UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   FORM 10-QSB

[Mark One]

[X]         QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

                                       OR

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

For the transition period from ____________ to ______________

Commission file number 0-13311

                             CityFed Financial Corp.
                             -----------------------
        (Exact name of small business issuer as specified in its charter)

              Delaware                            22-2527684
              --------                            ----------
    (State or other jurisdiction of         (IRS Employer  Identification
    incorporation or organization)                    No.)

                        PO Box 3126, Nantucket, MA 02584
                        --------------------------------
                    (Address of principal executive offices)

                                 (508) 228-2366
                                 --------------
                           (Issuer's telephone number)

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. As of June 30, 2003, the
number of shares of outstanding common stock was 18,716,134.

Transitional Small Business Disclosure Format (check one): Yes [ ]  No [X]

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
June 30, 2003
(Dollars in Thousands)
                                                   June 30, 2003
                                                    (Unaudited)

ASSETS
------

  Cash                                              $    139
  Investment securities at fair value                  2,741
  Loans receivable                                     3,307
  Other assets                                             5
                                                    --------
TOTAL ASSETS                                        $  6,192

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------

LIABILITIES:
  Accrued expenses                                  $     14
  Repurchase agreements                                  875
  Other liabilities                                    5,741
                                                    --------

      Total liabilities                                6,630
                                                    --------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY:
   Preferred stock, 30,000,000 shares authorized:
     $2.10 cumulative convertible, Series B, $25
          par value, issued and outstanding:
          2,538,550                                   63,464
     Series C Junior, cumulative, $.01 par value,
          liquidation preference $3.00 per share,
          issued and outstanding: 8,257,079               82
   Common stock, $.01 par value, 100,000,000
     shares authorized, issued:  18,915,134,
          outstanding: 18,716,134                       188
   Additional paid-in capital                        108,875
   Accumulated other comprehensive income,
     unrealized holding gains on securities               108
   Accumulated deficit                              (172,155)
   Treasury stock, at cost (199,000 shares of
     common stock)                                    (1,000)
                                                    --------

      Total stockholders' deficiency                   (438)
                                                    --------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY      $  6,192
                                                    --------

See notes to consolidated financial statements.

                                       2
<PAGE>

CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS
Three and six months ended June 30, 2003 and 2002
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
                                                     Three Months Ended         Six Months Ended
                                                     ------------------         ----------------
                                                          June 30,                  June 30,
                                                          --------                  --------
                                                        2003         2002         2003         2002
                                                        ----         ----         ----         ----
<S>                                               <C>          <C>          <C>          <C>
INCOME:
  Interest on investments                         $       42   $       54   $       92   $      105
  Interest on loans                                       67           -           124           -
  Other income                                             1            3            1            3
                                                  ----------   ----------   ----------   ----------

    Total income                                         110           57          217          108
                                                  ----------   ----------   ----------   ----------

EXPENSES:
  Compensation and employee benefits                      43           42           85           85
  Other operating expenses                                31           25           43           58
  Interest expense                                         9           -            13           -
                                                  ----------   ----------   ----------   ----------

    Total expenses                                        83           67          141          143
                                                  ----------   ----------   ----------   ----------

NET INCOME (LOSS) FROM CONTINUING OPERATIONS              27          (10)          76          (35)

NET INCOME FROM DISCONTINUED OPERATIONS                   -            -            11           -
                                                  ----------   ----------   ----------   ----------

NET INCOME (LOSS)                                         27          (10)          87          (35)
                                                  ----------   ----------   ----------   ----------

OTHER COMPREHENSIVE INCOME
  Unrealized gain on investment securities                106          -           106           -
  transferred to available-for-sale
  Unrealized gain on available -for-sale                   2           -             2           -
                                                  ----------   ----------   ----------   ----------
  securities

COMPREHENSIVE INCOME (LOSS)                       $      135   $      (10)  $      195   $      (35)
                                                  ==========   ==========   ==========   ==========

NET LOSS AVAILABLE FOR COMMON STOCKHOLDERS
                                                  $   (2,131)  $   (2,168)  $   (4,230)  $   (4,352)
                                                  ==========   ==========       ======   ==========

BASIC AND DILUTED LOSS PER COMMON SHARE:

  From continuing operations                      $    (0.11)  $    (0.12)  $    (0.23)  $    (0.23)
  From discontinued operations                    $    (0.00)  $    (0.00)  $    (0.00)  $    (0.00)
  Net loss                                        $    (0.11)  $    (0.12)  $    (0.23)  $    (0.23)
                                                  ==========   ==========   ==========   ==========

AVERAGE COMMON SHARES OUTSTANDING
                                                  18,716,134   18,716,134   18,716,134   18,716,134

DIVIDENDS PER COMMON SHARE                                 -            -
</TABLE>

                                       3

<PAGE>

See notes to consolidated financial statements.

                                       4
<PAGE>

CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 2003 and 2002
(Dollars in Thousands)
(Unaudited)

                                                             2003        2002
                                                             ----        ----
CASH FLOWS FROM OPERATING ACTIVITIES:
   Interest received                                        $   218    $   197
   Operating expenses                                           (96)       (153)
   Other income                                                   1          3
   Settlement payments                                          (28)     (1,069)
                                                            -------    -------
     Net cash provided by (used in) operating activities         95      (1,022)
                                                            -------    -------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Decrease in investment securities                          1,260        158
   Increase in loans                                         (1,423)        --
   Other                                                         (5)        (2)
                                                            -------    -------

     Net cash (used in) provided by investing  activities      (168)       156
                                                            -------    -------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in repurchase agreements                            175        875
                                                            -------    -------
     Cash provided by financing activities                      175        875
                                                            -------    -------
NET INCREASE IN CASH                                            102          9

CASH AT BEGINNING OF PERIOD                                      37          0
                                                            -------    -------
CASH AT END OF PERIOD                                       $   139    $     9
                                                            -------    -------
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
   PROVIDED BY (USED IN) OPERATING ACTIVITIES:
   Net income (loss)                                        $    87    $   (35)
   Gain from discontinued operations                            (11)        --
   Settlement payments                                          (28)     (1,069)
   Decrease (increase) in other assets                           54         (2)
   (Increase) decrease in accrued income and expense, net        (7)        84
                                                            -------    -------

NET CASH PROVIDED BY (USED IN) OPERATING
  ACTIVITIES                                                $    95    $ (1,022)
                                                            -------    -------
See notes to consolidated financial statements.

                                       5
<PAGE>

CITYFED FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
JUNE 30, 2003 (UNAUDITED)

1.   CityFed  Financial Corp.  ("CityFed") was  incorporated in Delaware in 1984
     and until December 8, 1989,  CityFed was a unitary savings and loan holding
     company that conducted its business primarily through its ownership of City
     Federal Savings Bank ("City Federal") and its subsidiaries.  On December 7,
     1989,  the  Office of  Thrift  Supervision  ("OTS")  of the  United  States
     Department  of the Treasury  declared  City Federal  insolvent,  ordered it
     closed and appointed the Resolution Trust  Corporation  ("RTC") as receiver
     of City Federal.  A new federal  mutual  savings  bank,  City Savings Bank,
     F.S.B.  ("City  Savings"),  was  created,  which  acquired all deposits and
     substantially all of the assets and liabilities of City Federal. CityFed no
     longer controls City Federal and has no control over City Savings.

     As a result of the  receivership  of City  Federal,  CityFed has  undergone
     material  changes in the nature of its business and is no longer  operating
     as a savings and loan holding company.  CityFed's  financial  statements at
     December 31, 1989,  for the year then ended,  and for  subsequent  periods,
     reflect CityFed's interest in City Federal as discontinued  operations.  At
     June  30,  2003,  CityFed's  business  activities  consisted  primarily  of
     attempting to resolve outstanding  indemnification  claims against CityFed,
     the  management  of  investments,  and  mortgage  and real  estate  related
     investments as described below.

     During February 2002,  CityFed  organized CFF Services Corp.  ("Services").
     Services is  incorporated  in Delaware and is a wholly owned  subsidiary of
     CityFed.  The consolidated  financial  statements  include the accounts and
     transactions  of CityFed and Services  (collectively  referred to herein as
     the Company) after elimination of all intercompany  activity. At the end of
     June 30, 2003, Services held $3,442,000 of real estate-related assets.

     The  consolidated  financial  statements  have been  prepared  assuming the
     Company will continue as a going concern although as discussed above and in
     Note 5,  CityFed is subject to a number of  commitments  and  contingencies
     that  raise  substantial  doubt  about  its  ability  to do so.  Except  as
     indicated in Note 5, the consolidated  financial  statements do not include
     any adjustments  that might result from the outcome of these  uncertainties
     which may be determined in the near term.

     Services  originates,  or  purchases  participations  in,  residential  and
     commercial  first and second mortgage  loans,  loans secured by real estate
     loans, and other real estate related loans. The borrowers  generally do not
     meet the conforming guidelines  established by banking institutions because
     of  higher   loan-to-value   ratios,   the  nature  or  absence  of  income
     documentation, limited credit histories, high levels of consumer debt, past
     credit  difficulties,  or  other  factors.  However,  an  analysis  of  the
     underlying  characteristics  of the borrower,  his business or  employment,
     and/or the value of  additional  collateral  to support the loan,  provides
     support so that the loan is a  reasonable  risk and is priced  accordingly.

                                        6
<PAGE>

     The normal  location of the  collateral is in the New England states with a
     concentration in Rhode Island and southeastern Massachusetts.

     Management  periodically  evaluates  the adequacy of the allowance for loan
     losses based on past loan loss experience,  known and inherent risks in the
     portfolio,  adverse  situations that might affect the borrower's ability to
     repay,  the  estimated  value of any  underlying  collateral,  and  current
     economic  conditions.   While  management  uses  information  available  in
     establishing the allowance for loan losses,  evaluation assessments made by
     management  are  inherently   subjective  and  future  adjustments  to  the
     allowance may be necessary if economic conditions differ substantially from
     the assumptions  used in making the  evaluation.  Management has determined
     that no  allowance  for loan losses was  necessary  at June 30, 2003 since,
     based on its  evaluation,  no events causing loss or loan  impairment  have
     occurred.  The  allowance  for loan losses is a material  estimate  that is
     particularly susceptible to significant change in the near term.

2.   The consolidated  financial  statements  should be read in conjunction with
     the  consolidated  financial  statements and notes thereto  included in the
     CityFed's  Form  10-KSB for the year ended  December  31,  2002 ("2002 Form
     10-KSB").  The  interim  statements  reflect  all  adjustments  of a normal
     recurring  nature that are, in the opinion of  management,  necessary for a
     fair  presentation  of the results and  financial  position for the periods
     presented.

3.   In July  1989,  CityFed's  Board of  Directors  suspended  the  payment  of
     dividends on all three  currently  outstanding  series of CityFed's  stock.
     These include  CityFed's  common stock,  $0.01 par value per share ("Common
     Stock"),  on which CityFed had been paying quarterly  dividends of one cent
     per share;  the Series C, Junior  Preferred  Stock,  Cumulative,  $0.01 par
     value per share ("Series C Stock"),  with a quarterly dividend of ten cents
     per share; and the $2.10 Cumulative  Convertible Preferred Stock, Series B,
     $25.00 par value per share ("Series B Stock"), with a quarterly dividend of
     $0.525 per share. Dividends on both series of CityFed's preferred stock are
     cumulative.  At June 30, 2003,  dividends in arrears were $74.6 million and
     $46.2 million on CityFed's Series B and Series C Stock, respectively.

4    The Company reclassified its investments in mortgage backed securities from
     held-to-maturity to available for sale as of June 1, 2003, in response to a
     change in business strategy approved by the Board of Directors. As a result
     of the change in business strategy,  the Company no longer has the positive
     intent to hold the securities to maturity but rather has the intent to hold
     them for an  indefinite  period.  The  necessity for the change in business
     strategy was not previously  anticipated  by the Company.  Prior to June 1,
     2003, the securities  were recorded at amortized cost in  investments.  The
     unrealized holding gain of $107,000 existing at that date has been added to
     the carrying  value of investments  and  recognized in other  comprehensive
     income.  The change in fair value during June is excluded from earnings and
     recorded as a component of other comprehensive  income.  Unrealized holding
     gains on such securities  which were added to  stockholders'  equity during
     June were $1,000.  The amortized cost of the investment  securities at June
     30, 2003 was $2,633,000.


                                       7
<PAGE>

5.   COMMITMENTS AND CONTINGENCIES

     Indemnification  Claims - The  By-laws of  CityFed,  inter  alia,  obligate
     CityFed to  indemnify,  to the fullest  extent  authorized  by the Delaware
     General  Corporation Law, any person who is made or threatened to be made a
     party to or becomes  involved in an action by reason of the fact that he or
     she is or was an employee of CityFed or one of its subsidiaries, and to pay
     on his or her behalf expenses incurred in defending such an action prior to
     the final disposition of such action; provided that expenses incurred by an
     officer or director may be paid in advance only if such person  delivers an
     undertaking to CityFed to repay such amounts if it ultimately is determined
     that the person is not entitled to be indemnified  under  CityFed's  Bylaws
     and the Delaware General  Corporation Law. These undertakings are generally
     not secured.  Consequently,  CityFed may become obligated to indemnify such
     persons for their expenses  incurred in connection with any such action and
     to advance  legal  expenses  incurred  by such  persons  prior to the final
     disposition  of any such action.  In addition to any amounts paid on behalf
     of such person for  expenses  incurred in  connection  with such an action,
     CityFed  also  may have  further  indemnification  responsibilities  to the
     extent  damages  are  assessed  against  such a person  and for  settlement
     amounts.

     As described below, CityFed and several former directors and/or officers of
     City  Federal  were named as  defendants  or  respondents  in the First and
     Second RTC  Actions and in the Notice of Charges (as such terms are defined
     below). Many of these former directors and/or officers of City Federal have
     requested  CityFed to  indemnify  them and to advance  expenses  to them in
     connection  with these matters.  A special  committee of CityFed's Board of
     Directors, comprised of directors who were not named in the First or Second
     RTC Actions,  was established to consider this request for  indemnification
     and  advancement  of  expenses  with  respect  to the First and  Second RTC
     Actions. On the advice of counsel to the special committee,  CityFed paid a
     portion  of the  defendants'  reasonable  defense  costs on  behalf of such
     former  directors and officers in such connection with the First and Second
     RTC Actions.

     In addition to the First and Second RTC Actions,  the Notice of Charges and
     the  "Indemnification  Claims  Relating  to  Deferred  Compensation  Plans"
     (described  below),  CityFed is currently aware of at least one other legal
     action  with  respect to which  current or former  officers,  directors  or
     employees of CityFed or its former subsidiaries have requested that CityFed
     advance expenses and indemnify them.

     In January 2002, CityFed entered into settlements with certain  individuals
     and in the  future  may be  required  to make  payments  of legal  fees and
     expenses  (including  settlement  amounts)  to other  individuals  who have
     settled with the RTC or Federal Deposit Insurance  Corporation  ("FDIC") in
     the Second RTC Action.  For more information  regarding these  settlements,
     see "Second RTC Action" below.

     CityFed received a letter dated June 21, 1995, from Skadden,  Arps,  Slate,
     Meagher & Flom  ("Skadden"),  which is counsel for Gordon  Allen,  Marshall
     Criser,  Edwin Halkyard,  Peter Kellogg,  William Liffers and Victor Pelson
     ("Outside  Directors"),  who  are or  were  parties  to one or  more of the
     following matters  (collectively,  the "Cases"): (1) the Second RTC Action;


                                       8
<PAGE>

     (2) the efforts to set aside the Temporary  Order (as defined  below);  and
     (3) the  administrative  enforcement  proceeding brought by the OTS against
     CityFed and the Individual  Respondents (as defined below).  In the letter,
     the Outside  Directors  demanded  that,  pursuant to  CityFed's  Bylaws and
     Restated Certificate of Incorporation, CityFed pay all outstanding invoices
     from  Skadden  for legal  services  rendered to the  Outside  Directors  in
     connection  with the Cases.  The letter states that, if CityFed  refuses to
     make the payments  demanded,  the Outside  Directors  will consider  taking
     appropriate  legal  action to  enforce  their  rights.  CityFed  received a
     similar letter from Venable, Baetjer, Howard & Civiletti,  counsel for John
     Kean,  who was a party to the Second RTC Action,  as well as from Alfred J.
     Hedden,  Gilbert G. Roessner,  and Gordon Allen, who were or are parties to
     the Cases.  CityFed also received  similar  letters in connection  with the
     deferred compensation matters described below. See "Indemnification  Claims
     Relating to Deferred Compensation Plans."

     During January 2002,  CityFed entered into Mutual Release Agreements with a
     number of former  officers,  directors  and  employees  of  CityFed or City
     Federal to settle in full amounts claimed for indemnification of settlement
     payments  made,  and legal fees and expenses paid or incurred in connection
     with defenses,  in the Cases by such  individuals.  At June 30, 2003, other
     liabilities    consist   of    approximately    $5,741,000   of   estimated
     indemnification claims made by former officers,  directors and employees of
     CityFed or City  Federal  representing  $3,010,000  related  to  settlement
     payments  made in the  Cases,  $2,345,000  related  to legal  services  and
     expenses paid or incurred by such parties in connection  with their defense
     in the Cases, $326,000 related to deferred compensation  arrangements,  and
     $60,000 related to a separate indemnification claim.

     On May 19, 2000,  CityFed  finalized with the OTS and the FDIC a settlement
     ("Settlement")  that settled the action  described  below under  "Notice of
     Charges."  Pursuant to the  Settlement,  the Temporary Order was dissolved,
     and the Escrow Agreement (as described below) was terminated. Consequently,
     CityFed may reorganize,  perhaps involving a bankruptcy  proceeding.  It is
     anticipated  that any  remaining  indemnification  claims will be addressed
     prior to or as part of any such reorganization.

     CityFed does not know whether all current or former officers,  directors or
     employees of CityFed or its former subsidiaries who are or were involved in
     actions  or  proceedings  will  request  advancement  or  payment  of legal
     expenses  and  indemnification  or,  if  requested,  whether  they  will be
     entitled  to  advancement  of expenses or  indemnification.  While  CityFed
     believes  amounts  accrued  in  other  liabilities  at June  30,  2003  for
     remaining  unpaid claims from the Cases and one additional  matter referred
     to above are  reasonable  estimates,  it is not  possible  for  CityFed  to
     estimate with accuracy the probable  amount or range of liability  relating
     to other  potential  indemnification  claims that might be made pursuant to
     CityFed's  Bylaws or state  statutes,  although  the amount of such  claims
     could be material.

     CityFed  has held  settlement  discussions  with  respect to the  remaining
     claims of certain of its, and its former subsidiaries',  current and former
     officers,   directors   and  employees   who  have   previously   requested
     indemnification from CityFed. Negotiations are ongoing.


                                       9
<PAGE>


     Certain   insurance   policies   may   provide   coverage  to  CityFed  for
     indemnification  payments  made by  CityFed.  These  policies,  subject  to
     certain exclusions,  limitations and loss participation provisions, provide
     coverage  to  CityFed  for  amounts  that  it  may be  obligated  to pay to
     indemnify its current and former directors and officers,  and in some cases
     also provide coverage to the directors and officers of CityFed directly for
     covered losses resulting from claims made against  CityFed's  directors and
     officers for certain wrongful acts. Under the insurance  policies,  CityFed
     would be required,  prior to any payment by the insurers to it, to absorb a
     retention  amount equal to the first $4 million of each covered loss unless
     it is unable to do so by reason of insolvency.

     The insurers  have denied  coverage with respect to the claims made against
     the   directors   and  officers  in  the  First  and  Second  RTC  Actions.
     Consequently,  CityFed  may  not be  reimbursed  by the  insurers  for  any
     expenses advanced or indemnification  payments made to these individuals in
     the First and Second RTC Actions.

     Notice of  Charges - In the Matter of CityFed  Financial  Corporation,  OTS
     Order No. AP 94-26  (June 2, 1994) - On June 2, 1994,  the Office of Thrift
     Supervision  issued a Notice  of  Charges  ("Notice  of  Charges")  against
     CityFed  and against  Gordon E.  Allen,  John W.  Atherton,  Jr.,  Edwin M.
     Halkyard,  Alfred J.  Hedden,  Peter R.  Kellogg,  William A.  Liffers  and
     Gilbert G. Roessner ("Individual  Respondents"),  who are current or former
     directors or officers of CityFed and of CityFed's former  subsidiary,  City
     Federal.

     The OTS  charged  that  CityFed  failed to  maintain  the net worth of City
     Federal at levels required by applicable capital  requirements in violation
     of a  stipulation  dated  December  4, 1984  ("Stipulation").  CityFed  had
     provided  the  Stipulation  to  the  Federal  Savings  and  Loan  Insurance
     Corporation  in connection  with the approval by the Federal Home Loan Bank
     Board ("FHLBB") of CityFed's  acquisition of City Federal in December 1984.
     FHLBB Resolution No. 84-664,  dated November 21, 1984,  approved  CityFed's
     acquisition  of City Federal on the  condition  that,  among other  things,
     CityFed  provide the  Stipulation to the Federal Savings and Loan Insurance
     Corporation.  The Stipulation  provided that, as long as CityFed controlled
     City  Federal,  CityFed  would  cause the net worth of City  Federal  to be
     maintained  at a level  consistent  with that required by  regulations  and
     would infuse sufficient  additional equity capital,  in a form satisfactory
     to the regulators,  to effect compliance with the capital requirement.  For
     further  information  regarding  the  Stipulation,  see "First RTC  Action"
     below.

     The Notice of Charges sought  restitution in an amount not less than $118.4
     million,  which the OTS  alleged to be the  regulatory  capital  deficiency
     reported by City Federal in the fall of 1989.

     The OTS also sought a civil money  penalty  against  CityFed on the grounds
     that  CityFed  allegedly   "knowingly"  committed  the  alleged  violations
     described above and allegedly "knowingly or recklessly caused a substantial
     loss to City  Federal."  The  amount of the civil  money  penalty  assessed
     against CityFed in the Notice of Charges was $2,649,600.

     The  OTS  charged  that  the  Individual  Respondents  had  an  affirmative
     obligation to see that CityFed complied with its net worth maintenance. The
     OTS  alleged  that  some  of the  Individual  Respondents  (Messrs.  Allen,

                                       10
<PAGE>

     Atherton,  Hedden,  Kellogg and Roessner)  were unjustly  enriched  through
     CityFed's   payment  of  their  legal  expenses  with  CityFed  assets,  an
     allegation  that  refers to the  advancement  by  CityFed,  pursuant to its
     obligations  in its Bylaws and Restated  Certificate of  Incorporation,  of
     litigation  expenses to those  Individual  Respondents in the RTC action in
     the United  States  District  Court for the  District of New Jersey  ("N.J.
     Court"), Resolution Trust Corporation v. Atherton, et al., Civil Action No.
     93-1811 (consolidated with Resolution Trust Corporation v. Simmons, et al.,
     Civil Action No. 92-5261-B).  The Notice of Charges requested that an order
     be entered by the Director of the OTS requiring the Individual  Respondents
     to make restitution, reimburse, indemnify or guarantee the OTS against loss
     in an amount not less than $400,000, which the OTS alleged to be the amount
     of legal expenses CityFed paid on their behalf from April to December 1993.

     In the  Notice of  Charges,  the OTS also  assessed a civil  money  penalty
     against  the  Individual  Respondents  on the grounds  that they  allegedly
     "violated a condition  imposed in writing and/or a written  agreement." The
     amount of civil money penalties assessed against the Individual Respondents
     was $51,750 each.

     Also on June 2, 1994, the OTS issued a Temporary  Order to Cease and Desist
     ("Temporary Order") against CityFed. The Temporary Order sought to "freeze"
     CityFed's  assets by placing them in various  respects under the control of
     the OTS.  CityFed and several of the  Individual  Respondents  attempted to
     have  the  Temporary  Order  set  aside in  court,  but  that  attempt  was
     unsuccessful.

     On October 26, 1994,  CityFed and the OTS entered into an Escrow  Agreement
     with  CoreStates  Bank,  N.A. (now First Union  National  Bank) pursuant to
     which CityFed  transferred  substantially  all of its assets to First Union
     Bank for deposit  into an escrow  account.  The Escrow  Agreement  provided
     CityFed  with  $15,000 per month for normal  business  expenses and allowed
     CityFed to sell and purchase securities in the escrow account.

     The terms of the Settlement generally included the following:

     o    CityFed paid to the FDIC, as receiver for City Federal, $3,169,115;

     o    CityFed assigned to the FDIC all of CityFed's interest in its goodwill
          claim (see "Supervisory Goodwill Action" below);

     o    CityFed  conveyed to the FDIC its  ownership  interest in City Federal
          and gave up any claims against its receivership estate;

     o    The OTS dismissed  with  prejudice the Notice of Charges,  and the OTS
          and the FDIC  gave  full and  complete  releases  to  CityFed  and the
          Individual Respondents;

     o    CityFed and the Individual Respondents gave full and complete releases
          to the OTS and the FDIC; and

                                       11
<PAGE>

     o    The OTS dissolved the Temporary Order and authorized  First Union Bank
          to  release  to  CityFed  all of its  assets  remaining  in the escrow
          account  following  payment  of the  Settlement  amount to the FDIC as
          receiver for City  Federal.  Subsequently,  the Escrow  Agreement  was
          terminated.

     First RTC Action - On December 7, 1992, the RTC in its capacity as receiver
     for City Savings,  and the RTC in its corporate  capacity,  filed the First
     RTC  Action in the N.J.  Court  against  CityFed  and  against  two  former
     officers of City  Federal.  In its  complaint in the First RTC Action,  the
     RTC, in its corporate capacity,  sought,  inter alia, to recover damages in
     excess of $12 million  against  CityFed  resulting from  CityFed's  alleged
     violation  of the  Stipulation  to maintain  the net worth of City  Federal
     (Resolution  Trust  Corporation  v.  Simmons,  et  al.,  Civil  Action  No.
     92-5261-B ("First RTC Action").

     Pursuant to the  Settlement,  the FDIC released  CityFed from all claims in
     the First RTC Action.

     Second RTC Action - On April 26, 1993, the RTC, in its capacity as receiver
     for City  Savings,  filed the Second RTC Action in the N.J.  Court  against
     John W. Atherton, Jr., Gordon E. Allen, Alfred J. Hedden, Peter R. Kellogg,
     John Kean, Gilbert G. Roessner, George E. Mikula and James P. McTernan, all
     former  directors  and/or  officers  of  City  Federal   (Resolution  Trust
     Corporation  v.  Atherton et al.,  Civil Action No.  93-1811)  ("Second RTC
     Action"). In its initial complaint in the Second RTC Action, the RTC sought
     to recover damages in excess of $130 million for alleged negligence,  gross
     negligence  and breach of fiduciary  duties by the defendants in connection
     with certain loans made by City Federal. Although the Second RTC Action was
     filed separately from the First RTC Action, the N.J. Court consolidated the
     two actions for administrative purposes.

     On June 17, 1993, the RTC filed a First Amended  Complaint  ("First Amended
     Complaint") in the Second RTC Action that named as additional defendants in
     the Second RTC Action  Victor A. Pelson and Marshall M. Criser,  two former
     directors of City  Federal.  With the  exception of the addition of Messrs.
     Pelson  and  Criser as  defendants,  the  substance  of the  First  Amended
     Complaint  was  identical  to the  complaint  filed by the RTC on April 26,
     1993.

     For additional  information  concerning the First RTC Action and the Second
     RTC Action see CityFed's 2001 Form 10-KSB.

     CityFed is aware that all of the  defendants  in the Second RTC Action have
     settled with the RTC or FDIC.  CityFed has completed  its own  settlements,
     described above, with all the defendants  except Peter R. Kellogg,  John W.
     Atherton, Jr. and Michael DeFreytas,  who agreed to pay $3,000,000,  $5,000
     and  $5,000,  respectively,  to settle  with the FDIC and such  amounts are
     included under other liabilities at December 31, 2002.

     "Supervisory  Goodwill"  Action - The United  States  Supreme Court held in
     United States v. Winstar Corp., 518 U.S. 839, 116 S. Ct. 2432 (1996),  that
     the loss by a financial  institution of supervisory goodwill carried on its

                                       12
<PAGE>

     books as a consequence of earlier  supervisory  mergers, as a result of the
     Financial Institutions Reform,  Recovery and Enforcement Act of 1989, could
     constitute  a breach of contract by the United  States.  On August 7, 1995,
     CityFed,  acting in its own right and as shareholder of City Federal, filed
     a civil action in the United States Court of Federal Claims seeking damages
     for loss of  supervisory  goodwill  on its  books as a  result  of  various
     acquisitions by City Federal of troubled depository  institutions.  CityFed
     Financial  Corp.,  in its own right and in its capacity as  Shareholder  of
     City  Federal  Saving  Bank,  Bedminster,  New Jersey v.  United  States of
     America, No. 95-508c.

     Pursuant to the Settlement,  CityFed  assigned to the FDIC all of CityFed's
     interest in its  supervisory  goodwill  case,  ceased to be a party to that
     case, and has no right to share in the recovery in that case,  should there
     be one.

     Claim of a Former Director and Officer - As a result of the receivership of
     City  Federal,  City Federal  failed to pay Gilbert G.  Roessner,  a former
     director  and officer of CityFed,  the  amounts  owed to him under  various
     deferred  compensation  arrangements  City  Federal had with him. He claims
     that CityFed is responsible for this amount  (approximately $1.1 million as
     of November 1989). On April 30, 1991,  special counsel to the  Compensation
     Committee of CityFed's  Board of  Directors  recommended  to the full Board
     that no payments be made to Mr. Roessner currently, but that the Board keep
     Mr. Roessner's claim under advisement,  to be reconsidered in light of then
     existing circumstances and any additional evidence provided by Mr. Roessner
     in support of his claim. The full Board of Directors received the report of
     special counsel to the Compensation Committee.

     Pursuant  to Mr.  Roessner's  settlement  with the RTC as  discussed  under
     "Second RTC Action" above, CityFed believes Mr. Roessner's current deferred
     compensation  claim is in the amount of $169,365.60  plus accrued  interest
     thereon,  if any. All of Mr.  Roessner's claims were settled as part of the
     settlements   entered   into  during   January   2002   referred  to  under
     "Indemnification Claims" above.

     Indemnification  Claims  Relating  to  Deferred  Compensation  Plans  -  In
     September  1990, the RTC, as receiver for City Federal (and the new Federal
     mutual   savings   bank   created  to  acquire  all  of  the  deposits  and
     substantially  all of the assets and indebtedness of City Federal),  caused
     an action to be filed in the N.J. Court seeking the return of approximately
     $3.1 million (since reduced to $1.9 million) in deferred  compensation paid
     by City  Federal to  certain  officers,  directors  and  employees  of City
     Federal, some of whom are or were also officers,  directors or employees of
     CityFed. Pursuant to the Delaware General Corporation Law and the Bylaws of
     CityFed,  CityFed paid the defendants'  legal fees in connection with their
     defense of the litigation.

     A settlement  agreement,  under which the defendants  were to pay $790,000,
     was entered  into by the parties in June 1993.  This  settlement  agreement
     concluded the case.

     Several defendants requested that CityFed reimburse them for the settlement
     payments made by them under the settlement agreement.

                                       13
<PAGE>

     CityFed  has  settled  with  all but  three of the  parties  as part of the
     settlements describe above. At June 30, 2003, CityFed has included $326,000
     related to the remaining claims in this matter in other liabilities.

     Tax  Liabilities  - CityFed's  liability  for federal  income taxes for tax
     years through 1990 was calculated on the basis of CityFed's  inclusion in a
     consolidated   group  that   includes   City  Federal  and  the   successor
     institutions  created by the OTS to acquire the assets and  liabilities  of
     City Federal.  Under the applicable provisions of the Internal Revenue Code
     of 1986, as amended ("Code"), and the regulations  thereunder,  all members
     of the consolidated  group,  including  CityFed,  are jointly and severally
     liable for any income  taxes owed by the group.  CityFed  has not  included
     City  Federal and the  successor  institutions  in the  Federal  income tax
     returns  CityFed  filed or will file for its tax years 1991  through  2002.
     CityFed's  position is not free from challenge,  although  CityFed believes
     that its position is reasonable under the current tax law.

     Potential  Bankruptcy - CityFed has considered,  but not currently actively
     pursuing, a filing under the Federal Bankruptcy Code to assist in resolving
     the claims made against it.

Item 2.  Management's Discussion and Analysis or Plan of Operation.

General

     Since its  determination  to rely on Section  3(c)(5)(C) of the  Investment
     Company Act of 1940,  as amended  ("1940  Act"),  CityFed has  continued to
     invest in high grade money market  instruments and has made  investments in
     pass-through   certificates  issued  by  federally  sponsored  agencies  in
     addition to its investment in Services and Services' investments. Since the
     receivership  of City  Federal,  the  operating  expenses  of CityFed  have
     consisted of the salaries of the employees of CityFed,  the expenses of the
     small  office  maintained  by  CityFed  and the  related  office  operating
     expenses, expenses relating to the audit of its financial statements by its
     independent auditors, and expenses of its outside legal counsel. Currently,
     CityFed has one full-time employee and one office.

     CityFed  believes  that it can satisfy its cash  requirements  for its next
     twelve  months of  operations  from its  existing  assets  or by  utilizing
     borrowing arrangements secured by its investments.  During such period, the
     Company does not expect to purchase or sell plant or significant equipment,
     nor  does  the  Company  intend  to  significantly  change  its  number  of
     employees.

     Due to the  nature of its assets at and  subsequent  to  December  8, 1989,
     CityFed  might  have  been  deemed  to fall  within  the  definition  of an
     "investment  company" under the 1940 Act. To resolve any question regarding
     its current  status under the 1940 Act,  CityFed  filed an  application  on
     October  19,  1990  with  the  Division  of  Investment  Management  of the
     Securities and Exchange  Commission  ("SEC") for an order exempting it from
     certain  provisions  of the  1940 Act and  certain  rules  and  regulations
     thereunder. This application was amended on September 23, 1993, January 18,
     1994 and March 1, 1994. The application was granted under Sections 6(c) and

                                       14
<PAGE>

     (e) of the 1940  Act on March  15,  1994.  Under  the  order  granting  the
     application ("1940 Act Order"),  CityFed was not required to register as an
     investment  company.  The 1940 Act Order  issued  by the SEC that  exempted
     CityFed  from  having to  register  as an  investment  company  expired  on
     February 6, 2003. As stated above, CityFed has expanded its investments and
     is currently  relying on Section  3(c)(5)(C) of the 1940 Act, which exempts
     from  registration  as an  investment  company any person who is  primarily
     engaged in "purchasing or otherwise  acquiring mortgages and other liens on
     and interests in real estate."

Liquidity and Capital Resources

     At June 30, 2003, the Company had approximately $6,192,000 in total assets,
     $6,630,000  in total  liabilities  and  $438,000 in negative  stockholders'
     equity. At December 31, 2002, the Company had  approximately  $5,869,000 in
     total  assets,  $6,502,000  in total  liabilities  and $633,000 in negative
     stockholders'  equity.  However,  as  discussed  in Note 5 to the Notes and
     under Item 1., "Description of Business - Potential Obligations of CityFed"
     in the  Company's  2002 Form 10-KSB,  a number of claims have been asserted
     against  CityFed.  If the  claimants  under some or all of these claims are
     successful, their claims against CityFed could greatly exceed the Company's
     assets.

     While the Company's liquidity is expected to be sufficient to meet expected
     litigation and  administrative  expenses over the next twelve  months,  any
     substantial  indemnification  expense,  settlement or judgment could reduce
     liquidity  to a  level  that  would  jeopardize  the  continuation  of  the
     Company's activities. However, as a result of accruals to other liabilities
     to reflect the items  described  under Item 1.,  "Description of Business -
     Potential  Obligations  of  CityFed" in  CityFed's  2002 Form  10-KSB,  the
     Company  currently has a negative net worth and it is unlikely that CityFed
     will be able to achieve a  positive  net worth in the  foreseeable  future.
     Although  management  believes that the Company's current level of accruals
     are  sufficient,  no assurances  can be given that the amounts  established
     will be  adequate,  that any  ultimate  resolution  of the claims  will not
     result in  substantial  amounts being  incurred or that further claims will
     not be asserted.

     As  discussed  above,  since  the  receivership  of City  Federal,  CityFed
     initially  marshaled  its assets  and has been,  and  currently  is, in the
     process of determining its liabilities.  To maintain the value of CityFed's
     existing assets while this process is ongoing,  CityFed  invested in income
     producing  instruments.  After the  settlements  described  above,  CityFed
     determined  to  expand  its  investment  options  to  include  pass-through
     certificates  issued by  federally  sponsored  agencies  and to  include an
     investment  in a subsidiary  that invests in first and second  mortgage and
     other real estate related assets including pass-through certificates issued
     by federally  sponsored  agencies.  Proceeds from  CityFed's  investment in
     Services are used by Services to fund its  investments  in first and second
     mortgages  and other  real  estate  assets.  To provide  liquidity  for its
     investment in Services, CityFed has and may from time to time in the future
     enter  into  reverse  repurchase  agreements  utilizing  its  or  Services'
     investments.

Results of Operations

                                       15
<PAGE>

     CityFed recorded a net income from continuing operations for the six months
     ended June 30, 2003 of $76,000. This compares to a net loss from continuing
     operations in the amount of $35,000 for the six months ended June 30, 2002.
     There was income of $11,000 from discontinued operations for the six months
     ended  June  30,  2003.  There  was no  income  or loss  from  discontinued
     operations in the six months ended June 30, 2002.

     CityFed  recorded a net income  from  continuing  operations  for the three
     months  ended June 30,  2003 of $27,000.  This  compares to a net loss from
     continuing  operations  in the amount of $10,000 for the three months ended
     June 30, 2002. There was no income or loss from discontinued operations for
     the three months ended June 30, 2002 or for the three months ended June 30,
     2003.

     Interest on investments  was $92,000 for the six months ended June 30, 2003
     compared  to  $105,000  for the six months  ended June 30,  2002 due to the
     lower amount of funds invested  offset by investing in higher yielding FNMA
     pass-through  securities in the 2003 period.  Interest on loans for the six
     months  ended  June 30,  2003 was  $116,000.  Interest  income on loans was
     reduced by $18,000  due to one loan being place on  non-accrual  during the
     quarter ended June 30, 2003. All payments on the loan were received in July
     and the loan is no longer on a non-accrual status. There was no interest on
     loans in the six months ended June 30, 2002. Total expenses of $141,000 for
     the six months ended June 30, 2003 were slightly less than the $143,000 for
     the same period in 2002.

     Interest on  investments  was $42,000 for the three  months  ended June 30,
     2003  compared to $54,000 for the three  months  ended June 30, 2002 due to
     the lower amount of funds invested  offset by investing in higher  yielding
     FNMA pass-through  securities in the 2003 period. Interest on loans for the
     three months ended June 30, 2003 was $67,000.  Interest income on loans was
     reduced by $18,000  due to one loan being place on  non-accrual  during the
     quarter ended June 30, 2003. All payments on the loan were received in July
     and the loan is no longer on a non-accrual status. There was no interest on
     loans in the six months ended June 30, 2002.  Total expenses of $83,000 for
     the six months  ended June 30,  2003 were  higher  than the $67,000 for the
     same period in 2002 due to higher legal and auditing fees.

     At June 30, 2003, there remain claims from five parties totaling $3,010,000
     for settlements  made in the Cases,  $326,000 for  settlements  made in the
     deferred compensation matter and $2,344,000 for legal services and expenses
     paid or incurred by the same parties in  connection  with their  defense in
     the  Cases.  See Note 5 above  and  Item 1.,  "Description  of  Business  -
     Potential  Obligations  of CityFed" in CityFed's  2002 Form  10-KSB.  These
     amounts  are  included  in  other  liabilities  at June  30,  2003  and are
     unchanged from December 31, 2002.

     The basic (and diluted) loss per common share from continuing operations of
     $0.23  and  $0.23  for the  six  months  ended  June  30,  2003  and  2002,
     respectively,  is after the  deduction  of unpaid  preferred  dividends  of
     $4,317,000 in both  periods.  The basic (and diluted) loss per common share

                                       16
<PAGE>

     from  discontinued  operations was $0.00 and $0.00 for the six months ended
     June 30, 2003 and 2002.  The basic (and  diluted)  loss per common share of
     $0.23  and  $0.23  for the  six  months  ended  June  30,  2003  and  2002,
     respectively,  is after the  deduction  of unpaid  preferred  dividends  of
     $4,317,000 in both periods. No preferred or common dividends have been paid
     since the  second  quarter of 1989 and none are  expected  to be paid until
     CityFed's situation changes significantly.

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

      See Note 5 to the Notes for a description of litigation.

Item 2.  Changes in Securities.

     (a)  None.

     (b)  None.

     (c)  None.

     (d)  Not applicable.

Item 3.  Defaults Upon Senior Securities.

     (a)  None.

     (b)  CityFed's $2.10 Cumulative  Convertible Preferred Stock, Series B, par
          value  $25.00  per  share  ("Series  B  Stock"),  is  required  to pay
          quarterly  dividends at a rate of $0.525 per share on March 1, June 1,
          September 1 and  December 1 of each year.  CityFed's  Series C, Junior
          Preferred  Stock,  Cumulative,  par value  $0.01 per share  ("Series C
          Stock"), is required to pay quarterly dividends at a rate of $0.10 per
          share on March 15, June 15, September 15 and December 15 of each year.
          The  dividends  on both  the  Series  B and  the  Series  C Stock  are
          cumulative.  The Series C Stock is junior to the Series B Stock in the
          payment of dividends.

          Beginning  with the payment due on September 1, 1989,  CityFed has not
          paid any  quarterly  dividends  on the  Series B Stock.  Beginning  on
          September 15, 1989, CityFed also has not paid any quarterly  dividends
          on the Series C Stock.  Because CityFed has failed to pay at least six
          quarterly  dividends on the Series B Stock,  the holders of such stock
          have the exclusive right,  voting separately as a class, to elect, and
          have elected, two directors of CityFed. Until the aggregate deficiency
          is  declared  and fully  paid on the  Series B Stock and the  Series C
          Stock,  CityFed  may not  declare  any  dividends  or make  any  other
          distributions  on or redeem  the  Common  Stock.  Until the  aggregate
          deficiency  is declared and fully paid on the Series B Stock,  CityFed
          may not declare any  dividends or make any other  distributions  on or
          redeem  the  Series  C  Stock.  As of June  30,  2003,  the  aggregate
          deficiency on the Series B Stock was  approximately  $74.6 million and
          the aggregate deficiency on the Series C Stock was approximately $46.2
          million.

                                       17
<PAGE>

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

      None.

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

     (a)  Exhibits

     11.  Statement Regarding the Computation of Per Share Loss.

     (b)  None.

                                       18
<PAGE>


                                   SIGNATURES

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


                                CITYFED FINANCIAL CORP.

                                By: /s/ John W. Atherton, Jr.
                                   --------------------------
                                  John W. Atherton, Jr.
                                  President, Chief Executive Officer
                                      and Treasurer (Principal Executive
                                      and Financial Officer)

Date:  August 21, 2003

                                       19
<PAGE>

                                  CERTIFICATION

I, John W. Atherton, Jr., certify that:

     1.   I have reviewed this  quarterly  report on Form 10-QSB for the quarter
          ended June 30, 2003 of CityFed Financial Corp.;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to me by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;
          b.   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and
          c.   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent functions):

          a.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b.   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to

                                       20
<PAGE>

          significant deficiencies and material weaknesses.


                             CITYFED FINANCIAL CORP.

                                By: /s/ John W. Atherton, Jr.
                                   --------------------------
                                  John W. Atherton, Jr.
                                  President, Chief Executive Officer
                                      and Treasurer (Chief Executive
                                      and Financial Officer)

Date:  August 21, 2003



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In  connection  with the  Quarterly  Report  of  CityFed  Financial  Corp.  (the
"Company")  on Form 10-QSB for the period  ended June 30, 2003 as filed with the
Securities  and  Exchange  Commission  on the date  hereof (the  "Report"),  the
undersigned,  in the  capacities  and  on  the  dates  indicated  below,  hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the  requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

2. The  information  contained in the Report  fairly  presents,  in all material
respects, the financial condition and results of operation of the Company.

                             CITYFED FINANCIAL CORP.

                                By: /s/ John W. Atherton, Jr.
                                   --------------------------
                                   John W. Atherton, Jr.
                                   President, Chief Executive Officer
                                      and Treasurer (Chief Executive
                                      and Financial Officer)

Date:  August 21, 2003

                                       21
<PAGE>

                                                                      Exhibit 11


                             CityFed Financial Corp.
              Statement Regarding the Computation of Per Share Loss



                                                Six months ended
                                                     June 30,

                                                       2003          2002
                                                       ----          ----
 Computation of Loss Per Share:


Weighted average number of common shares
   outstanding                                    18,716,134       18,716,134

Loss applicable to common stock:1

 From continuing operations                     $ (4,241,000)    $ (4,313,000)
                                                ------------     ------------
 From discontinued operations                   $     11,000     $       --
                                                ------------     ------------
 Net loss                                       $ (4,230,000)    $ (4,313,000)
                                                ============     ============

Basic and diluted loss per common share:

 From continuing operations                     $      (0.23)    $      (0.23)
 From discontinued operations                   $      (0.00)    $      (0.00)
 Net loss                                       $      (0.23)    $      (0.23)
                                                ------------     ------------


--------

(1) Losses  applicable to Common Stock include unpaid  preferred stock dividends
for the six months ended June 30, 2003 and 2002 in the amount of $4,317,000.


                                       22