge, West Palm Beach/Country Lake, Dallas/St. Charles) and the Ft.
Myers,  Florida land, and interest incurred on debt at the corporate level. This
increase in outstanding  mortgage  interest  primarily results from the interest
incurred on the two newly acquired properties,  St. Charles and Fort Myers land,
as well as from additional mezzanine financing on the Miami/Lake's Edge and West
Palm  Beach/Country Lake properties.  Additionally,  a portion of interest costs
incurred  during  2001 were  capitalized  related to the  rehabilitation  of the
Country Lakes and Lakes Edge properties.


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

Unrestricted  cash on hand was  $339,513 at March 31, 2001 and $195,914 at March
31,  2002,  a  decrease  of  $143,599   (42.3%).   This  decrease  is  primarily
attributable   to  continued   investments   in  real   property   improvements,
pre-acquisition   costs  and  financing  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


                                 -- Page 27 --
<PAGE>

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 Country Lake
and Lake's Edge Mezzanine loans, the proposed  development of the Ft. Myers/Beau
Rivage property,  the proposed  rehabilitation  of Dallas/St.  Charles,  and the
proposed acquisition and development of the Yonkers/Station Plaza property.


COUNTRY LAKE AND LAKE'S EDGE MEZZANINE LOANS

In December of 2001, the Company (through two wholly owned subsidiaries) entered
into two mezzanine loans pursuant to which it borrowed the amounts of $4,150,000
and $1,000,000 in association  with the Lake's Edge and Country Lake properties,
respectively.  The interest rate on the loans, totaling $5,150,000, is 12.51% on
a ten year note with a 25 year  amortization  schedule.  Using proceeds from the
mezzanine loans, the Company paid off a $1,800,000 note,  outstanding borrowings
of  $570,000  on a line of  credit  and  closing/escrow  expenses  of  $892,001,
resulting in a short term  increase in liquidity of  $1,887,999.  The payment of
the  $1,800,000  note will  decrease  annual debt service by  $288,000,  and the
payment of the $570,000 of debt will decrease annual debt service by $39,900,  a
total decrease of $327,900.  The addition of the mezzanine  loans will result in
an increase in annual debt service of $130,932 for Country Lake and $543,368 for
Lake's Edge,  a total  increase of $674,300.  The effect of the  foregoing  debt
repayment  and the addition of the  mezzanine  loans is a net increase in annual
debt service of $346,400.


PROPOSED DEVELOPMENT OF FORT MYERS/BEAU RIVAGE

The  Company  estimates a total  development  cost of  $31,198,459  for the Beau
Rivage project, including unit construction costs of $16,357,900,  miscellaneous
site  work,   common  area  and  parking   construction   costs  of  $3,367,045,
architect/engineering  costs of $591,736,  general conditions of $1,031,717,  an
Insurance/Bonds/Profit  to Builder of  $2,694,875,  interest of  2,892,376,  and
sales/marketing   costs  of  $4,263,210.   The  Company   anticipates   securing
approximately 90% financing:  79% from a construction  loan of $24,698,459,  and
11% from the sale of a  $3,000,000  tax  increment  rebate from the City of Fort
Myers.  The Company  anticipates  investing,  or joining in a partnership for an
equity investment of,  approximately 9% equity in the deal, or $3,500,000,  from
Company funds.


PROPOSED REHABILITATION OF DALLAS/ST. CHARLES

The Company anticipates total capital expenditures for the rehabilitation of St.
Charles Townhomes of $7,700,000, including a takeout of the current mortgage and
prepayment  penalty  totaling  $5,100,000,  rehabilitation  costs of $1,600,000,


                                 -- Page 28 --
<PAGE>

rehabilitation  reserves,  operating  deficit  reserves  and  interest  reserves
totaling  $500,000,  and closing costs and miscellaneous fees totaling $500,000.
The  Company  expects  to  secure  approximately  100%  financing  through a new
mortgage in the amount of $7,700,000.


PROPOSED ACQUISITION AND DEVELOPMENT OF YONKERS/STATION PLAZA

The Company  estimates a total  acquisition and development  cost of the Yonkers
Station  Plaza  of  $12,500,000,  including  a  purchase  price  for the land of
$500,000,  architect and engineering  costs of $325,000,  construction  costs of
$7,200,000,  tenant  improvements of $1,850,619,  leasing and marketing costs of
$875,000,  interest  of  $500,000,  reserves of $477,478  and  acquisition  fee,
closing  costs and  miscellaneous  costs of  $771,903.  The Company  anticipates
securing   approximately  94%  financing:   62%  from  a  construction  loan  of
$7,700,000,  24% from a  $3,000,000  loan  from the  City of  Yonkers,  which is
subordinated to the construction loan, and 8% from a $1,000,000 grant awarded to
the  Company  by  the  City  of  Yonkers.  The  Company  anticipates   investing
approximately 6% equity in the deal, or $800,000, from Company funds.

                                 -- Page 29 --
<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 30 --
<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 31 --