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 March 31, 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 Identification No.)
incorporation or organization)


                        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 March 31, 2004, the number of
shares of outstanding common stock was 28,716,134.

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

<PAGE>

<TABLE>
<CAPTION>
                         PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS.

CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
March 31, 2004
(Dollars in Thousands)
                                                                            March 31, 2004
                                                                              (UNAUDITED)


ASSETS
------
<S>                                                                             <C>
Cash                                                                            $     83
Available for sale securities                                                      1,355
Non-marketable equity securities                                                     190
Loans receivable                                                                   3,723
Other assets                                                                           4
                                                                                --------
TOTAL ASSETS                                                                    $  5,355
                                                                                ========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------

LIABILITIES:
  Accrued expenses                                                              $     29
  Notes payable, Shareholders                                                      5,405
  Other liabilities                                                                   14
                                                                                --------
           Total liabilities                                                       5,448
                                                                                --------
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                                                         (172,009)
    Accumulated other comprehensive income                                            43
    Treasury stock (199,000 shares of common stock), at cost                      (1,000)
                                                                                --------
         Total stockholders' deficiency                                              (93)
                                                                                --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                  $  5,355
                                                                                ========
See notes to consolidated financial statements.
</TABLE>


                                       2
<PAGE>
<TABLE>
<CAPTION>
CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31, 2004 and 2003
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
                                                                 2004                2003
                                                                 ----                ----
<S>                                                          <C>                <C>
INTEREST INCOME:
     Interest on investments                                 $      15          $       50
     Interest on loans                                             114                  57
                                                             ---------          ----------
            Total interest income                                  129                 107
INTEREST EXPENSE
     Repurchase agreements                                           2                   4
                                                             ---------          ----------
            Net interest income                                    127                 103
                                                             ---------          ----------
NON-INTEREST INCOME
     Loan fees                                                       2                   -
                                                             ---------          ----------
            Total non-interest income                                2                   -
                                                             ---------          ----------
EXPENSES:
     Compensation and employee benefits                             38                  42
     Other operating expenses                                       30                  12
                                                             ---------          ----------
            Total expenses                                          68                  54
                                                             ---------          ----------
NET INCOME FROM CONTINUING
     OPERATIONS                                                     61                  49
NET INCOME FROM DISCONTINUED OPERATIONS (Note 2)
                                                                     -                  11
                                                             ---------          ----------

NET INCOME                                                          61                  60
                                                             ---------          ----------
OTHER COMPREHENSIVE INCOME:
   Unrealized gain on available -for-sale securities                 3                   -
                                                             ---------          ----------
TOTAL OTHER COMPREHENSIVE INCOME                                     3                   -
                                                             ---------          ----------

COMPREHENSIVE INCOME                                         $      64          $       60
                                                             =========          ==========

NET LOSS AVAILABLE FOR
     COMMON STOCKHOLDERS                                     $  (2,217)         $   (2,098)
                                                             =========          ==========

BASIC AND DILUTED INCOME (LOSS) PER COMMON
SHARE:
     From continuing operations                              $   (0.08)         $    (0.11)
     From discontinued operations                                    -                   -
                                                             ---------          ----------
     Net loss                                                $   (0.08)         $    (0.11)
                                                             =========          ==========
AVERAGE COMMON SHARES OUTSTANDING                           28,716,134          18,716,134

DIVIDENDS PER COMMON SHARE                                           -                   -

See notes to consolidated financial statements.
</TABLE>





                                       3
<PAGE>

<TABLE>
<CAPTION>
CITYFED FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

                                                                              2004           2003
                                                                              ----           ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>  <C>                                                                  <C>            <C>
     Interest received                                                    $     121      $     104
     Operating expenses                                                         (54)           (93)
     Other income including income from discontinued operations
                                                                                  2             11
     Cash paid for interest                                                      (2)            (4)
                                                                          ---------      ---------
       Net cash provided by operating activities                                 67             18
                                                                          ---------      ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
     (Increase) decrease in investment securities                              (235)           731
     Decrease (increase) in loans receivable                                    298           (662)
     Other - net                                                                  2              1
                                                                          ---------      ---------
       Net cash provided by investing activities                                 65             70
                                                                          ---------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
     (Decrease) increase in repurchase agreements                              (250)           100
                                                                          ---------      ---------
       Net cash (used in) provided by financing activities                     (250)           100
                                                                          ---------      ---------
NET (DECREASE) INCREASE IN CASH                                                (118)           188

CASH AT BEGINNING OF YEAR                                                       201             37
                                                                          ---------      ---------
CASH AT END OF YEAR                                                       $      83      $     225
                                                                          =========      =========
RECONCILIATION OF NET INCOME TO NET
 CASH PROVIDED BY OPERATING ACTIVITIES:
     Net income from continuing operations                                $      61      $      49
     Income from discontinued operations                                          -             11
     Decrease in accrued income                                                  (8)            (3)
     Increase (decrease) in liabilities                                          14            (39)
                                                                          ---------      ---------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                 $      67      $      18
                                                                          =========      =========
See notes to consolidated financial statements.
</TABLE>


                                       4
<PAGE>

CITYFED FINANCIAL CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE
MONTHS ENDED MARCH 31, 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  March  31,  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 March 31, 2004, Services held
         $3,723,000 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 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.  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

                                       5
<PAGE>

         was  necessary  at March 31, 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 March 31, 2004,  dividends  in arrears were $78.6  million and $48.8
         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 three months ended March 31, 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 March 31, 2004 and 2003, deferred tax
         assets have been fully reserved.

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

                                       6
<PAGE>

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
salaries of the  employees  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 March 31, 2004,  CityFed had $5,355,000 in total assets,  $5,448,000 in total
liabilities and a stockholders'  deficiency of $93,000 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 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.  The normal location of the collateral is in the New England states
with a concentration in Rhode Island and southeastern Massachusetts.

At March 31, 2004,  CityFed held 1,350 shares of Series A-2 Preferred  Stock,  7
shares of Series B Preferred Stock, 2,000 shares of Series C Preferred Stock and
279 common shares of i2 Telecom International Inc. ("i2 Telecom"). The preferred

                                       7
<PAGE>

shares are  convertible  into 365,865  shares of common stock and, under certain
conditions an additional  33,300  shares of common  stock.  I2 Telecom  became a
public  company on February 27, 2004 in a reverse  merger.  CityFed also holds a
three year 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.  In April 2004, the CityFed executed the documents to convert the Series
A-2 preferred  stock into i2 Telecom common stock.  The conversion is subject to
unanimous  approval  by the  convertible  preferred  stock  holders  and also is
subject to  approval  of an  increase  in  authorized  common  stock at the next
i2Telecom stockholders meeting in June 2004.

RESULTS OF OPERATIONS

CityFed  recorded a net income from  continuing  operations for the three months
ended March 31, 2004 of $61,000.  This compares to a net income from  continuing
operations  in the amount of $49,000 for the three  months ended March 31, 2003.
There was income of $11,000 from  discontinued  operations  for the three months
ended March 31, 2003. There was no income or loss from  discontinued  operations
in the three months ended March 31, 2004.  Income from the change in  unrealized
gain on  available-for-sale  securities  was $3,000 for the three  months  ended
March 31,  2004.  There  was no  unrealized  gain or loss on  available-for-sale
securities  for the three  months  ended March 31, 2003 since the Company had no
available-for-sale securities during the three months ended March 31, 2003.

Interest on  investments  was $15,000 for the three  months ended March 31, 2004
compared  to $50,000  for the three  months  ended March 31, 2003 due to a lower
amount of funds invested in securities in the 2004 period. Interest on loans for
the three  months ended March 31, 2004 was  $114,000.  Interest on loans for the
three months ended March 31, 2003 was $57,000 due  primarily to the lower amount
of loans outstanding in the 2003 period. Total expenses of $68,000 for the three
months  ended  March 31,  2004 were more than the $54,000 for the same period in
2003.

The basic (and  diluted)  loss per common share of $0.08 and $0.08 for the three
months ended March 31, 2004 and $0.11 and $0.11 for the three months ended March
31, 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.

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 March 31,
2004, the contractual notional amounts representing commitments to fund loans in
the future totals $431,000.


                                       8
<PAGE>

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 March 31, 2004.  There
have been no changes to CityFed's  internal controls during the first quarter of
2004 or from March 31, to June 10, 2004.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

At  March  31,  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.  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


                                       9
<PAGE>

                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 March 31,
                2004,  the  aggregate  deficiency  on the  Series  B  Stock  was
                approximately $78.6 million and the aggregate  deficiency on the
                Series C Stock was approximately $48.8 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:  June 10, 2004



                                       11