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

                                  FORM 10-KSB/A
                                 AMENDMENT NO. 3

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                  ---------------------------------------------
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                     --------------------------------------

                             For the annual period ended:
                               DECEMBER 31, 2004

      Commission File Number: 000-22373

                   DIVERSIFIED FINANCIAL RESOURCES CORPORATION
             (Exact name of registrant as specified in its charter.)

                DELAWARE                       58-2027283
     (State of other jurisdiction of       (I.R.S. Employer
     incorporation  or  organization)     Identification  No.)

     8675  AERO  DRIVE,  SUITE  221,  SAN  DIEGO,  CA    92154
     (Address  of  principal  executive  offices)     (Zip  Code)

                                     858-244-6035
                            (Registrant's telephone number
                               Including  area  code)

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

YES  [X]     NO  [ ]

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

        Common Stock, no Par Value - 3,146,000 shares as of December 31, 2004.
                        As of April 13, 2005, - 4,481,597,981
  As of February 23, 2005, after the 2000 for 1 reverse split effective August
                                    25, 2005 - 2,381,323

Check  if there is no disclosure of delinquent filers in response to Item 405 of
Regulation  S-B not contained in this form, and no disclosure will be contained,
to  the  best  of  registrant's  knowledge,  in  definitive proxy or information
statements  incorporated  by  reference  in  Part III of this Form 10-KSB or any
amendment  to  this  Form  10-KSB  [X].

The  issuer's  total  consolidated revenues for the year ended December 31, 2004
were  $61,082.

The  aggregate  market value of the registrant's common stock, no par value (the
only  class  of voting stock), held by non-affiliates was approximately $474,453
based  on the average closing bid and asked prices for the Common Stock on April
13,  2005  of $0.0001 per share.  The aggregate market value of the registrant's
common  stock,  no  par  value  (the  only  class  of  voting  stock),  held  by
non-affiliates  was  approximately $184,430 based on the average closing bid and
asked  prices  for  the  Common  Stock  on February 23, 2006 of $0.10 per share.

                                       1
<PAGE>

<TABLE>
                                TABLE OF CONTENTS
<CAPTION>
                                     PART I
<S>                                                                           <C>
ITEM  1.  DESCRIPTION  OF  BUSINESS                                            3

ITEM  2.  DESCRIPTION  OF  PROPERTY                                            9

ITEM  3.  LEGAL  PROCEEDINGS                                                  16

ITEM  4.  SUBMISSION  OF  MATTERS  TO  VOTE  OF  SECURITY  HOLDERS            17

ITEM  5.  MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS     17

ITEM  6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF OPERATION     20

ITEM  7.  FINANCIAL  STATEMENTS                                               24

ITEM  8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON
          ACCOUNTING AND FINANCIAL  DISCLOSURE                                49

ITEM  8A. CONTROLS  AND  PROCEDURES                                           49

ITEM  9.  DIRECTORS  AND  EXECUTIVE  OFFICERS,  PROMOTERS  AND
          CONTROL PERSONS; COMPLIANCE  WITH  SECTION  16(A)  OF
          THE  EXCHANGE  ACT                                                  49

ITEM  10.  EXECUTIVE  COMPENSATION                                            50

ITEM  11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT     51

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS                 52

ITEM  13.  EXHIBITS,  LIST  AND  REPORTS  ON  FORM  8-K                       52

ITEM  14.  PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES                         53

SIGNATURES                                                                    54
</TABLE>

                                       2
<PAGE>

                                     PART I.

ITEM  1.     DESCRIPTION  OF  BUSINESS

BUSINESS  DEVELOPMENT
---------------------

As  used  herein  the  terms  the  "Company,"  "DFRC,"  the "Registrant," or the
"Issuer" refers to Diversified Financial Resources Corporation, its subsidiaries
and predecessors, unless indicated otherwise. DFRC was incorporated in the State
of  Delaware  on  January  6,  1993, as Vaxcel, Inc.  On December 19, 2000, DFRC
changed  its  name  to  eLocity  Networks  Corporation.  On August 6, 2002, DFRC
changed  its  name  to  Diversified  Financial  Resources  Corporation.

In  1999  DFRC sold all the rights to its technologies for cash and discontinued
all  of  its  operations.  DFRC  continues  to  hold  rights  to  develop  and
commercialize a certain cancer antigen under a license agreement from University
College  London, but no longer has any employees or other ability to develop its
technologies  further  without  assistance.

In April of 2002, DFRC implemented a plan of reorganization, which resulted in a
change  in  management  and  the  direction  of  DFRC.  Pursuant  to the plan of
reorganization,  DFRC  acquired  new  operations  in  the real estate investment
sector  and  is  currently  in  the  process  of  entering  the land and natural
resources  sector.

As part of the plan of reorganization, DFRC transferred ownership and control of
a  subsidiary,  Value  Plus Marketing, to its other subsidiary, eLocity, IncDFRC
also announced a "spin-off" to its shareholders of eLocity, Inc. stock through a
stock  dividend.  The  spin-off  should  result in DFRC's shareholders acquiring
direct  ownership  of  eLocity,  Inc.'s  common  stock.

Shareholders of record, as of April 30, 2002, will receive one-share of eLocity,
Inc.'s  common  stock  for each share of DFRC's common stock owned on that date.
eLocity,  Inc.  is  a  fully  reporting  public  company,  which,  prior  to the
completion  of  the  spin-off  must  (1)  file  with the Securities and Exchange
Commission documents to register its common stock and then (2) apply for trading
status  for  its  common  stock  on  a  public  market.  The  responsibility for
completing these necessary steps of the described registered spin-off rests with
eLocity,  Inc.  Through  the  date  of  this  filing,  only Thomas Clay and Mark
Schellenberger, former officers of DFRC had received their shares in the form of
restricted  common  stock  equal  to  approximately  65%  of the common stock of
eLocity,  Inc.,  the  balance of the spin-off has not been distributed as of the
date  of  this  filing.  Those  shareholders of record as of April 30, 2002, are
still entitled to their pro rata portion of the eLocity, Inc. registered shares.
eLocity,  Inc.  is  still holding those shares in escrow for the shareholders of
record  as  of  April 30, 2002.  The delivery date for those shares has not been
disclosed  to  DFRC  at  this  time.

                                       3
<PAGE>

BUSINESS  OF  ISSUER
--------------------

DFRC  is  currently  a  holding  company with real estate investment operations.
DFRC's  plan  is  to  create  and  manage  a  diverse comprehensive portfolio of
companies  operating  in  several  industries.  Currently,  DFRC is focusing its
resources  on two industry sectors including Land and Natural Resources and Real
Estate  Investments.  DFRC  is  currently in the process of fully developing its
business  plan.


REAL  ESTATE  INVESTMENTS
-------------------------

DFRC's  real  estate  operations  primarily involve the acquisition, management,
lease  and  sale  of  real  estate  through is subsidiaries, Wichita Development
Corporation (Wichita) and Diversified Holdings XIX, Inc. (DHX).  During the last
quarter  of  2002, DFRC acquired DHX which owns 4 residential properties located
in Utah.  In the second quarter of 2003, DFRC acquired Wichita which owned three
buildings.  DFRC  will  continue  to  locate and acquire undervalued real estate
with  little  or  no  cash down. Once acquired, DFRC will most likely lease such
properties. Though DFRC seeks to generate and maximize rental income through the
management  and  lease of the property, DFRC also intends to acquire real estate
which  will  substantially  appreciate in value and for which DFRC can realize a
substantial  gain  upon  disposition.  Nonetheless,  there  is  a  risk that the
properties  acquired  may  decline  in  value  rather  than  appreciate.

DFRC  acquired  DHX in a related party transaction on November 8, 2002, pursuant
to  a  Stock  Exchange Agreement with John Chapman, whereby DFRC acquired a 100%
interest  in  DHX  in  exchange  for  255,500 restricted shares of DFRC's common
stock.  DHX  is  a development stage company incorporated in the State of Nevada
whose  assets consist of four income producing residential properties.  For more
information  on  this  transaction,  see  "Item  2  Description  of Properties."

On  June  30,  2003,  DFRC  entered  into  a Stock Purchase Agreement with Nexia
Holdings,  Inc.,  Wichita  Development  Corporation, and Diversified Holdings I,
Inc.  to  acquire  not  less than an 83% ownership interest in Wichita.  Wichita
either  directly or through its ownership of a subsidiary owned three parcels of
real estate, one located in Wichita, Kansas, a second located in Ogden, Utah and
a  third  located  in  Salt  Lake City, Utah.  In October of 2003, the Company's
building  located  in  Ogden,  Utah,  was  sold  at  a  public auction through a
trustee's  sale,  the  Company  maintains title to four of the condominium units
located  in  that  building  that  were  not subject to the trustee's sale.  The
agreement  provides  that  Nexia  transfer to DFRC 100% of all shares that Nexia
held  in  Wichita  (86,795,794)  in exchange for a promissory note in the sum of
$150,000  and  1,148,251  restricted  shares  of the common stock of DFRC with a
guaranteed  resale  value  of  $1.00 per share, whereby, within 36 months of the
sale,  DFRC  is  bound to issue sufficient additional shares such that the total
value  at  liquidation  of  the  shares will equal $1,000,000.  The guarantee to
issue  common stock with a value of $1,000,000 would have a substantial dilutive
effect  based  on  DFRC's  current  trading  price  of  less  than  $.0001.

                                       4
<PAGE>

LAND  AND  NATURAL  RESOURCES
-----------------------------

DFRC  intended  to enter the coal reclamation business.  On March 24, 2003, DFRC
entered  into  a  Stock Purchase Agreement with John Chapman, Norman Mullins and
Dennis  Thompson,  shareholders of MT & C Diversified Land and Natural Resources
Corporation  (MT&C)  wherein  DFRC  agreed  to  purchase Six Million (6,000,000)
shares  or 100% of the total issued and outstanding shares of MT & C in exchange
for  Six  Million  (6,000,000)  shares  of  DFRC's  newly  issued common shares.

MT & C is a development stage company incorporated in the State of Nevada, whose
sole  asset  is  a  Coal  Slurry  Impoundment,  Plant  Site and Mine Waste Lease
Agreement.  DFRC's  wholly  owned  subsidiary,  MT&C  Diversified Land & Natural
Resources Corp., was not able to close on the purchase of these assets and carry
the requirements of the said lease agreement with Headwaters, Inc.  This failure
prevented  MT&C  from  starting  the  operation  of a coal reclamation business.

DFRC  has  signed  letters  of  intent to acquire and operate mining concessions
located in the Sierra Madre mountain range in Mexico, details and description of
the  mining  rights acquired by the Company are more fully set forth in "Item 2.
Description  of  Properties."

DFRC is currently seeking out other natural resource companies or opportunities.

COMPETITION
-----------

DFRC  will be involved in intense competition with other business entities, many
of  which  will  have  a  competitive edge over DFRC by virtue of their stronger
financial  resources  and  prior  experience in business.  There is no assurance
that  DFRC  will  be  successful  with  its  current  business  opportunities.

GOVERNMENTAL  REGULATION
------------------------

DFRC's  anticipates  being subject to federal, state and local regulations which
may  have  a  material  impact  upon  its  operations.

EMPLOYEES
---------

As  of  March  30,  2005,  DFRC has three full time employees and four part-time
employees.

RISK  FACTORS
-------------

You should carefully consider the following risks before making an investment in
our Company. In addition, you should keep in mind that the risks described below
are  not  the  only risks that DFRC faces. The risks described below are all the
risks  that  DFRC  currently  believes  are  material  to our business. However,
additional  risks  not presently known to us, or risks that we currently believe
are not material, may also impair our business operations. You should also refer
to  the  other  information  set  forth  in  this  Annual Report on Form 10-KSB,
including  the discussions set forth in "Management's Discussion and Analysis of
Financial  Condition  and  Results of Operations" and "Business," as well as our
financial  statements  and  the  related  notes.

                                       5
<PAGE>

DFRC's business, financial condition or results of operations could be adversely
affected  by  any  of  the following risks. If we are adversely affected by such
risks,  then  the  trading of our common stock could decline, and you could lose
all  or  part  of  your  investment.

DFRC's  auditor's  report  on  our  financial statements includes an explanatory
--------------------------------------------------------------------------------
paragraph  with  respect  to  substantial  doubt  existing  about its ability to
--------------------------------------------------------------------------------
continue  as  a  going  concern
-------------------------------

As  of  December  31,  2004, DFRC had incurred a loss from operations and had an
accumulated  deficit.  As  a  result,  its  financial  statements include a note
stating  that  these  conditions  raise  substantial  doubt about its ability to
continue  as  a  going  concern, but the financial statements do not include any
adjustments  that  might  result  from  this  uncertainty.



DFRC  is subject to compliance with securities law, which expose it to potential
--------------------------------------------------------------------------------
liabilities,  including  potential  rescission  rights.
------------------------------------------------------

DFRC has periodically offered and sold our common stock to investors pursuant to
certain  exemptions  from the registration requirements of the Securities Act of
1933,  as  well as those of various state securities laws. The basis for relying
on  such  exemptions  is  factual; that is, the applicability of such exemptions
depends  upon  DFRC's  conduct  and that of those persons contacting prospective
investors  and making the offering. DFRC has not received a legal opinion to the
effect  that  any of our prior offerings were exempt from registration under any
federal  or  state  law.  Instead, it has relied upon the operative facts as the
basis  for  such  exemptions,  including  information  provided  by  investors
themselves.

If any prior offering did not qualify for such exemption, an investor would have
the  right  to  rescind  its  purchase of the securities if it so desired. It is
possible  that  if  an  investor  should  seek  rescission,  such investor would
succeed.  A similar situation prevails under state law in those states where the
securities  may  be  offered  without  registration  in  reliance on the partial
preemption  from  the  registration  or  qualification  provisions of such state
statutes  under  the  National  Securities  Markets  Improvement Act of 1996. If
investors  were successful in seeking rescission, we would face severe financial
demands  that  could adversely affect our business and operations. Additionally,
if  we  did not in fact qualify for the exemptions upon which we have relied, we
may  become  subject  to  significant fines and penalties imposed by the SEC and
state  securities  agencies.

Additional  Capital  is  Necessary  to  Implement  DFRC's  Business  Plan
-------------------------------------------------------------------------

DFRC  does  not  believes  that  it  has  sufficient  cash, cash equivalents and
operating  income  to  maintain its business at its existing level in 2005. DFRC
will  require significant new capital in order to execute its strategic plan and
believes  that this capital will only be available through an offering of shares
of its common stock. DFRC's success in raising this capital will depend upon its
ability  to  access equity capital markets and we may not be able to do so or to
do  so  on acceptable terms. If it fails to obtain funds on acceptable terms, it
will  not  be  able  to  execute  its  strategic plan and would have to delay or
abandon  some  or all of its plans for growth. If it is able to obtain funds, it
believes  that  the terms of such arrangement will result in an offering that is
highly dilutive to existing holders of shares of our common stock because of the
price  at  which  it  would  have  to issue those shares and the large number of
shares  it  would  have  to  issue  at  those  prices.

                                       6
<PAGE>

There  is  no  established,  stable  market  for  DFRC's  common  stock.
-----------------------------------------------------------------------

DFRC's  common stock is quoted on the Over-the-Counter Electronic Bulletin Board
("OTCBB")  and  traded  sporadically.  A  large  number of shares of outstanding
common  stock are restricted and are not freely-tradeable. An established public
trading  market  for our common stock may never develop or, if developed, it may
not  be  able  to  be  sustained.  The  OTCBB  is  an unorganized, inter-dealer,
over-the-counter  market  that  provides significantly less liquidity than other
markets. Purchasers of DFRC's common stock may therefore have difficulty selling
their  shares  should  they  desire  to  do  so.

Volatility  of  Stock  Price
----------------------------

The  trading  price of DFRC's Common Stock has in the past and may in the future
be subject to significant fluctuations. In addition, the stock market in general
has  experienced  extreme  price  and volume fluctuations that have affected the
market  price  for many companies in industries similar to or related to that of
DFRC  and  which  have  been  unrelated  to  the  operating performance of these
companies.  These  market  fluctuations may adversely affect the market price of
DFRC's  Common  Stock.

Penny  stock  regulations  may impair DFRC's shareholders' ability to sell their
--------------------------------------------------------------------------------
stock.
-----

DFRC's  shares  of  common  stock  may  be  deemed  "penny  stock." Penny stocks
generally are equity securities with a price of less than $5.00 per share, other
than  securities  registered  on  certain  national  securities exchanges. Penny
stocks  are  subject  to  rules  and  regulations  that  impose additional sales
practice requirements on broker-dealers who sell the securities to persons other
than  established  customers  and  accredited  investors,  and  these additional
requirements  may  restrict the ability of broker-dealers to sell a penny stock.

Any  acquisitions  that  the Company undertakes could be difficult to integrate,
--------------------------------------------------------------------------------
disrupt  its  business,  dilute  shareholder  value  and  significantly harm its
--------------------------------------------------------------------------------
operating  results.
-------------------

The  Company  expects  to  review  opportunities  to  buy  other  business  or
technologies  that  would complement our current business, expand the breadth of
our  markets,  or that may otherwise offer growth opportunities.  If we make any
future  acquisitions,  we  could  issue  stock  that  would  dilute  existing
stockholders'  percentage ownership, incur substantial debt or assume contingent
liabilities.  Potential  acquisitions  also  involve  numerous risks, including:
     problems  assimilating  the purchased operations, technologies or products;
     unanticipated  costs  associated  with  the  acquisition;
     diversion  of  management's  attention  from  our  core  business;
     adverse  effects  on  existing  business  relationships  with suppliers and
     customers;

     risks  associated  with  entering  markets  in  which we have no or limited
     prior experience; and
     potential  loss  of  the purchased organization's or our own key employees.

The  Company  cannot  assure  that it would be successful in overcoming problems
encountered  in  connection  with  such  acquisitions and its inability to do so
could  significantly  harm  its  business.

DFRC  is  subject  to various risks connected to the ownership of real property.
--------------------------------------------------------------------------------

DFRC's  investments are subject to varying degrees of risk generally incident to
the  ownership  of  real  property.  Real  estate  values and income from DFRC's
current  properties  may  be  adversely affected by changes in national or local
economic  conditions and neighborhood characteristics, changes in interest rates
and  in  the  availability, cost and terms of mortgage funds, occupancy rates in
DFRC's properties, the impact of present or future environmental legislation and
compliance  with  environmental laws, the ongoing need for capital improvements,
changes  in  governmental  rules and fiscal policies, civil unrest, acts of God,
including  earthquakes and other natural disasters which may result in uninsured
losses, acts of war, adverse changes in zoning laws, and other factors which are
beyond  the  control  of  DFRC.

                                       7
<PAGE>

In  addition,  real  estate  investments are relatively illiquid. The ability of
DFRC  to  vary  its  ownership of real estate property in response to changes in
economic and other conditions is limited. If DFRC must sell an investment, there
can  be  no assurance that DFRC will be able to dispose of it in the time period
it  desires  or that the sales price of any investment will recoup the amount of
DFRC's  investment.

DFRC's  real  property is also subject to real property taxes. The real property
taxes on the real property may increase or decrease as property tax rates change
and as the property is assessed or reassessed by taxing authorities. If property
taxes  increase,  DFRC's  operations  could  be  adversely  affected.

REPORTS  TO  SECURITY  HOLDERS
------------------------------

DFRC  is  not  required to deliver an annual report to security holders and will
not voluntarily deliver a copy of the annual report to the security holders.  If
DFRC should choose to create an annual report, it will contain audited financial
statements.  DFRC  intends to file all of its required information with the SEC.
DFRC plans to file its 10-KSB, 10-QSB and all other forms that are or may become
applicable  with  the  SEC.

The  public  may read and copy any materials that are filed by DFRC with the SEC
at  the  SEC's  Public Reference Room at 450 Fifth Street N.W., Washington, D.C.
20549.  The  Public  may  obtain  information  on  the  operation  of the Public
Reference  Room  by calling the SEC at 1-800-SEC-0330.  The statements and forms
filed  by DFRC with the SEC have been filed electronically and are available for
viewing or copy on the SEC maintained Internet site that contains reports, proxy
and  information  statements,  and other information regarding issuers that file
electronically with the SEC.  The internet address for this site can by found at
www.sec.gov.
------------

                                       8
<PAGE>

ITEM  2.  DESCRIPTION  OF  PROPERTY

LOCATION  AND  DESCRIPTION
--------------------------

DFRC's  subsidiary, DHX owns four residential properties located in Utah.  Three
of  the  properties  are  encumbered, two with long-term lines of credit and one
with  a  30  year  mortgage.  The  fourth  property  is owned by DHX without any
encumbrances.  Only  one  of  the  properties  is  currently  leased.

Wichita Development Corporation, DFRC's subsidiary, owned three buildings at the
time  of  its acquisition.  One located in Wichita, Kansas, a second building in
Salt  Lake City, Utah and the third in Ogden, Utah.  The building in Ogden, Utah
has  been  sold at public auction and the Wichita, Kansas building was deeded to
the  mortgage  holder  in  lieu  of  foreclosure  proceedings  being  completed.

The  Company is in the process of acquiring mining concessions in an area of the
Sierra  Madre  Mountains  located  in Mexico.  Operations have begun on the mine
subject  to  those concessions and work is proceeding to produce gold and silver
ores  for  final  processing.

                                       9
<PAGE>

INVESTMENT  POLICIES
--------------------

DFRC's  policy  is  to  actively  pursue  the  acquisition  of  real  estate for
investment  income and appreciation in property value.  DFRC has plans to expand
into commercial and industrial properties in the near future.  DFRC policy is to
focus  on  terms  of  financing and potential return on Capital.  DFRC generally
looks for properties that can be purchased by assuming the existing financing or
by  paying  the  balance  of the purchase price with a nominal cash expenditure.

DFRC  currently  has  no  limitations  on  the percentage of assets which may be
invested  in  any  one  investment  or the type of securities and investments in
which  it  may  invest.  However, the board of directors, in its discretion, may
set  policies without a vote of DFRC securities holders regarding the percentage
of  assets  which  may  be invested in any one investment or type of investment.
DFRC's  current  policy  is to evaluate each investment based upon its potential
capital  to  DFRC.

Under a future subsidiary, DFRC may enter the business of originating, servicing
or  warehousing  mortgages  or  deeds or trust.  However, DFRC's current primary
purpose  is  acquiring  residential  and  commercial  real  estate.

There is a risk that DFRC may lose control of its properties through foreclosure
if  enough  funds  are not derived from the rental income for both the financing
and  operation  of  its  properties.  Currently,  DFRC  does not have sufficient
rental revenues to cover the debt service and operating costs of all properties.
DFRC  currently  has  to  use  capital  from other sources to fund this deficit.
Although management hopes to increase the rental income so that such income will
cover  both  operations and debt service, no such assurances can be made.  There
is  also a risk that the properties acquired may decline in value, no assurances
can  be  made  that  this  will  not  happen.

DESCRIPTION  OF  REAL  ESTATE  AND  OPERATING  DATA
---------------------------------------------------

OFFICE  LOCATION
----------------

DFRC  has  a  lease  for  its  approximate  1600  sq. ft. office located at 1771
Wolviston Way, San Diego, CA 92154 from Mr. Chapman, the president of DFRC.  The
office  space  is  subleased  in  a  related  party transaction in Mr. Chapman's
residence.  The  term of the lease is from May 2002 through May of 2005; monthly
rental  is  in  the  amount  of  $6,500.  The  lease  has a three year extension
available  for a monthly rental of $8,500.  DFRC is liable for all utilities for
the  premises.

As  of  April 1, 2005, DFRC has moved its headquarters into its own office space
at  8765  Aero  Drive,  Suite  221-San  Diego,  California  92123.

RESIDENTIAL  PROPERTIES
-----------------------

Below  is  a  listing  of  the  four  residential  properties  owned  by  DFRC's
consolidated  subsidiary, Diversified Holdings XIX, Inc.  ("DHX") as of December
31,  2004.  Also included are any changes in ownership status of such properties
which  have occurred between the end of 2002 and the filing of this Form 10-KSB.
All  references  to  current  principal  balances  of  encumbrances  against the
properties  are  as  of  December  31,  2004  only.  DHX  competes  with  other
residential  property  available  for  lease  in  the  Salt  Lake  City  area.

                                       10
<PAGE>

Property  located  at  3961  South  565  East, Salt Lake City, Utah 84107, 1,100
square feet, three bedroom duplex, estimated current value $196,000, approximate
debt  as  of December 31, 2004, $99,193, estimated equity $96,807. Financing for
this  property  carries  an interest rate of 9.25% on a 30-year fixed rate, with
final  payment  due  in  the year 2031.  The property consists of two units, the
monthly rental for one unit is $500 and is leased on a month to month basis, the
second  unit  was  damaged  as  a  result of fire in the fourth quarter of 2003.
Repairs  to that unit are completed and is currently being marketed to potential
tenants.  The  tenants  will be responsible for the payment of all utilities for
the  property.

Property located at 5721 South 1080 East Murray, Utah, 84107, value of $100,000,
there  is  no  debt  on  this building as of December 31, 2004, estimated equity
$100,000.  The  property  is  currently leased to one tenant on a month to month
basis, with a monthly rental of $500.  The tenant is responsible for the payment
of  all  utilities  on  the  property.

Property  located  at  44 West 300 South, Salt Lake City, Utah 84101, 900 square
feet,  1  bedroom  condominium,  estimate  current value of $125,000, debt as of
December  31,  2004  is  $  112,975,  estimated equity $12,025.  The property is
currently leased to a tenant on a month to month basis, with a monthly rental of
$900.  The  tenant  is  responsible  for  the  payment  of  all utilities on the
property.

Property  located at 315 East 920 South Layton, Utah 84041, 3,500 square feet, 5
bedroom,  two  story  residence,  estimate current value of $195,000, debt as of
December  31,  2004  is  $156,718, estimated equity $38,282. Recent improvements
include  improvements to the basement of the property, replacement of the carpet
and  tile  at  a  cost  of  approximately  $22,500.

DFRC  believes  that  each  of  the  four  residential  properties is adequately
insured.

COMMERCIAL  PROPERTIES
----------------------

SALT  LAKE  DEVELOPMENT,  INC.  ("SLD")

SLD  is a majority owned subsidiary of the Company, acquired on June 30, 2003 by
the  Company.  SLD  purchased a two-story 18 unit apartment building, located at
2402  Wall  Avenue  in  Ogden,  Utah, on July 23, 1998. The property included an
additional  7,500  square feet of commercial space. The total purchase price was
$850,000.  SLD  put  $5,000 down and financed the balance.  The $675,000 balance
was  being financed by the seller on a promissory note dated July 23, 1998, with
payments  based  upon a 20-year amortization with an interest rate of 7% for the
first  two  years,  which  escalated  to 9% beginning on September 1, 2000.  The
holder  of the note foreclosed on the property in October of 2003 taking 14 unit
of the building and the commercial space, SLD retains title to four units in the
buildings  and is attempting to rent those units, two of the units are vacant as
of  March  29,  2004.

                                       11
<PAGE>

SLD,  a majority owned subsidiary of the Company also owns a building located at
268  West  400  South  in Salt Lake City, Utah. The building is two stories with
14,347  net  rentable square feet of office space. SLD purchased the property on
March  6,  1998,  by  exercising its option to purchase the property through the
payment  of $418,762. SLD financed the purchase price and borrowed an additional
sum  of  $222,489,  which  is secured by the property. At December 31, 2004, the
outstanding  debt  on  the  property  was  $  557,653  with  monthly payments of
$5,341.43.  SLD  is  of  the opinion that this property is adequately covered by
insurance.  As of November 30, 2004 there are no tenants occupying the building.
There  are  14,347  square feet of office space currently available for lease as
office  space  in  the  building.  The office space in the building competes for
tenants  with  other  available  office  space in the downtown area of Salt Lake
City.  SLD  is currently in default under the terms of its loan.  SLD intends to
cure  the  default  in  April  of  2005.

WICHITA  DEVELOPMENT  CORPORATION  ("WICHITA")

Wichita was acquired by the Company on June 30, 2003.  Wichita held title to The
Trade  Center  Building.  The  building was purchased for $540,554 on August 30,
2000.  The  Trade  Center  Building,  which  opened  in  1921, is located in the
downtown  business  district of Wichita, Kansas, at 120 South Market Street. The
building  is  a  48,500  square foot, seven story office building. Wichita holds
title  to  the property subject to a mortgage of $ 268,452 at December 31, 2003.
The  taxed  assessed  value of the building is $600,000.  Mortgage payments were
not  current  on  the  building and a deed in lieu of foreclosure was granted by
Wichita  to  the  mortgage  holder  on  the  building.

LAND  AND  NATURAL  RESOURCES
-----------------------------

Mexican  Mining  Interests

DEFINITIONS

The following definitions to registrants engaged or to be engaged in significant
mining  operations:

1.   Reserve.  That  part  of  a  mineral  deposit  which  could be economically
     and legally extracted or produced at the time of the reserve determination.

2.   Proven  (Measured)  Reserves.  Reserves  for  which  (a)  quantity  is
     computed  from dimensions revealed in outcrops, trenches, workings or drill
     holes;  grade  and/or  quality  are  computed  from the results of detailed
     sampling and (b) the sites for inspection, sampling and

3.   measurement  are  spaced  so  closely  and  the  geological character is so
     well  defined  that  size, shape, depth and mineral content of reserves are
     well-established.

4.   Probable  (Indicated)  Reserves.  Reserves  for  which  quantity  and grade
     and/or  quality  are  computed  from  information  similar to that used for
     proven  (measured)  reserves,  but  the  sites for inspection, sampling and
     measurement  are farther apart or are otherwise less adequately spaced. The
     degree  of  assurance,  although  lower  than  that  for  proved (measured)
     reserves,  is  high  enough  to  assume  continuity  between  points  of
     observation.

                                       12
<PAGE>

MEXICO

The  Republic  of  Mexico  is  a  democratic  republic  with  a stable political
environment  and  a sophisticated western style legal system.  Mexico has been a
party to the North American Free Trade Agreement since 1994 and has a comparable
tax  and  trade  regime  to  the  United States.  The country has a 400 year old
mining  history  and the government actively encourages mining by giving mineral
development  precedence  over  surface  usage  rights.

LOCATION  AND  MEANS  OF  ACCESS
--------------------------------

The  claim  block  collectively  referred  to  in this annual report as La Curra
Project,  is  located at 27 degrees 15' North latitude, and 108 degrees 20' West
longitude, just northwest of Temoris in the southwestern portion of the State of
Chihuahua  in  the  Republic of Mexico (Map 1, Exhibit 99(cxv)).  The project is
located  in the Llanitos Mining District in the municipality of Guazapares at an
elevation  of  1,350  meters  (4,429  feet)  above  mean  sea  level.

The  small  town  of  Temoris is approximately 265 kilometers (approximately 165
miles) southwest of Chihuahua City, Temoris, population 2,500, can be reached by
an  inland  road or via railroad line from Chihuahua City.  There are also small
dirt  landing  strips at the town of Temoris and at the project area that can be
used  for  access by single engine light aircraft.  The flight from Chihuahua is
about  2  hours  while  the  drive  takes  about 8 to 9 hours.  During the rainy
season,  July  through  September,  use  of  a  4-wheel  drive truck is strongly
recommended.  From  Temoris  by  dirt  road  the  project  area is 10 kilometers
(approximately  6  miles) to the northwest and is easily accessible with 2-wheel
drive  truck.

TITLES,  CLAIMS,  LEASES  AND/OR  OPTION  AGREEMENTS
----------------------------------------------------

The  Company is currently conducting operations and improvements on the property
subject  to  the  mining  concessions  under the four month due diligence period
granted  it  by the option agreements.  This period allows the Company to retain
all  proceeds  from  its  operations  and  subjects  the company to make certain
payments  provided  for  by the option agreement.  This period will expire on or
about  April 16, 2005, at which time the Company expects to sign and receive all
necessary  paperwork to secure all rights to the mining concessions as set forth
in  the  following  description.

Sulema  No.  2        Title  number  191332  - Area 15.8280 hectares  (39 acres)
El  Rosario           Title number 185236 - Area 10.9568 hectares (27 acres)
La  Curra             Title number Exp 2515 - Area 13.8815 hectares (34 acres)

                                       13
<PAGE>

REGIONAL  GEOLOGY
-----------------

Los  Llanitos  Mining  District  is  situated on the western flank of the Sierra
Madre  Occidental  volcanic  province.  The volcanic province is aligned along a
northwest-southeast  axis  and  extends  nearly  1,200  kilometers  in length by
200 to 300 kilometers in width.  Two largely co-extensive igneous sequences, the
Upper  and  Lower  Volcanic Series (Wisser, 1966) make up the volcanic province.
The project is located in the Barranca (canyon) sub-province of the Sierra Madre
Occidental  volcanic  province  (Plate  2,  Exhibit  99(cxvii)).  The  Barrancas
sub-province  shows youthful topography.  Remnants of flat ground on the highest
interstream  divides  prove  the former extension westward of the mature surface
still  exposed  on  the  plateau  to  the  east.  These divides are separated by
youthful  steep-sided  canyons,  the  greatest  of  which  reach depths of 2,000
meters.

The  Lower  Volcanic Series (LVS) reach thicknesses of up to 1,000 meters and is
composed  of  abundant  batholithic  as  well  as  volcanic  rocks of dominantly
intermediate  composition.  The  LVS  unconformably  overlies or intrudes folded
Mesozoic  strata  or  late-Paleozoic  terrain.  The  LVS  are late-Cretaceous to
Eocene  in  age  (Clark  et  al,  1979),  the  older  limit  being  fixed by age
determinations  on intrusive phases that cut the surrounding andesites.  The LVS
is  dominated  by  significant  northwest regional block faults forming loci for
epithermal  mineralization  in  the  region.  The Upper Volcanic Series (UVS) is
Oligocene  to  Miocene  in age (Clark et al, 1979) and readily identified in the
filed  by  the  steep cliffs of rhyolitic tuffs, flows and ignimbrites attaining
thicknesses of up to 120 meters.  In the project area the UVS dips 15 degrees to
the  southwest  and  strikes  N  25  degrees  W.

The  UVS  is  composed  of  dominantly  horizontally  stratified rhyodacitic and
rholitic  ignimbrites  accompanied  by  rhololotic  flows and domes with main or
mafic  lava  flows.  The  interlayered  lave flows and tuffaceous sediments that
form  the  crestal plateau of the Sierra Madre are similar to rocks that blanket
areas  of  the  western  United  States.

A discussion of the tectonic setting for the area is given in Miller, 1988.  The
volcanic  rocks  which  form  this  province  have  been  uplifted  into a long,
northwest  trending  regional  anticline with superimposed domes, anticlines and
structural  depressions.  Ore  districts  lie  mainly along the crest and higher
flanks  of the anticline.  Tensional fissures induced by stretching of the domes
volcanic  massif  became  loci for precious-metal bearing veins. (Wisser, 1966).

LOCAL  GEOLOGY
--------------

The  LVS  hosts  the  precious  mineralization and is represented in the area by
andestic  red-bed  agglomerates,  lava flows, ash-flow tuffs and volcaniclastics
with  intercalated calcareous strata deposits.  (Plate 1, Exhibit 99(cxvi))  The
LVS  in  the Llanitos area dips 30 degrees northeast, strikes N 25 degrees W and
reaches  thicknesses  of  up  to  400  meters.

The  Upper Volcanic Series (geological sequence is derived from caldera-related,
large  volume  rhyolitic ash-flow tuffs and calc-alkalic rhyolitic ignimbrites).
Geographically  this  unit  is  gently  dipping  to  flat-lying and makes up the
plateau  caps  in  the  Sierra  Madre.

A  description  of  the  geology  of  the  Llanitos  Mining District is given in
Soberanes,  et  al,  1984  (Appendix  D, Miller 1988a, Exhibit 99(cxviii)).  The
Llanitos  Mining  District is defined by five quartz vein deposits.  These veins
are:  1)  the  Convirginia-La  Patria vein, 2) the Guadalupe-Las Animas vein, 3)
the  Sulema  vein (La Curra project), 4) the Tres de Mayo-Guerra al Tirano vein,
and  5)  La  Verde-Tres  Carlos  Dos  vein.  (Plate  1)  (Miller, 1988b, Exhibit
99(cxviii)).  The  deposits  are  hosted  in  domed  sediments  of the LVS.  The
fissure-veins  of  the  Llanitos  district  are  epithermal, precious-metal vein
systems  in  which  localization  has  been  controlled  by  regional  tectonic
fracturing  of  the  volcaniclastic  rocks  of  the  LVS.

The vein deposits of this district are spactially and temporally associated with
a  dacite  porphyry  intrusive  in  the  northwest  portion  of  the district, 4
kilometers  west  of  the  Sulema  vein.  This  intrusive  is exposed through an
erosional  window  in  the intruded Lower Volcanic Series (Plate 1).  Cretaceous
limestones  outcrop  to the southwest of this intrusive (Soberanes et al, 1984).

                                       14
<PAGE>

VEIN  GEOLOGY  AND  MINERALOGY
------------------------------

The Sulema vein extends for 1,100 meters along strike.  The mine workings extend
for  440  meters along strike and to at least 100-120 meters vertically from the
surface.  The  vein  dips  55  degrees  to the northeast.  The vein's true width
varies from 10 to 20 meters but the highly mineralized central zone averages 1.3
meters.  The  vein  is  a  complex  epigenetic  breccia  system  with  very  low
sulphidation.  The  high-grade  silver and gold mineralization rarely exceeds 1%
total  sulfide  content.  The  gangue mineralogy is composed of quartz, calcite,
siderite,  chalcedony,  adularis, K-spar, sericite, limonite, hematite, and rare
pyrite.

Konkin's  (1998)  very  detailed  description  of vein geology and mineralogy is
included in Section 7 of Exhibit 99(cxviii).  Generally the vein system has five
distinct phases: a carbonate phase, a siliceous phase, a quartz/carbonate phase,
an  authchthonous  breccia, and an allochthonous breccis.  The most economically
significant  phase  is  the  quartz/calcite  phase  with  silver  and  gold
mineralization  over  3-4 meter widths in the upper section and 1-2 meter widths
in  the lower portion of the vein.  To a lesser degree, the breccias may contain
elevated  silver  and gold values but are generally lower in grade.  The calcite
and  silica  phases  are  generally  barren  with  regard  to  economic  grade
mineralization.

HISTORY  OF  OPERATIONS
-----------------------

The  mining operation at La Curra project is currently in the development stage.
In  1984,  claims  encompassing  the  Sulema  vein had been purchased by Mr. Jim
Patterson  and  his  American  partners.  At  that  time,  the  epithermal,
precious-metal vein had some emino pits and open cuts across the top of the vein
system.  The  vein  was  essentially  high-graded  by  prospectors removing very
little  tonnage.  Initially,  Mr. Patterson and his partners with Minera Tecpan,
S.A.  de  C.V.  began  the  operation  as  a 40 tonne/day gravity/flotation mill
circuit.  Previous  production  between  1984  and  1993 is estimated at between
50,000  and  110,000.  The  vein  was  selectively mined underground over two-to
ten-meter  widths.  The  ore was mucked out of the stopes by shovel, then picked
up  by a one-yard scoop and transported to the portal entrance where the ore was
loaded and trucked to the mill.  Access to the workings was and still is through
the  No.  Five  Leval  portal.

Mr.  Patterson's  partners  passed  away in an airplane accident and in 1986 Mr.
Patterson  brought  in  Ibance, as a new partner.  From 1986 to 1989, Rebecca A.
Miller  conducted  her Master of Science Thesis, from the University of El Paso,
Texas  for  the area (Miller, 1988b).  The thesis report explores several of the
veins  within  the  Llanitos Mining District and presents the geological setting
and  mineralization  for  these  veins.

In  1991, Kalahari Resources Inc. optioned the property and completed 29 reverse
circulation drill holes.  Results were generally favorable and the drill results
are  provided in the Appendix F of James Patterson's 1998 mining report (Exhibit
99(cxviii).  At  the  time  Kalahari  Resources, Inc. was experiencing financial
difficulties  and  decided  to  drop  the  drilling  program.

                                       15
<PAGE>

Based  on  the  Kalahari  drilling  results,  in  1993  the milling capacity was
increased  to  120  tonnes/day, and from 1994 to 1998 the mine was in continuous
production  with  the mill operating 24 hours, 7 days a week, with Christmas and
Easter  off.  Production  summary  from  1994  to  1998 for the La Curra project
states  that  the  average  operating  cost  from  1994  to 1998 is estimated as
US$28/tonne.

In  1998,  Silver Standard Mexico, S.A. de C.V. entered into an option agreement
with  Ibance  in order to purchase 100% of the claim block, then consisting of 9
claims,  based  on  past  production  of  the  mine  and Kalahari's past reverse
circulation  drilling  results.  Silver  Standard  conducted a chip sampling and
drilling  program.  A  drilling  program  was  executed and reported in La Curra
Project,  Preliminary  Diamond  Drill  Hole  Program, Chihuahua, Mexico (Konkin,
1998)  K.J. Konkin, P. Geo prepared the report while working for Silver Standard
Resources,  1180-999 West Hastings Street, Vancouver, British Columbia, V6C 2W2.
Results  are  provided  in  Table 2.  Based on the very low silver prices at the
time, Silver Standard did not exercise their option to purchase the claim block.

To date, approximately 180,000 to 240,000 tonnes of material have been mined 440
meters along strike to a depth of 100-120 vertical meters from surface and along
three  principle levels and six sub-levels along a 440 meter long strike length.
Since 1998, no further significant production was realized and the mine was shut
down.

RECENT  ACTIONS
---------------

During  2004,  Diversified  Financial  Resources  Corporation  (the  Company), a
holding  company  trading  under  the  stock  symbol DFLR.OB, pursuant to signed
Letters of Intent and with the cooperation of all parties to the agreements, has
begun  efforts  to  refurbish  and  operate  the  La  Curra  Mine.

Refurbishing  of  the processing plant located at La Curra is nearing completion
and  the mill will be fully operational to begin the processing of some ore that
had been mined and is stored on the concession site.  All equipment and material
necessary to start the plant operations have been acquired and are either on the
site  or  are being delivered to the site.  The site supports 50-60 workers with
their  families  housed  in  small  primitive  houses.  Included are a few small
stores.

The  Company  plans to proceed with operations based on past production records,
core and reverse circulation drilling results, a current interpretation of those
results,  and  the  favorability  of  this historic silver-producing region as a
whole.  Water  is  pumped from the river in the Arroyo Blanco below the site and
is  stored  in a concrete cistern on site.  Large stands of pine and oak forests
are  common several kilometers to the east of the mine site.  Wood for timbering
and  mining  needs  is  abundant.  Electricity  is  generated  on  site  using a
diesel-powered electric plant.  Estimates of projected production have been made
assuming  67%  and  80%  mill  capacity.

                                       16
<PAGE>


19

ITEM  3.  LEGAL  PROCEEDINGS

Securities  and  Exchange Commission v. David M. Wolfson, et al.  On October 16,
----------------------------------------------------------------
2003  a  civil  complaint was filed by the Securities and Exchange Commission in
which  DFRC was named as a respondent.  The Company's president John Chapman was
also  named  as  a respondent.  The suit was filed in the United States District
Court  for  the  District of Utah and bears the docket number 2:03CV00914DAK and
the  style  of  the  case  is:  "Securities  and Exchange Commission v. David M.
Wolfson;  NuWay  Holdings,  Inc.,  a Nevada corporation; Momentous Group, LLC, a
Utah  limited  liability  company; Leeward Consulting Group, LLC, a Utah limited
liability  company; Sukumo Limited, a company incorporated in the British Virgin
Islands  (a.k.a.  Sukumo  Group,  Ltd.,  Fujiwara Group, First Chartered Capital
Corporation,  First  Colonial  Trust,  First  China  Capital  and  International
Investment  Holding);  Michael  Sydney  Newman  (A.K.A.  Marcus  Wiseman);  Stem
Genetics,  Inc.,  a  Utah corporation; Howard H. Robertson; Gino Carlucci; G & G
Capital,  LLC  an  Arizona  and  Utah limited liability company; F10 Oil and Gas
Properties, Inc.; Jon H. Marple; Mary E. Blake; Jon R. Marple; Grateful Internet
Associates,  LLC,  a  Colorado  limited liability company; Diversified Financial
Resources  Corporation,  a  Delaware corporation; John Chapman; Valesc Holdings,
Inc.,  a  New  Jersey  corporation; Jeremy D. Kraus; Samuel Cohen; NCI Holdings,
Inc.,  a  Nevada corporation."  The complaint alleges that the Company failed to
accurately  and  fully  disclose the nature of the Company's relationship to The
Sukumo  Group, Inc., including the failure of Sukumo to complete the purchase of
the shares and alleges that Sukumo acted as a selling agent for the Company. The
complaint  alleges  that  the  Company  and Mr. Chapman failed to accurately and
fully  disclose  the  nature  of the Company's relationship to The Sukumo Group,
Inc.  and timely disclosure of the execution of the Offshore Purchase Agreement.
The  complaint  further  alleges  that  Mr.  Chapman took actions during 2003 to
manipulate  the  price  of the Company's stock in the marketplace. The complaint
also  faults  The  Sukumo Group Inc.'s actions with regard to the sale of common
stock  to  off shore purchasers for failing to disclose the interest that Sukumo
had  in each sale, reporting that it was taking a 1-2% commission on the re-sale
rather  than  disclosing  that  it  was  keeping  70%  of  the  proceeds of each
transaction.  The  Company  has entered into settlement discussions with the SEC
which  are  ongoing  at  this  time.

Interbay  Funding LLC v. Wichita Development Corporation, et al.  Suit was filed
----------------------------------------------------------------
in  the  District Court of Sedgwick County, Kansas, case No. 03CV2074.  The case
seeks to foreclose on the mortgage that is secured by The Trade Center Building,
located  in  Wichita, Kansas.  Occupancy of the building has been reduced due to
operating  costs  of  the  building  and competition from other buildings in the
Wichita  business  district and has resulted in cash flow difficulties in making
payments  on  the  building.  The  Company  has  delivered  a  deed  in  lieu of
foreclosure  as settlement of the claims made by Interbay Funding in this claim.

James  Stacey  v. Successor in Interest to Salt Lake Development Corporation and
--------------------------------------------------------------------------------
John Does 1-10.  This complaint was filed in the Second Judicial District Court,
--------------
County  of Weber, State of Utah, Civil Case No. 040909281 on or about the 9th of
December, 2004.  In the Complaint Mr. Stacey seeks the recovery of $13,387.02 in
real  property  taxes  that  he  paid  on  condominiums that belong to Salt Lake
Development  Corporation.  An answer has been filed denying any liability to Mr.
Stacey.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

None.

                                       17
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERSITEM 5.  MARKET
FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS

DFRC's common stock is quoted on the Electronic Bulletin Board under the symbol,
DFLR.OB  (formerly  DFRC.OB  and  ELOC.OB).  Trading  in the common stock in the
over-the-counter  market  has  been  limited and sporadic and the quotations set
forth below are not necessarily indicative of actual market conditions. Further,
these  prices  reflect inter-dealer prices without retail mark-up, mark-down, or
commission,  and  may  not necessarily reflect actual transactions. The high and
low  bid  prices for the common stock for each quarter of the fiscal years ended
December  31,  2003  and  2004.

<TABLE>
<CAPTION>

<S>                                            <C>           <C>
PERIOD                                                BID PRICES
                                                  HIGH         LOW
Quarter Ended December 31, 2004-Post reverse   $      0.03   $0.0002
Fourth Quarter-pre reverse split (2)                0.0002    0.0001
Quarter Ended September 31, 2004                    0.0015    0.0001
Quarter Ended June 30, 2004                         0.0089    0.0007
Quarter Ended March 31, 2004                          0.17     0.005


Quarter Ended December 31, 2003                       1.01      0.16
Quarter Ended September 30, 2003                      2.70      1.01
Quarter Ended June 30, 2003                           1.75      1.50
Quarter Ended March 31, 2003                        2.50(1)     0.01
<FN>


(1)  The  board  of  directors  of DFRC authorized a reverse split of the common
stock of DFRC on February 7, 2003.  The reverse split was carried out on a 1 for
200  basis, the low for the quarter ended March 31, 2003 took place prior to the
reverse  and  the  high  occurred  subsequent.
(2)  The  board  of  directors  of DFRC authorized a reverse split of the common
stock  of DFRC that became effective on November 1, 2004.  The reverse split was
carried  out  on  a  1  for 1,000 basis.  The high and low prices for the fourth
quarter  are  divided  into pre and post reverse split periods, the prior prices
were  not  adjusted  to  reflected  the  effects  of  the  reverse  split.
</TABLE>

                                       18
<PAGE>

Such  quotations  reflect inter-dealer prices, without retail mark-up, mark-down
or  commission.  Such  quotes  are  not  necessarily  representative  of  actual
transactions or of the value of DFRC's securities, and are in all likelihood not
based  upon  any  recognized  criteria  of  securities  valuation as used in the
investment  banking  community.

SHAREHOLDERS
------------

As  of  April  13, 2005, there were an estimated 365 holders of record of DFRC's
common  stock. Certain of the shares of common stock are held in street name and
may,  therefore,  be  held  by  several  beneficial  owners.

DIVIDENDS
---------

Since  the year end December 31, 2003, DFRC has not declared any cash dividends.

On  April  30,  2002,  shareholders  of  record  on that date became entitled to
receive  a stock dividend of one share of eLocity, Inc., for every share of DFRC
held.  The spin-off shares are being held in escrow with eLocity, Inc., and will
not  be  distributed  until  eLocity,  Inc.  completes a registration statement.

DFRC  has  never  paid  a  cash  dividend  on  its  common stock. The payment of
dividends  may  be  made at the discretion of the Board of Directors of DFRC and
will  depend  upon,  among  other  things,  DFRC's  operations,  its  capital
requirements,  and  its  overall  financial  condition.

DESCRIPTION  OF  SECURITIES
---------------------------

As  of  April  13, 2005, there were 4,481,597,981 shares of common stock, no par
value,  issued  and  outstanding. Of those shares at least 38,706,663 shares are
restricted  securities  of DFRC within the meaning of Rule 144(a)(3) promulgated
under  the  Securities  Act of 1933, as amended, because such shares were issued
and  sold by DFRC in private transactions not involving a public offering. These
38,706,663  restricted  securities  are  held by affiliates and may only be sold
pursuant  to  a  registration  statement  or  pursuant  to  Rule  144.

In  general, under Rule 144, as currently in effect, subject to the satisfaction
of  certain  other  conditions,  a  person,  including  an affiliate of DFRC (in
general,  a  person  who  has  a  control  relationship with DFRC) who has owned
restricted  securities  of  common  stock  beneficially for at least one year is
entitled  to  sell,  within  any  three-month period, that number of shares of a
class  of securities that does not exceed the greater of (i) one percent (1%) of
the  shares  of that class then outstanding or, if the common stock is quoted on
NASDAQ,  (ii)  the  average  weekly trading volume of that class during the four
calendar  weeks  preceding  such sale. A person who has not been an affiliate of
DFRC  for  at  least  the  three  months  immediately preceding the sale and has
beneficially owned shares of common stock for at least two (2) years is entitled
to  sell  such  shares  under  Rule 144 without regard to any of the limitations
described  above.

No  prediction can be made as to the effect, if any, that future sales of shares
of common stock or the availability of common stock for future sale will have on
the  market  price  of  the  common stock prevailing from time-to-time. Sales of
substantial  amounts of common stock on the public market could adversely affect
the  prevailing  market  price  of  the  common  stock.

On  February  24,  2004,  the  board  of  directors approved an amendment to the
Certificate of Incorporation of the Company to increase the number of authorized
common  shares from 200,000,000 to 10,000,000,000.  The increase was approved by
a  holder  of the majority of the issued and outstanding shares of common stock,
notice  of  the increase has been provided to all shareholders of record and the
filing  of  a  Certificate  of  Amendment  with  the  State  of  Delaware.

200  TO  1  REVERSE  SPLIT
--------------------------

On  February  7, 2003, DFRC purported to effect a 1 for 200 reverse split of its
common  stock, but failed to give proper notice to its shareholders.  To rectify
this,  DFRC furnished an information statement dated May 29, 2003 to all holders
of  the  common  stock  of DFRC. The information statement disclosed that DFRC's
Board  of Directors had authorized the reverse stock split and that shareholders
holding  in excess of 50% of the outstanding common stock of DFRC had provided a
written  consent,  approving  the  reverse  stock  split for all shareholders of
record  on  May  29,  2003,  with fractional shares being rounded up to the next
whole  share.  The  reverse  stock  split was accordingly effected as of July 7,
2003.  All  fractional  shares  have been rounded up to the nearest whole share.
DFRC's  then  began trading on the OTC Bulletin Board under the symbol "DFRC.OB"
The  number  of  authorized  shares  will remain the same at Two Hundred Million
(200,000,000).  The  Board  of Director effected the reverse split in compliance
with  Rule  10b-17.

1,000  TO  1  REVERSE  SPLIT
----------------------------

On  November  1,  2004,  DFRC  made effective a 1,000 for 1 reverse split of its
common stock.  An Information Statement was filed by the Company to disclose the
reverse  stock split and reflected the approval of the board of directors of the
Company.  All  fractional shares will be rounded up to the nearest whole shares.
As  a result of the reverse split the Company in now trading on the OTC Bulletin
Board  under  the  symbol  "DFLR.OB"

PREFERRED  STOCK
----------------

DFRC  has  authorized  2,000,000  shares  of preferred stock with a par value of
$.001,  and  established  a  series  of  preferred shares designated as Series A
Convertible  Preferred  Stock,  consisting  of  1,000,000  shares.  The Series A
Convertible  Preferred  Stock  has  the  following  rights  and  privileges:

1.   The  shares  are  convertible  at  the  option  of  the  holder at any time
     into  common  shares,  at  a  conversion  rate  of  one  share  of Series A
     Convertible  Preferred Stock for 100 shares of common stock for a period of
     10 years from the issuance date.

2.   Requires two-thirds voting majority to authorize changes to equity.

3.   Redemption  provision  at  option  of  directors for $10 per share plus the
     greater  of  $3  per  share  or  50%  of  market  capitalization divided by
     2,000,000.

4.   The  holders  of  the  shares  are  entitled to one hundred (100) votes for
     each share held.

5.   Upon  the  liquidation  of  the  Company, the holders of the shares will be
     entitled  to  receive $10 per share plus redemption provision before assets
     distributed to other shareholders.

6.   The  holders  of  the  shares  are  entitled  to  dividends equal to common
     share dividends.

On  September  16,  2004, the Company filed with the Nevada Secretary of State a
Certificate  of  Designation of the Rights and Preferences of Preferred Stock of
Nexia Holdings, Inc.  This designation created 200,000,000 shares, no stated par
value,  of  Series  B  Convertible  Preferred  Stock,  out  of  the  200,000,000
authorized  shares  of  preferred  stock of the Company.  The Series B Preferred
Stock  holds voting rights equal to 500 shares of common stock for each share of
the  Series  B  Preferred  Stock  issued,  the shares do not have any conversion
rights  into  common  stock  or  any  other class of stock of the Company.  This
filing  was  reported  on  an  14c  filing  made  on  September  21,  2004.

RECENT  SALES  OF  UNREGISTERED  SECURITIES
-------------------------------------------

There  are  no recent sales of unregistered securities by DFRC during the period
covered  by this report, which have not been previously disclosed in Form 10-QSB
filings  or  Form  8-K  filings.

                                       19
<PAGE>

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

GENERAL
-------

DFRC  operates as a holding company.  DFRC's primary operations involve creating
and  managing  a  diverse  comprehensive portfolio of companies operating in key
industry  sectors.  DFRC's  primary operations consist primarily of two areas of
focus  which  include  real  estate  holdings  and  land  and natural resources.

REAL  ESTATE  OPERATIONS
------------------------

DFRC's  objective  with  respect  to its real property operations is to acquire,
through its subsidiaries, properties which management believes to be undervalued
and  which  DFRC  is  able to acquire through the limited expenditure of cash or
other consideration.  DFRC through its subsidiaries will attempt to acquire such
properties  by  assuming  existing favorable financing and paying the balance of
the  purchase  price  with  the  delivery  of common stock of either DFRC or the
subsidiary.  DFRC  will  make  investments  in  improvements  to  the  acquired
properties  with  the  objective  of increasing occupancy, rental rates and thus
improving  the  cash  flows of the properties.  Currently DFRC has negative cash
flows  from  its rental operations for the year ended December 31, 2004.  As the
properties  were  acquired  during  the past year DRFC will seek to minimize and
reverse  the  cash  flow  deficit  through  the  efforts  stated  above.

OFF-BALANCE  SHEET  ARRANGEMENT
-------------------------------

DFRC  has  no  off-balance  sheet  arrangements.

                                       20
<PAGE>

RESULTS  OF  OPERATIONS

REVENUES
--------

DFRC  had  revenues of $61,082 for the year ended December 31, 2004, compared to
revenues  of  $64,967  for  2003.  DFRC's  expenses  and  impairment losses were
$5,531,341 for the year ended December 31, 2004, an increase from $1,731,862 for
2003.  Accordingly,  DFRC  suffered  a  net  loss for the year ended 2004 in the
amount of $5,927,969 as compared to a net loss in the year 2003 of $2,020,908.

EXPENSES
--------

General  and  administrative  expenses  increased  $4,371,425 for the year ended
December  31,  2004,  from  $709,260  for  the  year  ended December 31, 2003 to
$5,080,685  for  the  year ended December 31, 2004.  The increase in general and
administrative  expense  results  from  the  following:

In  January  2004, the Company issued 30,000,000 restricted common shares to Mr.
Chapman,  the  Chairman  of  the  Board,  CEO,  and  President at that time, and
recorded  $2.4  million  in expense.  The shares were issued as compensation for
Mr.  Chapman's  continuing  efforts  to  identify business opportunities for the
Company,  and  the  Company  had  no such expense in 2003.  The Company does not
anticipate  issuing  additional  shares  in  the future related to Mr. Chapman's
efforts  to  identify  business  opportunities.

During  2004,  we  hired  seven additional employees and consultants in order to
move  forward with the bottled water business opportunity and the Mexican mining
business  opportunity  identified  by  Mr.  Chapman,  and  expenses  related  to
compensation  of  the  employees and consultants increased $590,000 in 2004 over
2003.  In 2004, employees and consultants were primarily compensated through the
issuance of stock options, a non-cash method of compensation.  By December 2004,
many of the employees and consultants were no longer with the Company because we
did  not  acquire  the bottled water business, and we do not expect expenses for
employees  and  consultants  to  continue  at  this  level  in  the  future.

Mr.  Chapman's  salary  increased  from  $20,000  per month to $50,000 per month
effective  April  1,  2004.  The  Company  recorded compensation expense for Mr.
Chapman's  salary of $510,000 in 2004, versus $80,000 in 2003, or an increase of
$430,000.  The Company expects to incur expense for Mr. Chapman's salary as long
as  he  is  an  officer  and  director  of  the  Company.

The  Company  and  Mr.  Chapman  were  named as respondents in legal proceedings
initiated  by  the Securities and Exchange Commission in October 2003.  See Item
3.  Legal Proceedings and Note 6 to the audited financial statements for further
discussion  on  these  legal  proceedings.  Proposed  settlement agreements were
submitted  in  2004, and the Company recorded $305,000 of expense related to the
settlement  agreements.  The  Company  did not record any expense related to the
settlement  agreements  in  2003.  The  Company does not anticipate future penal
actions.

In  September 2004, the Company issued 500 million restricted common shares each
to  the  three  members  of  the  Board  of  Directors,  and recorded expense of
$300,000.  There was no such issuance of shares in 2003.  The Company expects to
issue  additional  shares  in  the  future  to  compensate  the  board  members.

As  a  result  of  the  increased compensation to employees in 2004, payroll tax
expense  increased  $158,000  over 2003.  We do no expect payroll tax expense to
continue  t  this  level  in  the  future.

The  Company's  2004  expense  for accounting related services increased $61,000
over 2003.  The Company incurred higher accounting and audit fees as a result of
the  operations  and  transactions  completed during the year.  We do not expect
accounting  related  service  fees  to  continue to increase at this rate in the
future.

The  Company  reserved  $60,000  against  a  note  receivable  that  may  not be
collected.  No  such  reserve was established in 2003.  The Company continues to
pursue  collection  of the note receivable via management's interaction with the
maker of the note.  The Company has not enlisted a collection agency or attorney
to  pursue  collection of the note.  The Company does not expect future reserves
against  the  note  receivable.

The  Company's travel related expenses increased $44,000 in 2004.  The increased
travel  was  incurred  by  employees  and  consultants  in  the normal course of
identifying  and  expanding  on  new  business opportunities in 2004.  We do not
expect  travel  expense  to  continue  at  this  level  in  the  future.

Additionally,  the  Company incurred $382,789 in expenses related to the Mexican
mining concession during the year ended December 31, 2004, including the payment
of  $300,000  to preserve the exclusive four month option period provided by the
letter  of  intent  to  acquire  the  mining  concessions and there were no such
expenses during the similar period for 2003.  The Company recorded an impairment
loss  of  $1,000,000  during  the  year ended December 31, 2003 to write off the
goodwill  recorded  in the purchase of Wichita Development Corporation and there
was no such charge during the similar period for 2004.  The loss from operations
for  the  Company  increased to $5,470,259 for the year ended December 31, 2004,
from  $1,666,895 for the year ended December 31, 2003.

LIABILITIES
-----------

The  total  current  liabilities  of the Company increased to $2,257,282 for the
year  ended  December  31,  2004 from $1,185,566 for the year ended December 31,
2003.  In  2004,  all of the Company's debt related to real estate properties is
classified  as  current.  The Company recorded accrued payroll and payroll taxes
in  2004  totaling  $284,885,  and  there were no such obligations in 2003.  The
Company  accrued expenses in 2004 totaling $265,362 related to the normal course
of business, and there were fewer such obligations in 2003.  The Company accrued
$296,499  in 2004 for penalties and interest related to settling litigation with
the  SEC,  and  there  was  no  such  accrual  in  2003.

The  net  assets  of  the  company  represented  by  real property and equipment
decreased to $718,346 as of December 31, 2004 from $1,332,338 as of December 31,
2003  as  a  result of the loss of the Wichita and Ogden, Utah properties to the
secured  creditors  of  those properties. This reduction in assets resulted in a
decrease  of  the total assets of the Company to $1,149,537 as of the year ended
December  31,  2004  from  $1,464,059  as  of  December  31,  2003.

                                       21
<PAGE>

CASH  FLOWS
-----------

Cash  flows  used  in  operations  were $979,788 for the year ended December 31,
2004,  compared  to cash flows used in operations of $466,846 for the year ended
December  31,  2003.  Cash flows used in operating activities for the year ended
December  31, 2004, are primarily attributable to the operating expenses related
to  the investigation and due diligence review of the mining interests, property
and  real  estate  interests  that DFRC acquired or investigated during the year
ended December 31, 2004 and represent an increase from the prior year due to the
change  in  the  nature  of  DFRC's  operations.  Cash  flows  used in investing
activities  decreased  to  $59,084  for  the  year  ended December 31, 2004 from
$67,813 used in investing activities for the year ended December 31, 2003.  Cash
flows from financing activities increased from $540,925 in 2003 to $1,166,260 in
2004,  resulting  primarily  from  the  exercise  of more stock options in 2004.

LIQUIDITY  AND  CAPITAL  RESOURCES

As  of  December  31,  2004,  DFRC  had  current  assets of $431,191 and current
liabilities  of $2,257,282.  A substantial portion of DFRC's current liabilities
as  of  December  31,  2004, consist of the current portion of notes payable and
related  party  payables.  DFRC's current portion of notes payable were $716,846
at December 31, 2004 and DFRC was indebted to related parties of DFRC in the sum
of  $323,517  for  loans  and  advances  made  to  DFRC.

DFRC  was  in  default on its mortgage payable and interest of totaling $570,000
and  $557,000  to  First Bank of Beverly Hills as of December 31, 2004 and March
31,  2005, respectively.  We intend to raise funds through the sale of equity or
assets  in  order  to make the payments required to cure the default.  If we are
unable  to  cure  the  default,  we  may  lose the property through foreclosure.

During the fiscal year ended December 31, 2004, the Company's board of directors
has  authorized  the  issuance  of  1,956,799,270 (adjusted to reflect the 1 for
1,000  reverse  stock  split)  shares of common stock as compensation to various
individuals  for  services  rendered to the Company.  All the shares were issued
pursuant  to  the  S-8  Registration  Statement of the Company.  The shares were
issued  as  compensation  to employees, consultants, and advisors to the Company
due  to  the  lack  of cash flow from the Company's operations and to retain the
services  and  provide  timely  payment  of  obligations  to  those individuals.

SUBSEQUENT  EVENTS-2005

During the current year of 2005, the Company's board of directors has authorized
the issuance of 1,855,000,000 shares of the Company's common stock as payment to
various  individuals for services that they have rendered to the Company.  These
issuances  of  common  shares are a continuation of the Company policy set forth
above  to issue shares as compensation for individuals providing services to the
Company.

DFRC  believes  that  it  does  not  have  sufficient cash, cash equivalents and
operating  income  to  maintain its business at its existing level in 2005. DFRC
will  require significant new capital in order to execute its strategic plan and
believes  that this capital will only be available through an offering of shares
of  its  common  stock. Our success in raising this capital will depend upon our
ability  to  access equity capital markets and we may not be able to do so or to
do  so  on  acceptable  terms. If we fail to obtain funds on acceptable terms we
will  not  be  able  to  execute  our  strategic plan and would have to delay or
abandon  some or all of our plans for growth.  If we are able to obtain funds we
believe  that  the  terms of such arrangement will result in an offering that is
highly dilutive to existing holders of shares of our common stock because of the
price  at  which  we  would  have  to issue those shares and the large number of
shares  we  would  have  to  issue  at  those  prices.

ABILITY  TO  CONTINUE  AS  A  GOING  CONCERN

DFRC's ability to continue as a going concern is in doubt.  As DFRC has incurred
a  loss from its operations during both calendar years 2003 and 2004 and has had
losses  in  prior  years  as well.  DFRC will need to substantially decrease its
operating  expenses,  increase  its  operating  income,  and  raise  significant
additional  capital.  There is no assurance that DFRC will be able to accomplish
all  or  any  of  these items.  In the event that these events do not take place
DFRC  will  in  all  probability  not  be able to continue as a going concern in
calendar  year  2005.

                                       22
<PAGE>

IMPACT  OF  INFLATION
---------------------

DFRC  believes that inflation has had a negligible effect on operations over the
past  three  years.  DFRC  believes that it can offset inflationary increases in
the  cost  of  material  and  labor  by  increasing  and  improving  operating
efficiencies.

GENERAL  REAL  ESTATE  INVESTMENT  RISKS
----------------------------------------

DFRC's  investments are subject to varying degrees of risk generally incident to
the  ownership  of  real  property.  Real  estate  values and income from DFRC's
current  properties  may  be  adversely affected by changes in national or local
economic  conditions and neighborhood characteristics, changes in interest rates
and  in  the  availability, cost and terms of mortgage funds, occupancy rates in
DFRC's properties, the impact of present or future environmental legislation and
compliance  with  environmental laws, the ongoing need for capital improvements,
changes  in  governmental  rules and fiscal policies, civil unrest, acts of God,
including  earthquakes and other natural disasters which may result in uninsured
losses,  acts of war, adverse changes in zoning laws and other factors which are
beyond  the  control  of  DFRC.

VALUE  AND  ILLIQUIDITY  OF  REAL  ESTATE
-----------------------------------------

Real  estate  investments  are relatively illiquid.  The ability of DFRC to vary
its  ownership  of  real  estate property in response to changes in economic and
other  conditions  is limited.  If DFRC must sell an investment, there can be no
assurance  that DFRC will be able to dispose of it in the time period it desires
or  that  the  sales  price  of  any investment will recoup the amount of DFRC's
investment.

PROPERTY  TAXES
---------------

DFRC's real property is subject to real property taxes.  The real property taxes
on  the  real property may increase or decrease as property tax rates change and
as  the  property  is  assessed or reassessed by taxing authorities. If property
taxes  increase,  DFRC's  operations  could  be  adversely  affected.

MINING  INTERESTS
-----------------

DFRC is in the final stages of evaluation of an option to acquire various mining
concessions located in the Sierra Madre mountain range of Mexico.  Expenses were
incurred during the first quarter of 2005 and during the year ended December 31,
2004  in  an  effort to conduct the necessary due diligence and investigation of
the  potential  for  mining  sufficient  quantities  of precious metals from the
concessions  to  operate  a  profitable  mining  recovery  effort at the subject
location.  Additional expenses are expected from this evaluation process and the
expected  return  from  future  mining  operations, if any are undertaken by the
Company,  are  still  to  be  determined.

ITEM  7.     FINANCIAL  STATEMENTS

The  Company's  financial statements for the fiscal year ended December 31, 2004
are  attached  hereto  as  pages  F-1  through  F-20.

                                       23
<PAGE>

                   DIVERSIFIED FINANCIAL RESOURCES CORPORATION

                        CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2004 and 2003

                                       24
<PAGE>

                   DIVERSIFIED FINANCIAL RESOURCES CORPORATION
                   -------------------------------------------

                          INDEX TO FINANCIAL STATEMENTS


                                                         Page
                                                         ----

Independent  Auditors'  Report                           F-2

Independent  Auditors'  Report                           F-3

Consolidated  Balance  Sheets                            F-4

Consolidated  Statements  of  Operations                 F-5

Consolidated  Statements  of  Stockholders'  Deficit     F-6

Consolidated  Statements  of  Cash  Flows                F-8

Notes  to  Consolidated  Financial  Statements           F-9


                                       F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To  the  Board  of  Directors  and
Stockholders  of  Diversified  Financial  Resources  Corporation

We  have  audited  the  accompanying  consolidated  balance sheet of Diversified
Financial  Resources  Corporation  as  of  December  31,  2004  and  the related
consolidated  statements  of operations, stockholders' equity (deficit) and cash
flows  for  the  year  ended  December  31,  2004,  These consolidated financial
statements  are  the  responsibility  of  the  Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements  based  on  our  audit.  The  consolidated  financial  statements  of
Diversified  Financial  Resources  Corporation  as  of  December  31, 2003, were
audited  by  other  auditors  whose  report  dated  April  2,  2004,  on  those
consolidated  statements included an explanatory paragraph describing conditions
that raised substantial doubt as to the Company's ability to continue as a going
concern  as  discussed  in  Note  1  the  consolidated  financial  statements.

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

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  Diversified
Financial  Resources Corporation as of December 31, 2004, and the results of its
operations  and  its  cash  flows  for  the  year  then ended in conformity with
accounting  principles  generally  accepted  in  the  United  States of America.

The  accompanying  consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated  financial  statements,  the  Company has incurred a loss and has a
stockholders'  deficit.  These  conditions  raise  substantial  doubt  about its
ability  to  continue  as  a  going  concern. Management's plans regarding those
matters  are  also described in Note 1. The consolidated financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

Mendoza  Berger  &  Company,  LLP

/s/  Mendoza  Berger  &  Company,  LLP
Irvine,  California
April  16,  2005,  except  for  Note  10  and  18
which  are  dated  February  27,  2006

                                       F - 2

<PAGE>

                REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

To  the  Stockholders'  and
Board  of  Directors  of
Diversified  Financial  Resources  Corporation

We  have  audited  the  accompanying  consolidated  balance sheet of Diversified
Financial  Resources  Corporation,  as  of  December  31,  2003  and the related
consolidated  statements  of  operations,  stockholders' deficit, and cash flows
for  the  year ended December 31, 2003.  These consolidated financial statements
are  the  responsibility  of the Company's management.  Our responsibility is to
express  an  opinion  on  these  consolidated  financial statements based on our
audit.

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

In  our  opinion,  the financial statements referred to above present fairly, in
all material respects, the financial position of Diversified Financial Resources
Corporation,  as  of December 31, 2003 and the results of its operations and its
cash  flows  for the year ended December 31, 2003, in conformity with accounting
principles  generally  accepted  in  the  United  States  of  America.

As  discussed  in  Note  18  to  the consolidated financial statements, an error
resulting  in  an  understatement  of  previously  reported  liabilities  and an
understatement  of  net  loss  was  discovered  by  management  of  the Company.
Accordingly,  the  2003  consolidated financial statements have been restated to
correct  the  error.

The  accompanying  consolidated financial statements have been prepared assuming
that  the  Company  will continue as a going concern.  As discussed in Note 1 to
the consolidated financial statements, the Company has incurred a loss and has a
stockholders'  deficit.  These  conditions  raise  substantial  doubt  about its
ability  to  continue  as  a  going concern.  Management's plans regarding those
matters  also are described in Note 1.  The consolidated financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.



JONES  SIMKINS,  P.C.
Logan,  Utah
April  2,  2004,  except  for  Note  18  which  is  dated  February  27,  2006

                                      F - 3
<PAGE>


<TABLE>


                     DIVERSIFIED FINANCIAL RESOURCES CORP.
                          CONSOLIDATED BALANCE SHEETS
<CAPTION>

<S>                                             <C>                  <C>

                                              DECEMBER 31,   DECEMBER 31,
                                                  2004           2003
                                                RESTATED       RESTATED
                                             -------------  -------------
ASSETS
Current assets:
Cash and cash equivalents                    $    135,754   $      8,006
Money market funds                                 55,252              -
Receivable from Finance 500                        26,849              -
Investments, available for sale, net                1,052         19,548
Receivables                                         3,571         91,952
Receivables from employees                        141,342              -
Receivable - JR Chapman                            13,264              -
Prepaid expenses                                   44,933              -
Deposits                                            9,174         12,215
                                             -------------  -------------
Total current assets                              431,191        131,721

Property and equipment, net                       718,346      1,332,338
                                             -------------  -------------
Total assets                                 $  1,149,537   $  1,464,059
                                             =============  =============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable                             $    100,481   $     93,629
Accrued payroll and taxes                         284,885              -
Accrued expenses                                  265,362         48,268
Litigation settlement payable                     296,499              -
Lines-of-credit                                   269,692              -
Notes payable - related parties                   323,517        210,245
Current portion of notes payable                  716,846        833,424
                                             -------------  -------------
Total current liabilities                       2,257,282      1,185,566
Lines-of-credit                                         -        260,950
Notes payable                                           -        107,637
Purchase price payable                          1,000,000      1,000,000
                                             -------------  -------------
Total liabilities                               3,257,282      2,554,153

Commitments and contingencies                           -              -

Stockholders' deficit
Preferred stock; $.001 par value,
200,000,000 and 2,000,000 shares
authorized at December 31, 2004
and 2003, respectively; 13,150
shares issued and outstanding at
December 31, 2004 and 2003                             13             13

Common stock; no par value;
10,000,000,000 and 200,000,000
shares authorized at December 31,
2004 and 2003, respectively;
2,081,599,872 and 11,208 shares
issued and outstanding as of
December 31, 2004 and 2003, respectively       18,490,075     13,561,261

Additional paid-in capital                        131,487        131,487
Accumulated other comprehensive loss              (63,949)       (45,453)
Accumulated deficit                           (20,665,371)   (14,737,402)
                                             -------------  -------------
Total stockholders' deficit                    (2,107,745)    (1,090,094)
                                             -------------  -------------
Total liabilities and stockholders' deficit  $  1,149,537   $  1,464,059
                                             =============  =============
<FN>

See  accompanying  notes  to  financial  statements.
</TABLE>

                                     F - 4
<PAGE>

<TABLE>

DIVERSIFIED FINANCIAL RESOURCES CORP.
STATEMENT OF OPERATIONS
<CAPTION>

<S>                                          <C>            <C>
                                                Year ended December 31,
                                             ----------------------------
                                                  2004           2003
                                             -------------  -------------
                                                               Restated

Revenue                                      $     61,082   $     64,967
General and administrative expenses             5,080,685        709,260
Mining exploration expenses                       382,789              -
Impairment loss                                    67,867      1,022,602
                                             -------------  -------------
Loss from operations                           (5,470,259)    (1,666,895)

Gain on sale of securities                            289          2,405
Interest expense                                 (150,822)       (59,370)
Loss on sale of property                         (272,966)      (339,697)
                                             -------------  -------------
Net loss before equity interest in
minority net income (loss) and
provision for income taxes                     (5,893,758)    (2,063,557)

Provision for income taxes                              -              -
                                             -------------  -------------
Loss before equity interest
in minority income (loss)                      (5,893,758)    (2,063,557)

Loss before interest in net
loss of subsidiaries                              (34,211)        42,649
                                             -------------  -------------
Net loss                                     $ (5,927,969)  $ (2,020,908)
                                             =============  =============
Net loss per share - basic and diluted       $      (0.06)  $    (264.27)
                                             =============  =============
Weighted average number of common
shares outstanding - basic and diluted         99,969,473          7,647
                                             =============  =============
<FN>

See accompanying notes to financial statements.
</TABLE>
                                     F - 5
<PAGE>



<TABLE>
                     DIVERSIFIED FINANCIAL RESOURCES CORP.
                      STATEMENTS OF STOCKHOLDERS' DEFICIT
               Years ended December 31, 2004 and 2003 (Restated)
                                  Page 1 of 2
<CAPTION>
<S>                                          <C>            <C>            <C>            <C>
                                                    Preferred Stock                 Common Stock
                                             ----------------------------  ----------------------------
                                                 Shares         Amount         Shares         Amount
                                             -------------  -------------  -------------  -------------
Balances at December 31, 2002                           -   $          -            616   $ 12,747,289

Issuance of preferred stock for services           13,150             13              -              -

Issuance of common stock for:
     Cash                                               -              -          3,044        539,804
     Services                                           -              -            400         50,000
     Acquisition of subsidiaries                        -              -          7,148        224,168

Comprehensive loss:
Net loss, as restated                                   -              -              -              -
Other comprehensive loss on investments,
available for sale                                      -              -              -              -
                                             -------------  -------------  -------------  -------------
Balances at December 31, 2003, restated            13,150             13         11,208     13,561,261

Issuance of common stock for:
     Cash, receivables, compensation,
     and construction costs                             -              -    252,446,500      1,732,063
     Services                                           -              -   1,704,352,770     3,062,587
     Other - accounts payable and MTC agreement         -              -    124,789,394        134,164

Comprehensive loss:
Net loss, as restated                                   -              -              -              -
Other comprehensive loss on investments,
available for sale                                      -              -              -              -
                                             -------------  -------------  -------------  -------------
Balances at December 31, 2004, restated            13,150   $         13   2,081,599,872  $ 18,490,075

<FN>

See accompanying notes to financial statements.

</TABLE>

                                     F - 6
<PAGE>

<TABLE>
                     DIVERSIFIED FINANCIAL RESOURCES CORP.
                      STATEMENTS OF STOCKHOLDERS' DEFICIT
               Years ended December 31, 2004 and 2003 (Restated)
                                  Page 2 of 2
<CAPTION>
<S>                                          <C>            <C>            <C>            <C>
                                               Additional        Other
                                                paid-in     Comprehensive   Accumulated
                                                capital          Loss         Deficit         Total
                                             -------------  -------------  -------------  -------------
Balances at December 31, 2002                $          -   $          -   $(12,716,494)        30,795

Issuance of preferred stock for services          131,487              -              -        131,500

Issuance of common stock for:
Cash                                                    -              -              -        539,804
Services                                                -              -              -         50,000
Acquisition of subsidiaries                             -              -              -        224,168

Comprehensive loss:
Net loss, as restated                                   -              -     (2,020,908)    (2,020,908)
Other comprehensive loss on investments,
available for sale                                      -        (45,453)             -        (45,453)
                                             -------------  -------------  -------------  -------------
Balances at December 31, 2003, restated           131,487        (45,453)   (14,737,402)    (1,090,094)

Issuance of common stock for:

     Cash, receivables, compensation,
     and construction costs                             -              -              -       1,732,063
     Services                                           -              -              -       3,062,587
     Other - accounts payable
     and MTC agreement                                  -              -              -        134,164

Comprehensive loss:
Net loss                                                -              -     (5,927,969)    (5,927,969)
Other comprehensive loss on investments,
available for sale                                      -        (18,496)             -        (18,496)
                                             -------------  -------------  -------------  -------------
Balances at December 31, 2004, restated      $    131,487   $    (63,949)  $(20,665,371)   ($2,107,745)
                                             =============  =============  =============  =============
<FN>
See accompanying notes to financial statements.
</TABLE>

                                     F - 7
<PAGE>

<TABLE>
                     DIVERSIFIED FINANCIAL RESOURCES CORP.
                              CASH FLOW STATEMENT
<CAPTION>


Year ended December 31,
                                                  2004           2003
                                             -------------  -------------
                                                              Restated
<S>                                          <C>            <C>
Cash flows from operating activities:
Net loss                                     $ (5,927,969)  $ (2,020,908)

Adjustments to reconcile net loss to
net cash used in operating activities:
Stock compensation expense                      3,473,816        181,500
Reserve for receivables                            58,691              -
Write-off of receivables                            1,040              -
Depreciation                                       23,804         28,174
Gain on sale of investments,
available-for-sale                                   (289)        (2,405)
Loss on foreclosure of property                   272,966        339,697
Loss on impairment of assets                       67,867      1,022,602
Minority interest                                   7,800        (91,943)

Changes in assets and liabilities:
Receivables                                       (11,463)             -
Prepaid expenses                                     (691)             -
Deposits                                            9,674        (12,215)
Accounts payable                                  133,216         26,587
Accrued payroll & taxes                           284,885              -
Accrued expenses                                  217,094         48,268
Related party payables                            113,272         13,797
Litigation settlement payable                     296,499              -
                                             -------------  -------------
Net cash used in operating activities            (979,788)      (466,846)

Cash flow from investing activities
Purchase of money funds                           (55,252)             -
Increase in notes receivable                            -        (90,437)
Purchase of fixed equipment                        (4,121)             -
Net cash received in acquisitions                       -         20,451
Proceeds from sale of investments,
available-for-sale, net                               289          2,173
                                             -------------  -------------
Net cash (used in) provided by
investing activities                              (59,084)       (67,813)

Cash flows from financing activities
Increase (decrease) in lines-of-credit              8,742         (1,847)
Principal payments on notes payable               (15,763)        (1,501)
Proceeds from issuance of notes payable            60,000          4,469
Issuance of common stock                        1,113,641        539,804
                                             -------------  -------------
Net cash provided by financing activities       1,166,620        540,925
                                             -------------  -------------
Net increase (decrease) in cash                   127,748          6,266

Cash and cash equivalents at
beginning of year                                   8,006          1,740
                                             -------------  -------------
Cash and cash equivalents at end of year     $    135,754   $      8,006
                                             =============  =============
<FN>
See accompanying notes to financial statements.
</TABLE>
                                     F - 8
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

Note  1  -  Basis of Presentation, Current Operating Environment and Significant
--------------------------------------------------------------------------------
Accounting  Policies
--------------------

Organization
------------

Diversified  Financial Resources Corporation (DFRC) was organized under the laws
of  the  State  of  Delaware  on January 6, 1993. DFRC and its subsidiaries (the
Company)  are primarily engaged in the rental of commercial and residential real
estate.

On  June 30, 2003, the Company acquired approximately 83% of Wichita Development
Corporation  (Wichita),  in exchange for 1,148,251 common shares of the Company.
The  shares  issued in the acquisition were valued at $218,168 ($.19 per share).
This  value  was  determined  based  on  the net price per share realized on the
issuance  of  the  Company's  common  shares issued for cash, to other entities,
during  the  same  period.

In  addition,  as part of the acquisition agreement, the Company guaranteed that
1,000,000  of the shares issued would have an aggregate liquidation value of not
less  than  $1.00 per share within 36 months from the date of the agreement.  If
the  liquidation value is not satisfied with the initial issuance of shares, the
Company  would  be  required  to  issue  additional  common shares sufficient to
satisfy  the  guaranteed  value.

Wichita  and  it's  83%  owned  subsidiary, Salt Lake Development, Inc., own one
commercial building and four condos as of December 31, 2004.  Wichita also has a
wholly  owned  subsidiary,  Wichita  Properties  Corporation,  which  has  no
significant  assets  or  liabilities.

On  March 24, 2003, the Company entered into an agreement to purchase all of the
issued  and  outstanding  shares  of MT&C Diversified Land and Natural Resources
Corporation  (MT&C)  in  exchange for the issuance of 6,000,000 common shares of
the Company.  John Chapman is one of the shareholders of MT&C and is the current
President  and  major  shareholder  of  the  Company.

The  common  shares issued were valued at $6,000 (par value) and the net deficit
of MT&C was $16,602, which resulted in the purchase price being in excess of the
assets  by $22,602.  At March 31, 2003, the Company determined that the goodwill
of  $22,602 was impaired and, therefore, recognized a loss equal to this amount.

On  June 5, 2002, the Company entered into a Stock Exchange Agreement to acquire
100%  of  the  common  stock  of Diversified Holdings-XIX, Inc. (Diversified), a
real-estate  holding  company, in exchange for common stock of the Company.  The
common stock issued as a result of this transaction was valued at the historical
cost  of the net assets of Diversified.  Diversified owns two houses, one condo,
and  one  duplex  as  of  December  31,  2004.

A  formerly  wholly  owned  subsidiary,  eLocity,  Inc (eLocity), was engaged in
building  and  maintaining  websites.  Effective  April  30,  2002,  all  of the
outstanding  shares  of  eLocity's  common  stock  were  distributed  as a stock
dividend  to the shareholders of the Company and, as a result, eLocity ceased to
be  a  subsidiary  of  the  Company.

                                      F - 9
<PAGE>

Going  Concern
--------------

For  the  years ended December 31, 2004 and 2003, the Company generated revenues
of  $61,000  and  $65,000, respectively, incurred net losses of $5.9 million and
$2.0  million,  respectively,  and  had  negative  cash  flows  from  operating
activities of $980,000 and $467,000, respectively.  As of December 31, 2004, the
company had an accumulated deficit of $20.7 million, negative working capital of
$1.8  million, current portion of notes payable of $717,000 and accrued employee
wages  and  taxes  of  $285,000.  The  Company  expects  to  continue  to  incur
significant  losses and negative cash flows from operating activities through at
least  December  31,  2005,  primarily due to our inability to generate revenues
sufficient  to  finance  our  operations.

The  Company's cash resources, limited to borrowings from related parties, sales
of  equity  securities,  and  rents  received  on  rental  properties,  are  not
sufficient  to  cover  operating  expenses.  The Company's low stock price makes
raising capital very difficult.  The Company has several properties that are not
generating  rental  income because they are not leased by tenants.  As a result,
payments to vendors, lenders, and employees have been delayed.  In addition, the
Company  has  been  declared  in  default  of  its borrowings from First Bank of
Beverly  Hills  that  total  $570,000,  including  interest,  and  the Company's
building  in  Salt Lake City, UT is the security for the loan.  If we are unable
to  cure  the  default  in  a  timely  manner,  we may lose the property through
foreclosure.

These  factors,  as  well as the risk factors set out elsewhere in the Company's
Annual  Report  on  Form  10-KSB,  as amended, raise substantial doubt about the
Company's  ability  to  continue as a going concern.  The accompanying financial
statements  do not include any adjustments that might result from the outcome of
this uncertainty.  Management intends to fund operations through the issuance of
additional  equity or debt instruments or through the sale of assets.  There can
be  no  assurance  that  management's  plans  will  be  successful.

Principles  of  Consolidation
-----------------------------

The  consolidated  financial statements presented herein include the accounts of
Diversified  Financial  Resources  Corporation  and  its  subsidiaries.  All
significant  intercompany  balances  and  transactions  have  been  eliminated.

Use  of  Estimates
------------------

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

Reclassifications
-----------------

Certain  previously  reported  amounts  have been reclassified to conform to the
current  period  presentation.

Cash  and  Cash  Equivalents
----------------------------

For  purposes  of  the statement of cash flows, the Company considers all highly
liquid  investments with an original maturity of three months or less to be cash
equivalents.

Concentration  of  Credit  Risk
-------------------------------

The  Company  maintains  its cash in bank deposit accounts, which, at times, may
exceed  federally insured limits.  The Company has not experienced any losses in
such  accounts  and believes it is not exposed to any significant credit risk on
cash  and  cash  equivalents.

Investments
-----------

The  Company  classifies  its  investments  as "available for sale."  Securities
classified  as  "available  for sale" are carried in the financial statements at
fair  value.  Realized  gains  and  losses,  determined  using  the  specific
identification  method, are included in operations; unrealized holding gains and
losses  are  reported  as  a  separate  component  of

                                      F - 10
<PAGE>

accumulated  other comprehensive income.  Declines in fair value below cost that
are  other  than  temporary  are  included  in  operations.

Property  and  Equipment
------------------------

Property  and  equipment  are  stated  at  cost  less  accumulated depreciation.
Depreciation  is  determined  using  the straight-line method over the estimated
useful  lives  of  the  assets.  Expenditures  for  maintenance  and repairs are
expensed  when  incurred  and  betterments are capitalized.  Gains and losses on
sale  of  property  and  equipment  are  reflected  in  operations.

Impairment  of  Long-Lived  Assets
----------------------------------

The  Company  evaluates  its  long-lived assets in accordance with SFAS No. 144,
"Accounting  for  the  Impairment of Long-Lived Assets".  Long-lived assets held
and  used  by the Company are reviewed for impairment whenever events or changes
in  circumstances  indicate  that  their  net book value may not be recoverable.
When  such  factors  and circumstances exist, the Company compares the projected
undiscounted  future  cash  flows  associated with the related asset or group of
assets  over  their  estimated  useful  lives  against their respective carrying
amounts.  Impairment, if any, is based on the excess of the carrying amount over
the  fair  value  of  those  assets  and  is recorded in the period in which the
determination  was  made.

Stock-Based  Compensation
-------------------------

The Company accounts for stock option plans in accordance with the provisions of
Accounting  Principles Board Opinion No. 25 ("APB No. 25"), Accounting for Stock
Issued  to  Employees, and related interpretations, which require the Company to
recognize  compensation expense on the grant date if the current market price of
the  stock  exceeds  the  exercise  price.

In  December  2002, the Financial Accounting Standards Board ("FASB") issued the
Statement  of  Financial  Accounting  Standard  No.  SFAS  148 ("SFAS No. 148"),
Accounting  for  Stock-Based  Compensation - Transition and Disclosure. SFAS No.
148  amended  SFAS  No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair value based
method  of  accounting  for stock-based employee compensation. In addition, SFAS
No. 148 amended the disclosure requirements of SFAS No. 123 to require prominent
disclosures  in both annual and interim financial statements about the method of
accounting  for  stock-based  employee compensation and the effect of the method
used  on reported results. SFAS No. 148 became effective for fiscal years ending
after  December 15, 2002. The Company chose not to adopt the voluntary change to
the fair value based method of accounting for stock-based employee compensation.
If  the  Company  chose to adopt such a method in the future, its implementation
pursuant  to  SFAS  No.  148  could  have  a material effect on its consolidated
financial  position  and  results  of  operations.

<PAGE>

                                     F - 11

<TABLE>
<CAPTION>

<S>                                          <C>             <C>
                                                Years ended December 31,
                                             ----------------------------
                                                  2004           2003
                                             -------------  -------------
Net loss applicable to common
stockholders, as reported                   $  (5,927,969)  $ (2,020,908)

Add: total stock-based employee
Compensation                                   (1,881,000)             -
                                             -------------  -------------
Pro-forma net loss                          $  (7,808,969)  $ (2,020,908)
                                            ==============  =============
Basic and diluted net loss per share
applicable to common stockholders, as
Reported                                    $       (0.06)  $    (264.27)

Effect of stock-based compensation
expense per share                                   (0.02)             -
                                             -------------  -------------
Pro forma net loss available to common
stockholders per share (basic and diluted)  $       (0.08)  $    (264.27)
                                            ==============  =============
</TABLE>

<TABLE>

The  Black  Scholes  option-pricing model was used in the fair value method with
the  following  assumptions:
<CAPTION>

<S>                                          <C>             <C>
                                                Years ended December 31,
                                             ----------------------------
                                                  2004           2003
                                             -------------  -------------

Risk-free interest rate                              1.41        n/a
Dividend yield                                          -        n/a
Volatility factor                                    2027%       n/a
Weighted-average expected option life               7 days       n/a
</TABLE>

For  purposes of the adjusted pro forma disclosures, the estimated fair value of
the  options  is  amortized  to  expense  over  the  vesting  period.  The
weighted-average fair value of options granted during 2004 was $.0005, and there
were  no  options  granted  in  2003.

Revenue  Recognition
--------------------

Rental  revenue  is  generally  recognized  at  the  time rents are invoiced and
collectibles  is  reasonably  assured.  This  policy meets the criteria of Staff
Accounting  Bulletin  101  in  that  there is persuasive evidence of an existing
contract  or  arrangement,  services  have been provided, the price is fixed and
determinable  and  the  collectibles  is  reasonably  assured.

Income  Taxes
-------------

Deferred  income  taxes  are  provided  in  amounts sufficient to give effect to
temporary  differences  between financial and tax reporting, principally related
to  net  operating  loss  carryforwards.

                                     F - 12

<PAGE>

Comprehensive  Loss
-------------------

Under  SFAS  No.  130, Reporting Comprehensive Income or Loss, the reporting and
display  of  comprehensive  loss and its components is required in the financial
statements.
For the periods presented in the accompanying consolidated financial statements,
the  Company  classifies  unrealized  holding  gains  and  losses  as a separate
component  of  accumulated  other  comprehensive  income.

Net  Loss  Per  Share
---------------------

The  computation  of  basic  earnings  per common share is based on the weighted
average  number  of  shares  outstanding  during  the  year.

The  computation  of  diluted earnings per common share is based on the weighted
average  number  of  shares  outstanding  during  the year plus the common stock
equivalents  which  would  arise from the exercise of stock options and warrants
outstanding  using  the  treasury  stock method and the average market price per
share  during  the  year.

Common  stock  equivalents  are  not  included in the diluted earnings per share
calculation  when  their  effect  is  anti-dilutive.

Fair  Value  of  Financial  Instruments
---------------------------------------

The  Company's  financial  instruments  consist  of cash, receivables, payables,
lines-of-credit and notes payable.  The carrying amount of cash, receivables and
payables  approximates  fair  value  because  of  the short-term nature of these
items.  The  carrying  amount  of  the  lines-of-credit  and  the  notes payable
approximates  fair  value  as  the  instruments bear interest at market interest
rates.

Note  2  -  Investments
-----------------------

Investments,  classified  as  available-for-sale,  consist  of  the  following:

<TABLE>
<CAPTION>
<S>                                          <C>             <C>
                                                      December 31,
                                             ----------------------------
                                                  2004           2003
                                             -------------  -------------

Investments,  at  cost                       $     65,001   $     65,001
Unrealized  holding  loss                         (63,949)       (45,453)
                                             -------------  -------------
Investments,  at  fair  value                $      1,052   $     19,548
                                             =============  =============
</TABLE>

Changes  in  the  unrealized  holding  loss  on  investment  securities
available-for-sale  and  reported  as  a separate component of accumulated other
comprehensive  income  are  as  follows:
<TABLE>
<CAPTION>
<S>                                          <C>             <C>
                                                      December 31,
                                             ----------------------------
                                                  2004           2003
                                             -------------  -------------

Balance  at  beginning  of  year             $    (45,453)  $          -
Unrealized  holding  loss                         (18,496)       (45,453)
                                             -------------  -------------
Balance  at  end  of  year                   $    (63,949)  $    (45,453)
                                             =============  =============
</TABLE>
                                     F - 13

<PAGE>

Note  3  -  Letter  of  Intent  to  acquire  Mining  Interests  in  Mexico
--------------------------------------------------------------------------

On  October  30,  2004,  the  Company  entered into a Letter of Intent with John
Chapman  ("Chapman")  and  Dennis Thompson ("Thompson"), as individuals, both of
whom  are officers and directors of the Company, to acquire the maximum interest
allowable  under  Mexican  Law,  but  not  less  than a controlling interest, in
Amermin  S.A.  de  C.V.  ("Amermin").  As  consideration  for  the  transfer  of
ownership  in  Amermin  to  the  Company,  Chapman  and  Thompson  will retain a
collective  27%  royalty interest in the mining interests of Amermin, subject to
certain limitations.  The royalty interest will be based on the net value of the
minerals  extracted  and  the  net  smelting  revenues.

As  a  condition  precedent to the transfer of ownership in Amermin from Chapman
and  Thompson  to the Company, Chapman and Thompson must acquire the interest in
Amermin  from  the  current  owners  who  are  not related parties.  The parties
entered  into  a  Letter  of  Intent for the transfer of ownership in Amermin on
October  30,  2004.  As  consideration  for the transfer of ownership in Amermin
from  the current owners to Chapman and Thompson, the current owners will retain
a collective 10% royalty interest in the mining interests of Amermin, subject to
certain limitations.  The royalty interest will be based on the net value of the
minerals  extracted  and  the  net  smelting  revenues.

As  a  condition  precedent  to  the  transfer  of ownership in Amermin from its
current owners to Chapman and Thompson, certain mining interests owned by Minera
Tres  de  Mayo  S.A. de C.V. ("Minera) must be acquired by Amermin.  Minera, the
current  owners  of  Amermin,  Chapman  and  Thompson  entered  into  a  Mining,
Exploration  and  Purchase  Option  Agreement  ("Purchase  Agreement")  for  the
transfer  of  certain  mining  interests  and  assets  in  Mexico  to  Amermin.

The  Purchase  Agreement  provides  a four-month exclusive option to the current
owners  of  Amermin  to  acquire the mining interests and assets in Mexico.  The
option  period  began December 16, 2004.  Consideration for the exclusive option
was  $300,000,  and  the Company paid this amount in December 2004.  These funds
are  non-refundable,  and  are  being  used to establish the existence of proven
reserves  at  the  mine.  The  Company also incurred expenses of $82,789 in 2004
related  to  establishing  the  existence  of  proven  reserves  at  the  mine.

The  Purchase  Agreement  provides  for  a  purchase  price of USD $1.2 million,
$500,000  of  which  is  due  upon  exercise  of  the  option and payment of the
remaining  $700,000  will be made monthly beginning four months after the option
exercise,  and  in amounts ranging from USD $50,000 to USD $100,000.  The option
period  expired  April  16,  2005,  and  the Company did not make payment of the
$500,000  to  exercise the option.  The parties are in negotiation to extend the
option  exercise period, and management believes the negotiations will result in
a  successful  extension  of  the  option  period.  In  addition,  the  Purchase
Agreement provides Minera with a 10% royalty interest in the mining interests of
Amermin,  subject to certain limitations.  The royalty interest will be based on
the  net  value  of  the  minerals  extracted  and  the  net  smelting revenues.

The Company expects to acquire the mining interests and assets pursuant to these
agreements,  and  to  operate  Amermin  as  a  subsidiary.  From January 1, 2005
through  March  22, 2005, the Company has made payments under the agreements and
incurred  expenses  related  to  the  agreements  totaling  $130,000.

                                      F - 14
<PAGE>

Note  4  -  Notes  Receivable
-----------------------------

Notes  receivable  consist  of  the  following:

<TABLE>
<CAPTION>
<S>                                          <C>             <C>
                                                      December 31,
                                             ----------------------------
                                                  2004           2003
                                             -------------  -------------

Note  receivable from Creative Marketing
Group, Inc., bearing interest at 2% and
due  on  September  4,  2004                 $          -   $     56,891

Note  receivable  from  Valley Air,
Inc., non-interest bearing and due
on demand                                               -         26,300

Notes  receivable from unrelated parties,
non-interest bearing and due on demand              3,571          8,761
                                             -------------  -------------
                                             $      3,571   $     91,952
                                             =============  =============
</TABLE>


Note  5  -  Property  and  Equipment
------------------------------------

Property  and  equipment  consists  of  the  following:

<TABLE>
<CAPTION>

<S>                                          <C>             <C>
                                                      December 31,
                                             ----------------------------
                                                  2004           2003
                                             -------------  -------------

Land                                         $    176,100   $    276,100
Building  and
improvements                                      735,128      1,206,627
Equipment                                           4,121              -
                                             -------------  -------------
                                                  915,349      1,482,727
Less  accumulated
 depreciation                                    (129,136)      (150,389)
Less  SFAS  144  write-down                       (67,867)             -
                                             -------------  -------------
                                             $    718,346   $  1,332,338
                                             =============  =============
</TABLE>


The  Company  executed purchase and sale agreements for the following properties
in  February, 2005: the residential house in Murray, UT with a carrying value of
$74,500;  the  residential duplex in Salt Lake City, UT with a carrying value of
$183,400; the residential house in Layton, UT with a carrying value of $111,500;
four  residential  condos  in  Ogden  with no carrying value; and the commercial
office  building  in  Salt  Lake  City,  UT  with  a carrying value of $354,200.
Management  expects  that  the  sales  will  close  by  June  30,  2005.

The  Company  recorded  impairment  charges  under  SFAS  144  for the following
properties  because the estimated future cash flows exceed the carrying value at
December  31,  2004:  the  residential  house  in  Murray, UT - $14,500; and the
residential  duplex  in  Salt  Lake  City,  UT  -  $53,400.

Note  6  -  Litigation  settlement  payable
-------------------------------------------

The  Company  and  its  president  have been named as respondents in a complaint
filed  by the Securities and Exchange Commission ("SEC"). The civil suit, SEC v.
Wolfson,  et.  al.,  case  number  2:03 CV 0914K, was filed in the United States
District  Court for the District of Utah. The complaint alleges that the Company
and  its  president  failed  to  accurately and fully disclose the nature of the
Company's  relationship  with the Sukumo, Group, Inc. and to timely disclose the
execution of the Offshore Purchase Agreement. The complaint further alleges that
the  Company's  president  took  actions  in 2003 to manipulate the price of the
Company's stock in the marketplace. The proposed settlement orders the Company's
president  to  pay  a  civil penalty of $120,000 in installments over a one year
term  and  prohibits  him from serving as an officer or director of any publicly
held  company  and  from  participating  in  the  issuance  of  any penny stock.


                                     F - 15
<PAGE>

The  Company's  president has been named as a respondent in a complaint filed by
the  Securities and Exchange Commission ("SEC"). The civil suit, SEC v. Allen Z.
Wolfson,  et. al., case number 2:02 CV 1086 (TC), was filed in the United States
District  Court  for  the  District  of  Utah.  The  complaint  alleges that the
Company's  president  took  actions  in  2003  to  manipulate  the  price of the
Company's  stock  in  the  marketplace.  Upon  the  acceptance  of  the proposed
settlement  agreement  by  the SEC, the agreement holds the president liable for
disgorgement  of $64,714, representing profits gained as a result of the conduct
alleged  in  the  complaint,  plus interest in the amount of $16,785 and a civil
penalty of $120,000, payable in installments over a one year term. Additionally,
the  settlement  bars the Company's president from participating in the issuance
of  any  penny  stock.

The  president has executed the proposed settlement agreements and has submitted
them  to  the  SEC  Commissioner  for  approval.  SEC  approval  is pending. The
president  currently  serves  as an officer and director of the Company and will
continue  to  do  so  until  the  final  settlement is approved by the SEC. Upon
approval,  the  president will resign as an officer and director of the Company.

Note  7  -  Lines-of-Credit
---------------------------

The  Company  has two separate lines-of-credit with a bank, each secured by real
estate,  bearing  interest  at  a  variable  rate  (currently  10.75%).  The
lines-of-credit  mature  in  December  2005  and  require  monthly interest only
payments.  At  December  31,  2004,  the  maximum  amounts  available  under the
lines-of-credit  have  been  fully  drawn  by  the  Company.

Note  8  -  Notes  Payable  -  Related  Parties
-----------------------------------------------

Notes  payable  -  related  parties  consists  of  the  following:

<TABLE>
<CAPTION>

<S>                                          <C>             <C>
                                                      December 31,
                                             ----------------------------
                                                  2004           2003
                                             -------------  -------------

Note  payable  to  Nexia,  non-interest
bearing, due on demand                       $    150,000   $    150,000

Note  payable  to  Nexia,  non-interest
bearing, due on demand                             13,894          4,469

Note  payable  to  Nexia,  payable in
monthly installments of $31,250, including
interest  at  115%,  all  due  on or before
April 17, 2005                                    100,000              -

Payable  to  John  Chapman,  non-interest
bearing, due on demand                             59,623         55,776
                                             -------------  -------------
                                             $    323,517   $    210,245
                                             =============  =============
</TABLE>


                                     F - 16
<PAGE>

Note  9  -  Notes  Payable
--------------------------

Notes  payable  consist  of  the  following:
<TABLE>
<CAPTION>

<S>                                          <C>             <C>
                                                      December 31,
                                             ----------------------------
                                                  2004           2003
                                             -------------  -------------

Note  payable  to  First  Bank of
Beverly Hills, secured by real estate,
payable monthly  installments of $5,341,
including interest at 7.7%.  The note
went into default subsequent to
December 31, 2004.                           $    557,653   $    563,872


Note  payable  to  Interbay  Funding,  LLC,
secured  by real estate, payable in monthly
installments of $2,689, including interest
at 10.97%.                                              -        268,452

Note  payable  to  IndyMac  Bank,  secured
by  real  estate, payable in monthly
installments of $851 including interest
at 8.5%.                                           99,193        108,737

Note  payable  to  Alexander  &  Wade,
due 2005, total interest on obligation is
$20,000.                                           60,000              -
                                             -------------  -------------

Total notes payable                               716,846        941,061
Less current portion                             (716,846)      (833,424)

Long-term portion                            $          -   $    107,637
                                             =============  =============
</TABLE>

Note  10  -  Purchase  Price  Payable
-------------------------------------

As  part of the acquisition of Wichita Development Corporation in June 2003, the
Company  issued  1,148,251  shares  of  common  stock, and guaranteed the resale
value,  such  that  within 36 months of the acquisition, the Company would issue
sufficient  additional  shares  so  that  the  total value at liquidation of all
shares  issued  would be $1,000,000. As of December 31, 2004, none of the shares
had  been  liquidated,  the  value  of  the issued shares is negligible, and the
Company  is  obligated  to issue shares with a guaranteed value of $1,000,000 by
June  2006.

Note  11  -  Preferred  Stock
-----------------------------

The  Company  has  authorized  200,000,000  shares of preferred stock with a par
value  of  $.001,  and  established two series of preferred shares designated as
Series A Convertible Preferred Stock, consisting of 1,000,000 shares, and Series
B  Convertible  Preferred  Stock,  consisting  of  50,000,000  shares.

The  Series  A  Convertible  Preferred  Stock  has  the  following  rights  and
privileges:
The  shares  are convertible at the option of the holder at any time into common
shares,  at  a  conversion  rate  of one share of Series A Convertible Preferred
Stock  for 100 shares of common stock for a period of 10 years from the issuance
date.
*     Requires  two-thirds  voting  majority  to  authorize  changes  to equity.
*     Redemption  provision  at  option  of directors for $10 per share plus the
greater  of  $3  per share or 50% of market capitalization divided by 2,000,000.
*     The holders of the shares are entitled to one hundred (100) votes for each
share  held.
*     Upon  the  liquidation  of  the Company, the holders of the shares will be
entitled  to  receive  $10  per  share  plus  redemption provision before assets
distributed  to  other  shareholders.
*     The  holders of the shares are entitled to dividends equal to common share
dividends.


                                     F - 17
<PAGE>

The  Series  B  Convertible  Preferred  Stock  has  the  following  rights  and
privileges:

* The shares are not convertible into any other class or series of stock.

*    The  holders  of  the  shares  are entitled to five hundred (500) votes for
     each  share  held.  Voting  rights are not subject to adjustment for splits
     that increase or decrease the common shares outstanding.

*    Upon  the  liquidation  of  the  Company, the holders of the shares will be
     entitled to receive $.001 per share plus redemption provision before assets
     distributed to other shareholders.

*    The  holders  of  the  shares  are  entitled  to  dividends equal to common
     share dividends.

*    Once  any  shares  of  Series  B  Convertible  Preferred  Stock  are
     outstanding,  at least two-thirds of the total number of shares of Series B
     Convertible  Preferred  Stock  outstanding  must  approve  the  following
     transactions:

*    Alter  or  change  the  rights,  preferences  or privileges of the Series B
     Preferred Stock.

*    Create  any  new  class  of  stock  having  preferences  over  the Series B
     Preferred Stock.

* Repurchase any of the Company's common stock.

*    Merge  or  consolidate  with  any  other  Company,  except  wholly-owned
     subsidiaries of the Company.

*    Sell,  convey  or  otherwise  dispose  of  ,  or  create  or  incur  any
     mortgage,  lien, or charge or encumbrance or security interest in or pledge
     of,  or  sell and leaseback, in all or substantially all of the property or
     business of the Company.

*    Incur,  assume  or  guarantee  any  indebtedness  maturing  more  than  18
     months after the date on which it is incurred, assumed or guaranteed by the
     Company, except for operating leases and obligations assumed as part of the
     purchase price of property.

Note  12  -  Common  Stock
--------------------------

On  February  7,  2003,  the  Company's  Board of Directors approved a 1-for-200
reverse  common stock split.  All common stock amounts and per share information
have  been  retroactively adjusted to reflect this reverse common stock split in
the  accompanying  consolidated  financial  statements.

On  February  23, 2004, the Company's Board of Directors approved an increase in
the  number  of authorized common shares from 200,000,000 to 10,000,000,000, and
changed  the  par  value  from $.001 per share to no stated par value per share.

On  October  12,  2004,  the Company's Board of Directors approved a 1-for-1,000
reverse  common  stock  split and changed the par value of the common stock from
$.001  to no par value.  All common stock amounts and per share information have
been  retroactively  adjusted  to reflect this reverse common stock split in the
accompanying  consolidated  financial  statements.

                                     F - 18
<PAGE>

As  discussed in Note 1, the Company is obligated to issue common shares with an
aggregate  value  of  $1,000,000  by  June  30,  2006  in  connection  with  the
acquisition  of  Wichita  from  Nexia.  As  of  December 31, 2004, the number of
common  shares  required for issuance to satisfy the remainder of the $1,000,000
aggregate  value  totaled  approximately  2  billion.  As of March 31, 2005, the
number  of  common  shares  required for issuance to satisfy the remaining value
totaled  approximately  132.3  million.

The  Board  of Directors authorized the issuance of 1.6 billion shares of common
stock  from  January 1, 2005 through March 24, 2005 pursuant to the 2005 Benefit
Plan  of  Diversified  Financial  Resources  Corp.  discussed  in  Note  13.

Note  13  -  Common  Stock  Options
-----------------------------------

On  January  29,  2004,  the Board of Directors adopted the 2004 Benefit Plan of
Diversified  Financial  Resources  Corp.  Through  October  11,  2004,  the plan
authorized  the  grant  of  stock  options to eligible employees, directors, and
other  individuals  to  purchase  up  to  an
aggregate of 4,050,000,000 shares of stock.  Options granted under the plan have
an  exercise price and term established by the plan administrator at the date of
grant.  The  plan  is  intended  to  advance  the  interest  of  the  Company by
attracting  and  helping  to  ensure  the  retention  of  competent  directors,
employees,  and  consultants,  and to provide incentives to those individuals to
devote  their  utmost  efforts  to  the  advancement  of  the  Company.

A  summary  of  option  activity  is  presented  below:

<TABLE>
<CAPTION>

<S>                                          <C>           <C>
                                                           Weighted Average
                                                 Shares     Exercise Price
                                             -------------  -------------
Outstanding  as  of  December  31.  2002                -   $          -
Granted                                                 -   $          -
Exercised                                               -   $          -
Cancelled                                               -   $          -
                                             -------------  -------------

Outstanding  as  of  December  31.  2003                -   $          -
Granted                                     3,564,060,000   $     0.0005
Exercised                                  (3,564,060,000)  $     0.0005
Cancelled                                               -   $          -
                                             -------------  -------------
Outstanding as of December 31, 2004                     -        n/a
                                             =============  =============
</TABLE>

On  January  4,  2005,  the  Board of Directors adopted the 2005 Benefit Plan of
Diversified  Financial  Resources  Corp.  The plan authorizes the grant of stock
options  to  eligible employees, directors, and other individuals to purchase up
to  an  aggregate  of  2,000,000,000 shares of stock.  Options granted under the
plan  have  an  exercise price and term established by the plan administrator at
the  date of grant.  The plan is intended to advance the interest of the Company
by  attracting and ensuring the retention of competent directors, employees, and
consultants,  and  to  provide  incentives  to those individuals to devote their
utmost  efforts  to  the  advancement  of  the Company.  Through March 24, 2005,
options  to  purchase  1,855,000,000  shares  of  common  stock were granted and
exercised.

                                     F - 19
<PAGE>
Note  14  -  Income  Taxes
--------------------------

The  difference between income taxes at statutory rates and the amount presented
in  the  financial  statements  is  a  result  of  the  following:


<TABLE>
<CAPTION>

<S>                                          <C>             <C>
                                                Year Ended  December 31,
                                             ----------------------------
                                                  2004           2003
                                             -------------  -------------
Income tax benefit at statutory rate         $ (1,548,818)  $   (345,000)
Change in valuation allowance                   1,548,818        345,000
                                             -------------  -------------
                                             $          -   $          -
                                             =============  =============

</TABLE>
Deferred  tax  assets  are  as  follows  at  December  31,  2004:

<TABLE>
<CAPTION>

<S>                                          <C>             <C>
                                                Year Ended  December 31,
                                             ----------------------------
Net operating loss carryforwards             $  1,904,938   $    394,000
Valuation allowance                            (1,904,938)      (394,000)
                                             -------------  -------------
                                             $          -   $          -
                                             =============  =============
</TABLE>

The  Company  has a net operating loss carryforwards of approximately $6,200,000
which  begins  to  expire  in  the  year 2022.  The amount of net operating loss
carryforwards  that  can  be used in any one year will be limited by significant
changes in the ownership of the Company and by the applicable tax laws which are
in  effect  at  the  time  such  carryforwards  can  be  utilized.

Note  15  -  Related  Party  Transactions
-----------------------------------------

During the year ended December 31, 2004, the Company issued 30,000,000 shares of
restricted  stock to John Chapman for acquisition-related services, and recorded
$2.4  million as expense; issued 2,000,000,000 shares of restricted common stock
to  John  Chapman  to  satisfy accrued salary of $100,000; advanced John Chapman
$13,000;  and  accepted  advances  from  John Chapman of $3,000.  John Chapman's
monthly  salary  was  increased  from  $20,000 per month to $50,000 per month in
April, 2004, and the Company owes $127,000 of salary to John Chapman at December
31, 2004.  The Company recorded compensation expense to John Chapman of $510,000
and  $140,000  for  the  years  ended  December 31, 2004 and 2003, respectively.

During the year ended December 31, 2004, the Company issued 1,500,000,000 shares
of restricted common stock to Board of Director members and recorded $300,000 as
expense.

During the year ended December 31, 2004, the Company executed a Letter of Intent
with  John  Chapman and Dennis Thompson, both of whom are officers and directors
of  the  Company,  to  acquire  certain mining interests in Mexico.  See Note 3.

During  the  year  ended  December 31, 2004, the Company executed a note payable
with  Nexia  Holdings, Inc. ("Nexia") for $100,000; and issued 26,000,000 shares
to Nexia pursuant to the acquisition agreement for Wichita.  See Note 1.  During
the year ended December 31, 2003, the Company executed a note payable with Nexia
for  $150,000.  See  Note  8.

                                     F - 20

<PAGE>

During  the  year ended December 31, 2004, the Company issued 101,786,230 shares
of common stock to Richard Surber of Hudson Consulting Group, Inc. ("Hudson") to
satisfy  obligations under a consulting agreement between the Company and Hudson
that  provides for monthly payments of $7,500.  The Company paid Hudson $104,000
under  the  consulting  agreement  in  2003.  Richard  Surber  is  a  principal
shareholder  of  Nexia  Holdings,  Inc.

During  the  year  ended  December 31, 2003, the Company issued 13,150 shares of
preferred  stock  to  John Chapman for consulting services and rent of $131,500.

DFRC  has  a  lease  for  its  approximate  1600  sq. ft. office located at 1771
Wolviston Way, San Diego, CA 92154 from Mr. Chapman, the president of DFRC.  The
home  office  space is subleased in a related party transaction in Mr. Chapman's
residence.  The  term of the lease is from May 2002 through May of 2005; monthly
rental  is  in  the  amount  of  $6,500.  The  lease  has a three year extension
available  for a monthly rental of $8,500.  DFRC is liable for all utilities for
the  premises.  Rental expense of approximately $78,000 was recorded during 2004
and  2003.  Future  obligations  under  the  lease  total  $32,500.

Note  16  -  Supplemental  Cash  Flow  Information
--------------------------------------------------

For  the  years  ended  December 31, 2004 and 2003, the Company paid interest of
approximately  $177,000  and  $59,000,  respectively.

No  amounts  were paid for income taxes during the years ended December 31, 2004
and  2003.

During  the  year  ended  December  31,  2004:

*    The  Company  issued  3.9  billion  shares of common stock for services and
     recorded $3.1 million as expense related to the issuances.

*    The  Company  recorded  $411,000  of  compensation  expense  related to the
     issuance and exercise of stock options.

*    The  Company  executed  a  deed  in  lieu of foreclosure on its property in
     Wichita,  KS and recorded a loss of $273,000 on the transaction, recorded a
     reduction  in  the  related mortgage liability of $268,000, and wrote-off a
     deposit

*    The  Company  issued  102  million  shares  of  common  stock  to  satisfy
     accounts payable totaling $126,000.

*    The Company reserved or wrote-off receivables totaling $60,000.

*    The  Company  issued  stock  for  the  prepayment  of  construction  costs
     totaling $44,000.

During  the  year  ended  December  31,  2003:

*     The  Company  acquired  approximately  83%  of the common stock of Wichita
Development  Corporation.  The  Company recorded net assets from the acquisition
as  follows:

                                     F - 21
<PAGE>

<TABLE>
<CAPTION>
<S>                            <C>                             <C>
                               Marketable securities           $         64,769
                               Receivables, net                           1,515
                               Property and equipment, net            1,873,230
                               Accounts payable                         (73,370)
                               Notes payable                         (1,571,384)
                               Minority interest                        (91,943)
                                                               -----------------
                                                                        202,817
                               Less common stock issued                (218,168)
                                                               -----------------
                               Net cash received              $          15,351
                                                               =================

</TABLE>

As  discussed  in  Note  18  below,  the  Company  restated  the  2003 financial
statements  related  to  this  transaction  to  record  an  impairment  loss  of
$1,000,000  and  to  establish a purchase price payable liability of $1,000,000.
The purchase price payable represents the Company's guaranteed liquidation value
of  the  stock  issued  in  the  transaction.

*     The  Company  acquired  100%  of  the  common  stock of MT&C.  The Company
recorded  net  assets  from  the  acquisition  as  follows:

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

                               Goodwill                        $         22,602
                               Related  party  payable                  (21,702)
                                                               -----------------
                                                                            900

                               Less  common  stock  issued               (6,000)
                                                               -----------------
                               Net  cash  received             $           5,100
                                                               =================
</TABLE>

The Company's building located in Ogden, Utah was sold at a trustee's sale.  The
sale  resulted  in  the  Company  reducing the following assets and liabilities:

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

                            Property  and  equipment,  net      $      (939,949)
                            Accounts  payable                            12,045
                            Notes  payable                              588,207
                                                               -----------------
                            Loss on trustee's sale of property $       (339,697)
</TABLE>

Note  17  -  Subsequent  Events
-------------------------------

Subsequent  to  the  year  ended  December  31,  2004:

Options  to  purchase  1,855,000,000  shares of common stock were granted to and
exercised  by  employees  and  consultants of the Company under the 2005 Benefit
Plan  of  Diversified  Financial  Resources  Corp.

The  Company issued 145,000,000 shares of common stock to an individual involved
in  the  mining  operations  in  Mexico.

The  Company  made payments under the mining acquisition agreements and incurred
expenses  related  to  the  mining  acquisition  totaling  $130,000.

The Company entered into purchase and sale agreements for all of its real estate
properties  in  February  2005  with a non-affiliate.  The transactions have not
closed  as  of March 24, 2005.  Proceeds to the Company consist of notes payable
aggregating $1,320,000, and bear interest at 6.75%.  Interest is payable monthly
beginning  April  2005,

                                     F - 22
<PAGE>

and  the  notes and all unpaid interest are due in February 2006.  The mortgage,
line-of-credit  and  property  tax  liabilities  associated with the properties,
which  total  approximately  $941,000  at  December  31,  2004,  remain  the
responsibility  of the Company.  The net book value of the properties subject to
the purchase and sale agreements is approximately $715,000 at December 31, 2004.

The  parties  have  discussed  modifying the purchase and sale agreements in the
event  that  closing  issues  prevent  the transactions from closing in a timely
manner.  The purchase and sale agreements would be rescinded, and new agreements
executed  for  the  sale  of  the  common stock of the subsidiaries that own the
properties.

Note  18  -  Restatement
------------------------

The  accompanying financial statements for 2003 have been restated to correct an
error  in  recording the acquisition of Wichita Development Corporation in 2003.
As  part  of the consideration for the acquisition, the Company issued 1,148,251
shares  of common stock, and agreed to issue additional shares so that the value
received  by  the  holder  upon  liquidation  of  all  shares  issued  would  be
$1,000,000.  The  fair  market  value of the property acquired did not support a
step  up  in  basis  or  the  recording and continued reporting of goodwill. The
Company  did  not  record a liability for the $1,000,000 value guarantee and did
not  expense  the  $1,000,000  as  an  impairment loss in 2003. The accompanying
financial  statements  for 2003 have been restated to record a liability for the
$1,000,000  value  guarantee as purchase price payable on the balance sheet, and
to  reflect  an  additional  impairment  loss  of $1,000,000 in the statement of
operations.  The effect of the restatement was to increase the net loss for 2003
by $1,000,000, or $130.77 per share.

                                     F - 23

<PAGE>

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

The  Company  has  had no disagreements with its independent accountants and has
made  no  changes during the year ended December 31, 2004, except as reported in
the  August 13, 2004 Form 8-K filed the Company reporting the dismissal of Jones
Simkins,  LLP as its Certifying Accountant and the retention of Mendoza Berger &
Company,  LLP  of  Irvine,  California  as  its  new Certifying Accountant.  The
Company  has  had  no  disagreements  with  Jones  Simkins  LLP on any matter of
accounting  principles  or practices, financial statement disclosure or auditing
scope or procedures, which disagreements, if not resolved to their satisfaction,
would  have  caused  Jones  Simkins  to  make reference in connection with their
opinion  on  the  subject  matter  of  the  disagreement.

ITEM  8A.   CONTROLS  AND  PROCEDURESITEM  8A.   CONTROLS  AND  PROCEDURES

The  Company  carried  out  an  evaluation,  under  the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer, of the
effectiveness  of  the  design  and  operation  of  our  disclosure controls and
procedures,  as  defined  in  Exchange  Act  Rule 13a-14(c) as of the end of the
period  covered  by this Annual Report on Form 10-KSB and as of a date within 90
days  of  the  filing  of  this  report.  Based  on that evaluation, it has been
concluded that the Company's disclosure controls and procedures are effective to
ensure  that  information required to be disclosed in the Company's Exchange Act
reports  is recorded, processed, summarized and reported within the time periods
specified  in the Securities and Exchange Commission's rules and forms, and that
such  information  is  accumulated  and  communicated  to  them  to allow timely
decisions  regarding  required  disclosure.

There  has  been no change in our internal control over financial reporting that
occurred  during  our  last  fiscal  quarter that has materially affected, or is
reasonably  likely  to  materially  affect,  our internal control over financial
reporting.

                                    PART III
ITEM  9.  DIRECTORS  AND  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACTITEM 9. DIRECTORS AND EXECUTIVE
OFFICERS,  PROMOTERS  AND  CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE  ACT
DIRECTORS,  EXECUTIVE  OFFICERS  AND  CONTROL  PERSONS

NAME                         AGE               POSITION

John  Chapman                62          President,  CFO  and  Director
Dennis  Thompson             51          Director
John  Casey                  31          Director

JOHN  R.  CHAPMAN,  62  was  appointed  to  DFRC's Board of Directors and as the
Company's President on March 23, 2003. Over the last five years, Mr. Chapman has
been  primarily involved in the business of real estate development and mortgage
banking.  He  will  serve  as  a  director  until  the  next annual shareholders
meeting.

                                       25
<PAGE>

DENNIS  THOMPSON, 51 was appointed to DFRC's Board of Directors on May 30, 2002.
Mr.  Thompson  has  been  a  consultant  who  provides  expert advice concerning
equipment,  construction,  and  mining  operations.  He  develops and implements
construction plans for gold and coal mining operations.  Prior to that time, Mr.
Thompson  was  involved  in  manufacturing  industry and construction field.  He
attended  the Iron Workers Apprentice School in West Virginia from 1972-1975. He
will  serve  as  a  director  until  the  next  annual  shareholders  meeting.


JOHN  CASEY,  31 was appointed to DFRC's Board of Directors on October 30, 2002.
Mr.  Casey  has  over  five  years  experience as a Site Manager supervising and
directing  numerous  on-site  craft  and  salaried  personnel as well as various
subcontractors.  He  also  has  4  additional  years  of  environmental remedial
experience  as  a  Site  Safety Officer, Operations Foreman, and heavy equipment
operator.  He  served  as  the  Operations Foreman and Site Safety Officer for a
crew  of twelve on a 125 acre precious metal mining operations from 1996 through
1998.  He  served  in  the  United States Air Force for four years assigned to a
fire  fighting/hazardous  materials handling unit.  He has worked on buried drum
recovery  projects  as  well  as  landfill  construction barrier/ cut-off trench
installations,  low  level radiological decommissioning and demolition projects,
and  the  construction of landfill capping systems.  He will serve as a director
until  the  next  annual  shareholders  meeting.

INVOLVEMENT  IN  CERTAIN  LEGAL  PROCEEDINGS.
---------------------------------------------

John R. Chapman has been named as a defendant in a civil injunctive action filed
on  September  30, 2002, by the Securities and Exchange Commission in the United
States  District  Court in the State of Utah, Civil Action No. 2:02CV-1086.  The
action alleges that the named defendants were involved in a scheme to manipulate
the  stock  of  Freedom  Surf,  Inc.  from July 2000 through November 2000.  The
complaint  seeks injunctive relief as to Mr. Chapman that could prevent him from
serving  as  an  officer  or  a director for the Company in the future, or other
relief  that  could  impact  Mr.  Chapman's  ability  to  serve  the  Company.

The  President  of  DFRC  has  been named individually as a defendant in a civil
action  filed  on  October 16, 2003 by the Securities and Exchange Commission in
the  United  States  District  Court  for  the  State  of Utah, Civil Action No.
2:03CV00914.  The action alleges that Mr. Chapman engaged in manipulation of the
share  price  of  DFRC  and failed to adequately disclose the role of The Sukumo
Group,  Inc.  in  the sale of securities of DFRC to off shore investors.  Relief
sought  by the complaint includes penalties, fines and injunctive relief against
Mr.  Chapman,  discussions  of  terms  to  resolve  the  claims  are  ongoing.

COMPLIANCE  WITH  SECTION  16(A)  OF  THE  EXCHANGE  ACT
--------------------------------------------------------

Based  solely  on a review of Forms 4 and 5 furnished to DFRC and filed with the
Securities  and  Exchange  Commission  under Rule 16a-3(e) promulgated under the
Securities  Exchange Act of 1934, DFRC believes that all directors, officers and
beneficial  owners of more than 10% of any class of equity securities filed on a
timely  basis  the  reports required by Section 16(a) of the Exchange Act during
the  most  recent  fiscal  year.

CODE  OF  ETHICS
----------------

Due  to the small group of employees and management, DFRC has not adopted a code
of  ethics  that apply to its officers and employees.  The board of directors is
in  direct  contact  with  management  on  a regular basis and believes that all
conduct  is  under  sufficient  supervision to protect DFRC and its shareholders
from  any  unethical  activity.

                                       26
<PAGE>


ITEM  10.  EXECUTIVE  COMPENSATIONITEM  10.  EXECUTIVE  COMPENSATION

The  following  tables  and notes present for the three years ended December 31,
2004  the  compensation  received by the DFRC's President and Vice President. No
other  executive  officer  of DFRC received compensation which exceeded $100,000
during  any  of  the  three  years  ended  December  31,  2004.

<TABLE>
<CAPTION>
<S>                        <C>      <C>          <C>               <C>            <C>                  <C>
                           SUMMARY COMPENSATION TABLE
                                                                         Long Term Compensation

                  Annual Compensation                        Awards                        Payouts
                                                                    Securities
                                                                    Underlying                              All
      Name  and                                  Restricted  Stock    Options                              Other
Principal  Position        Year     Salary  ($)       Award(s)         SARs(#)     LTIP  payouts($)     Compensation($)

John Chapman,              2004     $510,000(1)    2,030,000(4,3)          -                    -                  -
President, Director(4)     2003      $80,000(1)            -               -                    -                  -

Sandra Jorgensen           2002            -          15,000(2)            -                    -                  -

Thomas  Clay               2002       $7,500               -               -                    -                  -
President, Director                  $55,000 -             -               -                    -                  -

<FN>
(1)  Cash  compensation  paid  to  Mr.  Chapman.
(2) 3,000,000 shares issued November 1, 2002 were reduced to 15,000 by the 1 for
200  reverse  split.
(3)  Mr.  Chapman  received  13,150  shares of Class A preferred shares from the
company  on  December  11,  2003;  7,150  shares for rent on the office space he
provided to the Company and 6,000 shares as compensation for the months October,
November  and  December  of  2003.
(4)  This number reflects the 1 for 1,000 reverse stock split that was effective
as  of November 1, 2004, the restricted stock awards consisted of 30,000,000 pre
reverse  shares  granted  to  Mr. Chapman in January of 2004 as compensation for
services  he provided with regard to the acquisitions being explored by DFRC and
2,000,000,000  pre-reverse  shares  granted  to  Mr.  Chapman in August of 2004.
</TABLE>

DFRC  entered into an Employment Agreement dated June 5, 2003 with John Chapman,
pursuant  to  which  Mr. Chapman has agreed to serve as the Company's President,
Chief  Executive Office and Chief Financial Officer.  The agreement provides for
a  base  salary of $50,000 per month, payable in cash, common or preferred stock
of  the  Company,  the  form  to  be  at  the  election  of  Mr.  Chapman.

COMPENSATION  OF  DIRECTORS
---------------------------

No  payments have been made to directors of DFRC for their services as directors
that  have  not  been  previously  reported  by  the  Company.

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

The  table below sets forth information with respect to the beneficial ownership
of the Common Stock by (i) each of the directors of DFRC, (ii) each person known
by  DFRC  to  be the beneficial owner of five percent or more of the outstanding
Common  Stock,  and (iii) all executive officers and directors as a group, as of
April  13,  2005.  The  total  number  of  shares  of  common  stock  issued and
outstanding  on  April  13,  2005 is 4,481,597,981.  Unless otherwise indicated,
DFRC  believes  that  the  beneficial owner has sole voting and investment power
over  such  shares.

                                       27
<PAGE>

<TABLE>
<CAPTION>
<S>                        <C>                                         <C>
NAME  AND  ADDRESS  OF                                                 PERCENTAGE  OF
BENEFICIAL  OWNER          NUMBER  OF  SHARES  BENEFICIALLY  OWNED       OWNERSHIP

Dennis  Thompson                        502,000                             0.01%
1771  Wolviston  Way.
San  Diego,  CA  92154

John  Chapman,                        2,532,370                             0.06%
President  &  Director
1771  Wolviston  Way.
San  Diego,  CA  92154

John  Casey,  Director                  500,000                             0.01%
1771  Wolviston  Way.
San Diego, CA 92154

Officers  and  Directors              3,534,370                            0.078%
as a group (2 persons)
</TABLE>

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONSITEM  12.  CERTAIN
RELATIONSHIPS  AND  RELATED  TRANSACTIONS

Effective  May  1,  2002,  the  Company entered into a lease agreement with John
Chapman,  currently  president, CEO and a director of the Company, for the lease
of  an  approximately  1,600  square foot office space located at 1771 Wolviston
Way, San Diego, California, 92154, where the offices of the Company are located.
The  leased  space  is  Mr.  Chapman's  residence.  The lease is for a term of 3
years, with an option to extend for three additional years. Monthly rent for the
space  is  $6,500 and the Company is responsible for all utilities in the space.

The  Company  entered  into an Employment Agreement dated June 5, 2003 with John
Chapman,  pursuant  to  which  Mr.  Chapman has agreed to serve as the Company's
President,  Chief  Executive  Officer and Chief Financial Officer. The agreement
provides  for  a  base  salary  of $50,000 per month, payable in cash, common or
preferred  stock  of  the  Company,  the  form  to  be  at  the  election
of  Mr.  Chapman.

On  August  31, 2004 the Company's board of directors authorized the issuance of
2,000,000  (2,000,000,000  pre-reverse  split stock) shares of restricted common
stock  to  be  issued  to  John  Chapman,  President  of  the Company as partial
satisfaction of salary and compensation due to him for his services as President
and  CEO  of  the  Company.

On January 21, 2004, the board of directors of the Company approved the issuance
to  John  Chapman,  the  president  of  the  Company,  of  30,000,000  shares of
restricted  common  stock  of  the  Company,  pursuant  to  Section  4(2) of the
Securities  Act  of  1933  as  compensation  for his services with regard to the
acquisitions  being  explored  by  the  Company.

ITEM  13.  EXHIBITS,  LIST  AND  REPORTS  ON FORM 8-KITEM 13. EXHIBITS, LIST AND
REPORTS  ON  FORM  8-K

Exhibits.  Exhibits  required  to  be attached by Item 601 of Regulation S-B are
---------
listed  in the Index to Exhibits beginning on page 32 of Form 10-KSB, which is
incorporated  herein  by  reference.

31(i)     Certification as adopted pursuant to Section 302 of the Sarbanes Oxley
          Act  of  2002
32(i)     Certification  of  Chief Executive Officer and Chief Financial Officer




                                       28
<PAGE>

(b)  Reports  on  Form  8-K.
   -------------------------

(1)     On  February  6,  2004, DFRC filed an 8-K report DFRC on the issuance of
30,000,000  shares  of  its  restricted common stock to the Company's president,
John  Chapman  as  compensation for services rendered in connection with various
acquisition  candidates  of DFRC.  DFRC further reported that it had in December
of  2003  issued  to  Mr. Chapman 13,150 shares of its Class A preferred shares,
6,000  shares  for  compensation and 7,150 shares in payment of rent due to him.

(2)     On  August  13,  2004,  DFRC  filed  an 8-K report of the actions of the
Company  in dismissing Jones Simkins LLP as its Certified Public Accountants and
retaining  Mendoza  Berger  & Company of Irvine, California as its new Certified
Public  Accountants.   The  Company  has had no disagreements with Jones Simkins
LLP  on  any  matter  of accounting principles or practices, financial statement
disclosure or auditing scope or procedures, which disagreements, if not resolved
to their satisfaction, would have caused Simkins to make reference in connection
with  their  opinion  on  the  subject  matter  of  the  disagreement.

(3)     On  September  3,  2004,  DFRC  filed  an  8-K report of the issuance of
unregistered  shares  of  its common stock.  The first issuance of 1,500,000,000
shares of restricted common stock to each of the three directors of the Company,
John Chapman, John Casey and Dennis Thompson each received 500,000,000 shares as
compensation  for their services as directors of the Company.  A second issuance
of  2,000,000,000  shares of restricted common stock was made to John Chapman as
compensation  for  his  services  as  President  of  the  Company.

(4)     On  December  10,  2004,  DFRC  filed  an 8-K report  on the issuance of
457,910,014,  since  November  22,  2004,  shares  of the Company's common stock
pursuant  to  the  Company's S-8 Registration Statement.  All of the shares were
issued  as  payment  for  services  provided  by  individuals  to  the  Company.

(5)     On December 16, 2004, DFRC filed an 8-K reporting that the Company has a
total  of  1,271,869,981  shares  of  its  common  stock issued and outstanding.

(6)     On  December  22,  2004,  DFRC  filed  an  8-K  reported the issuance of
50,000,000  shares  of  restricted  common  stock  to Equitilink LLC pursuant to
Section  4(2)  of  the  Securities  Act  of  1933.  The  shares  were  issued as
compensation  for public relations and communications services provided pursuant
to  a  written  agreement  with  the  Company.

Subsequent  to  the  end  of  the  year  no reports on Form 8-K have been filed:

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICESITEM 14.   PRINCIPAL ACCOUNTANT
FEES  AND  SERVICES

AUDIT  FEES
-----------

Audit  fees  are  for  professional  services  for  the  audit  of DFRC's annual
financial statements, and for the review of the financial statements included in
the  Company's filing on Form 10-QSB and for services that are normally provided
in  connection  with  statutory and regulatory filings or engagements.  DFRC has
paid  to  Jones  Simkins,  PC,  audit fees of approximately $35,000 for 2003 and
$21,268  also  need  to  fix  the  font  on  the  number  to  Mendoza  for 2004.

                                       29
<PAGE>

AUDIT  RELATED  FEES
--------------------

Audit  related  fees  are  funds  paid  for  the  assurance and related services
reasonably  related  to  the  performance  of  the audit or the review of DFRC's
financial statements.  DFRC has paid to Jones Simkins, PC, audit related fees of
approximately  $2,000  for  2003 and $21,268 also need to change the font on the
number  to  Mendoza  for  2004.


TAX  FEES
---------

The  tax fees are those funds paid for professional services with respect to tax
compliance, tax advice, and tax planning.  DFRC paid no professional tax fees to
Jones  Simkins,  LP  during  2004  and  2003.

ALL  OTHER  FEES
----------------

Fees  paid for permissible work that does not fall within any of the three other
fees  categories  set  forth  above.  No  other  fees  paid.

PRE-APPROVED  POLICY  FOR  AUDIT  AND  NON-AUDIT  SERVICES
----------------------------------------------------------

DFRC  does  not  have a standing audit committee and the full board of directors
performs  all functions of an audit committee, including the pre-approval of all
audit  and  non-audit services prior to DFRC engaging an accountant.  All of the
services  rendered  for  DFRC  by  Mendoza LLP were pre-approved by the board of
directors  of  DFRC.


                                   SIGNATURES

In  accordance  with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the  Registrant  caused this Annual Report and any subsequent amendments thereto
to  be  signed  on  its  behalf  by  the undersigned, thereunto duly authorized.

     Diversified  Financial  Resources  Corporation


Dated:  February  24,  2006               By:  /s/Dennis  Thompson
                                               -----------------------------
                                         Dennis Thompson, CEO, President and CFO

Pursuant  to  the requirements of the Securities Act of 1934, this Annual Report
has  been  signed  below by the following persons in their respective capacities
with  the  Registrant  and  on  the  dates  indicated.

SIGNATURE                               TITLE                       DATE

  /s/  Dennis  Thompson     President,  CFO,  and  Director  February  24,  2006
-----------------------
Dennis  Thompson

/s/  John Casey                        Director              February  24,  2006
-----------------
John  Casey