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                                  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, 2004

                                       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
 incorporation or organization)                              Identification 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, 2004, the number of
shares of outstanding common stock was 28,716,134.

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


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<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
June 30, 2004
(Dollars in Thousands)
<TABLE><CAPTION>
                                                              JUNE 30, 2004
                                                               ------------
                                                               (Unaudited)
<S>                                                            <C>
ASSETS
------
Cash                                                           $        692
Available for sale securities                                           737
Non-marketable equity securities                                        190
Loans receivable                                                      3,776
Other assets                                                              3
                                                               ------------

TOTAL ASSETS                                                   $      5,398
                                                               ============


LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
LIABILITIES:
  Accrued expenses                                             $         39
  Notes payable, Shareholders                                         5,405
  Other liabilities                                                      14
                                                               ------------

       Total liabilities                                              5,458
                                                               ------------

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, shares
      issued and outstanding: 9,457,079                                  95
  Common stock, $.01 par value, 100,000,000 shares
    authorized, issued:
      28,915,134, outstanding: 28,716,134                               288
  Additional paid-in capital                                        109,026
  Accumulated deficit                                              (171,955)
  Accumulated other comprehensive income                                 22
  Treasury stock (199,000 shares of common stock), at cost           (1,000)
                                                               ------------
       Total stockholders' deficiency                                   (60)
                                                               ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                 $      5,398
                                                               ============
</TABLE>

See notes to consolidated financial statements.

                                        2
<PAGE>
CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS
Six months ended June 30, 2004 and 2003
(Dollars in Thousands, Except Per Share Data)
(Unaudited)

<TABLE><CAPTION>
                                                 THREE MONTHS ENDEDJUNE 30,          SIX MONTHS ENDED JUNE 30,
                                               ------------------------------      ------------------------------
INTEREST INCOME:                                   2004              2003              2004              2003
                                               ------------      ------------      ------------      ------------
<S>                                            <C>               <C>               <C>               <C>
     Interest on investments                   $         13      $         42      $         28      $         92
     Interest on loans                                  112                67               226               124
                                               ------------      ------------      ------------      ------------
            Total interest income                       125               109               254               216
INTEREST EXPENSE
     Repurchase agreements                               --                 9                 2                13
                                               ------------      ------------      ------------      ------------
            Net interest income                         125               100               252               203
                                               ------------      ------------      ------------      ------------
NON-INTEREST INCOME
     Loan fees                                            6                 1                 8                 1
                                               ------------      ------------      ------------      ------------
            Total non-interest income                     6                 1                 8                 1
                                               ------------      ------------      ------------      ------------
EXPENSES:
     Compensation and employee benefits                  34                43                72                85
     Other operating expenses                            43                31                73                43
                                               ------------      ------------      ------------      ------------
            Total expenses                               77                74               145               128
                                               ------------      ------------      ------------      ------------
NET INCOME FROM CONTINUING OPERATIONS                    54                27               115                76

NET INCOME FROM DISCONTINUED OPERATIONS
(Note 2)                                                 --                --                --                11
                                               ------------      ------------      ------------      ------------

NET INCOME                                               54                27               115                87
                                               ------------      ------------      ------------      ------------

OTHER COMPREHENSIVE INCOME (LOSS):
     Unrealized gain (loss) on
     available-for-sale securities                      (21)              108               (18)              108
                                               ------------      ------------      ------------      ------------
TOTAL OTHER COMPREHENSIVE INCOME                        (21)              108               (18)              108
                                               ------------      ------------      ------------      ------------

COMPREHENSIVE INCOME                           $         33      $        135      $         97      $        195
                                               ============      ============      ============      ============

NET LOSS AVAILABLE FOR COMMON STOCKHOLDERS     $     (2,104)     $     (2,131)     $     (4,442)     $     (4,230)
                                               ============      ============      ============      ============

BASIC AND DILUTED INCOME (LOSS) PER
COMMON SHARE:
     From continuing operations                $      (0.07)     $      (0.11)     $      (0.15)     $      (0.23)
     From discontinued operations                        --                --                --                --
                                               ------------      ------------      ------------      ------------
     Net loss                                  $      (0.07)     $      (0.11)     $      (0.15)     $      (0.23)
                                               ============      ============      ============      ============

AVERAGE COMMON SHARES OUTSTANDING                28,716,134        18,716,134        28,716,134        18,716,134

DIVIDENDS PER COMMON SHARE                               --                --                --                --
</TABLE>

See notes to consolidated financial statements.

                                        3
<PAGE>
CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)
<TABLE><CAPTION>
                                                                        2004              2003
                                                                    ------------      ------------
<S>                                                                 <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Interest received                                              $        246      $        218
     Operating expenses                                                     (121)             (175)
     Other income including income from discontinued operations                8                12
     Cash paid for interest                                                   (2)              (13)
                                                                    ------------      ------------
       Net cash provided by operating activities                             131                42
                                                                    ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Decrease in investment securities                                       361             1,260
     Decrease (increase) in loans receivable                                 246            (1,423)
     Other - net                                                               3                48
                                                                    ------------      ------------
       Net cash provided by (used in) investing activities                   610              (115)
                                                                    ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     (Decrease) increase in repurchase agreements                           (250)              175
                                                                    ------------      ------------
       Net cash (used in) provided by financing activities                  (250)              175
                                                                    ------------      ------------

NET INCREASE IN CASH                                                         491               102

CASH AT BEGINNING OF PERIOD                                                  201                37
                                                                    ------------      ------------

CASH AT END OF PERIOD                                               $        692      $        139
                                                                    ============      ============

RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
     Net income from continuing operations                          $        115      $         76
     Income from discontinued operations                                      --                11
     Decrease in accrued income                                               (8)               (2)
     Increase (decrease) in liabilities                                       24               (47)
                                                                    ------------      ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                           $        131      $         42
                                                                    ============      ============
</TABLE>

See notes to consolidated financial statements.

                                        4
<PAGE>
CITYFED FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
JUNE 30, 2004 (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, 2004, CityFed's business activities consisted primarily of 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, 2004, Services held $3,776,000 of real estate-related assets.

     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 by management
     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 to Services and is
     priced accordingly. 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

                                        5
<PAGE>

     making the evaluation. Management has determined that no allowance for loan
     losses was necessary at June 30, 2004 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, 2003 ("2003 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, 2004, dividends in arrears were $80.0 million and
     $49.8 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.
     Changes in fair value since June 1, 2003 are recorded as a component of
     other comprehensive income.

5.   Notes payable, shareholders include the principal balance of $4,750,000,
     which is payable at maturity on May 31, 2007. The balance also includes
     interest payable at maturity of $655,000, which is computed at the prime
     rate of 4% in effect on December 31, 2003. The interest is due at the
     maturity of the notes and, when actually paid, will be computed at the
     prime rate as it will exist from time to time until maturity. Any
     difference between the amount recorded as a liability and the amount
     actually due as a result of changes in interest rates will be recognized as
     a change in paid-in capital. No interest expense on these notes will be
     recognized in the statement of operations unless the amount previously
     recognized as paid-in-capital is reduced to zero.

6.   Non-marketable equity securities are securities for which sale by the
     Company is restricted and have been valued at cost.

7.   No provision for income taxes for the six months ended June 30, 2004 and
     2003 have been included in the accompanying consolidated Financial
     Statements since the Company has available net operating losses for income
     tax reporting purposes. At June 30, 2004 and 2003, deferred tax assets have
     been fully reserved.

                                        6
<PAGE>

8.   Certain prior year amounts have been reclassified to conform to current
     year presentation.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

GENERAL

Since its determination in February 2003 to rely on Section 3(c)(5)(C) of the
Investment Company Act of 1940, as amended ("1940 Act"), CityFed has invested in
money market instruments, corporate securities, and pass-through certificates
issued by federally sponsored agencies in addition to its investment in Services
and Services' investments. The operating expenses of CityFed consist of the
salary of the employee of CityFed, interest expense on borrowings under
repurchase agreements, the expenses of the office maintained by CityFed and the
related office operating expenses of Services, 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, CityFed does not
expect to purchase or sell plant or significant equipment, nor does CityFed
intend to significantly change its number of employees.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2004, CityFed had $5,398,000 in total assets, $5,458,000 in total
liabilities and a stockholders' deficiency of $60,000 compared to $5,527,000 in
total assets, $5,684,000 in total liabilities and a stockholders' deficiency of
$157,000 at December 31, 2003. CityFed expects to meet its commitments to
originate loans, borrowing commitments and its operating expenses from cash
generated from operations, from the sale of marketable securities or from loan
repayments.

CURRENT OPERATIONS

CityFed invests in pass-through certificates issued by federally sponsored
agencies, corporate debt and equity securities and operates through a subsidiary
as an originator and investor in first and second mortgage loans and other real
estate related assets. Proceeds from CityFed's investment in Services are used
by Services to fund its investments in first and second mortgage loans 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 repurchase agreements
utilizing its or Services' investments.

Services invests in first and second mortgage loans, loans secured by real
estate loans, and other real estate related loans. Some loans are originated
directly by Services or purchased by assignment and serviced directly and some
are purchased by participation certificates and the loans are serviced by the
originator. 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 by management 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 to Services and is
priced accordingly. The normal location of the collateral is in the New England
states with a concentration in Rhode Island and southeastern Massachusetts.

                                        7
<PAGE>

At June 30, 2004, CityFed held 365,865 common shares of i2 Telecom International
Inc. ("i2 Telecom"). As part of the original consideration, under certain
conditions an additional 33,300 shares of common stock may be issued to CityFed.
I2 Telecom became a public company on February 27, 2004 in a reverse merger.
CityFed also holds a warrant to purchase 66,438 common shares of i2 Telecom at
$0.903 per share until February 2006 and at $1.20 per share for an additional
twelve months. Under terms of the purchase the shares, and any shares to be
purchased upon exercise of the warrants, are restricted. 40% of the shares are
to be registered upon the first registration of shares by i2 Telecom which has
not occurred as of June 30, 2004.

RESULTS OF OPERATIONS

CityFed recorded a net income from continuing operations for the six months
ended June 30, 2004 of $115,000. This compares to a net income from continuing
operations in the amount of $76,000 for the six months ended June 30, 2003.
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, 2004. Loss from the change in unrealized gain on
available-for-sale securities was $18,000 for the six months ended June 30,
2004. There was an unrealized gain on available-for-sale securities for the six
months ended June 30, 2003 of $108,000.

Interest on investments was $28,000 for the six months ended June 30, 2004
compared to $92,000 for the six months ended June 30, 2003 due to a lower amount
of funds invested in securities in the 2004 period. Interest on loans for the
six months ended June 30, 2004 was $226,000. Interest on loans for the six
months ended June 30, 2003 was $124,000 due primarily to the lower amount of
average loans outstanding in the 2003 period. Total expenses of $145,000 for the
six months ended June 30, 2004 were more than the $128,000 for the same period
in 2003.

CityFed recorded a net income from continuing operations for the three months
ended June 30, 2004 of $54,000. This compares to a net income from continuing
operations in the amount of $27,000 for the three months ended June 30, 2003.
There was no income or loss from discontinued operations in either the three
months ended June 30, 2004 or 2003. Loss from the change in unrealized gain on
available-for-sale securities was $21,000 for the three months ended June 30,
2004. There was an unrealized gain on available-for-sale securities for the
three months ended June 30, 2003 of $108,000.

Interest on investments was $13,000 for the three months ended June 30, 2004
compared to $42,000 for the three months ended June 30, 2003 due to a lower
amount of funds invested in securities in the 2004 period. Interest on loans for
the three months ended June 30, 2004 was $112,000. Interest on loans for the
three months ended June 30, 2003 was $67,000 due primarily to the lower amount
of loans outstanding in the 2003 period. Total expenses of $77,000 for the three
months ended June 30, 2004 were more than the $74,000 for the same period in
2003.

The basic (and diluted) loss per common share of $0.15 and $0.15 for the six
months ended June 30, 2004 and $0.23 and $0.23 for the six months ended June 30,
2003, is after the deduction of unpaid preferred dividends of $4,557,000 in 2004
and $4,317,000 in 2003. The basic (and diluted) loss per common share of $0.07
and $0.07 for the three months ended June 30, 2004 and $0.11 and $0.11 for the
three months ended June 30, 2003, is after the deduction of unpaid preferred
dividends of $2,278,000 in 2004 and $2,158,000 in 2003. 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.

                                        8
<PAGE>

OFF-BALANCE SHEET ARRANGEMENTS

CityFed is party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments consist solely of commitments to extend credit and
involve, to varying degrees, elements of credit risk in excess of the amount
recognized in CityFed's consolidated statement of financial condition. The
contract or notional amounts of such instruments reflect the extent of
involvement CityFed has in the financial instruments. CityFed's exposure to
credit loss in the event of nonperformance by the other party to the financial
instrument for commitments to extend credit is represented by the contractual
notional amount of those instruments. CityFed uses the same credit policies in
making commitments as it does for on-balance sheet instruments. At June 30,
2004, the contractual notional amounts representing commitments to fund loans in
the future totals $485,000.

ITEM 3. CONTROLS AND PROCEDURES.

CityFed has adopted disclosure controls and procedures as required by Section
302 of the Sarbanes-Oxley Act and the Securities and Exchange Commission's rules
thereunder. CityFed's disclosure controls and procedures reflect the fact that
it currently has only one employee. CityFed's President, Chief Executive Officer
and Treasurer has evaluated the effectiveness of these disclosure controls and
procedures as of the end of the quarterly period ending June 30, 2004. There
have been no changes to CityFed's internal controls during the second quarter of
2004 or from June 30, to August 17, 2004.

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

At June 30, 2004 there are no suits or claims against CityFed. For a description
of the settlement of prior indemnification claims of current or former officers
and directors see the description under Settlement of Claims in Part I Item
1-Description of Business in CityFed's 2003 Form 10-KSB.

ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
SECURITIES.

     (a)  None.

     (b)  None.

     (c)  None.

     (d)  Not applicable.

     (e)  None

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.

                                        9
<PAGE>

          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, 2004, the aggregate
          deficiency on the Series B Stock was approximately $80.0 million and
          the aggregate deficiency on the Series C Stock was approximately $49.8
          million.

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

     None.

ITEM 5. OTHER INFORMATION.

     (a)  None

     (b)  None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  Exhibits

     11.  Statement Regarding the Computation of Per Share Loss.

     31.  Rule 15d-14(a) Certification.

     32.  Section 1350 Certification.

     (b)  None.


                                       10
<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 17, 2004



























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