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

                                   FORM 10-KSB
                                   -----------

 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                       FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000


                           COMMISSION FILE NO. 0-3-222


                        HOMES FOR AMERICA HOLDINGS, INC.
                     ---------------------------------------
                 (Name of Small Business Issuer in Its Charter)


                                     Nevada
                     ---------------------------------------
         (State or other jurisdiction of incorporation or organization)


                                   88-0355448
                     ---------------------------------------
                     (I.R.S. Employer Identification Number)


              6010 Sherwood Glen Way West Palm Beach, Florida  33415
          --------------------------------------------------- --------
                (Address of principal executive offices) Zip Code

                                 (561) 433-3939
                     ---------------------------------------
                           (Issuer's Telephone Number)


           Securities registered under Section 12(b) of the Exchange Act:

                                      None
                        --------------------------------
                              (Title of each class)

                                      None
                        --------------------------------
                   (Name of each exchange on which registered)


         Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, .001 par value per share
                     ---------------------------------------
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [ ] No [X]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of the  registrant's  knowledge,  in  definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

The  issuer's  revenues  for the  fiscal  year  ended  December  31,  2000  were
$8,901,343.

There is no  established  trading  market for the  Company's  common equity and,
accordingly,  the issuer  cannot  determine  the  aggregate  market value of the
voting and non-voting common equity held by non-affiliates of the issuer.

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, 2001,  there were
10,109,131 shares of common stock outstanding.

Transitional Small Business Disclosure Format: Yes [ ] No [X]

<PAGE>

================================================================================
TABLE OF CONTENTS
================================================================================

PART I
------

1.   BUSINESS ..........................................................1

     a.   Introduction .................................................1
     b.   Financing ....................................................2
          i.   Tax Exempt Bonds ........................................3
          ii.  Low Income Housing Tax Credits ..........................4
          iii. Tax Credit Partnerships .................................5
     c.   Revenue and Profit Generation ................................5
     d.   Government Regulations .......................................8
     e.   Competition ..................................................9
     f.   Employees ....................................................10
     g.   New Business Ventures ........................................10
     h.   Glossary of Terms ............................................10

2.   PROPERTIES ........................................................12

     a.   Properties, Offices And Facilities ...........................12
     b.   Current Operations ...........................................12
          i.   Willow Pond .............................................12
          ii.  Putnam Square ...........................................15
          iii. Prairie Village .........................................16
          iv.  Lake's Edge .............................................17
          v.   Country Lake ............................................19
     c.   Proposed Acquisitions Under Contract .........................20
          i.  Billy's Creek.............................................20
     d.   Discontinued Operations/Sale of Assets........................21

3.   LEGAL PROCEEDINGS .................................................22

4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................22


PART II
-------

5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...........22

     a.   Market Price of, and Dividends on, the Registrant's
          Common Equity and Other Shareholder Matters ..................22
     b.   Recent Sales of Unregistered Securities ......................22

6.   MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
     AND RESULTS OF OPERATIONS .........................................23

     a.   Overview .....................................................23
     b.   Results of Operations  for the Twelve  Months Ended
          December 31, 2000 Compared to December 31, 1999 ..............25
          i.   Revenues ................................................25
          ii.  Expenses ................................................25
          iii. Liquidity and Capital Resources .........................27

<PAGE>

7.   CONSOLIDATED FINANCIAL  STATEMENTS FOR THE COMPANY
     FOR THE YEARS  ENDED DECEMBER 31, 2000 AND 1999 (AUDITED)..........29

     a.   Independent Auditor's Report .................................29
     b.   Consolidated Financial Statements ............................30
          i.   Balance Sheets ..........................................30
          ii.  Statements of Operations ................................32
          iii. Statement of Changes in Shareholders' Equity ............33
          iv.  Statements of Cash Flows ................................34
     c.   Notes to Financial Statements ................................35

8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNANTS .......................53

PART III
--------

9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
    COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT ..................54

     a.   Directors and Executive Officers , Promoters
          and Control Persons...........................................54
     b.   Committees of the Board of Directors .........................55
     c.   Meetings of the Board of Directors ...........................55
     d.   Compliance With Section 16(A) Of the Exchange Act.............56

10.  EXECUTIVE COMPENSATION ............................................56

     a.   Summary Compensation Table ...................................56
     b.   Stock Option Grants ..........................................57
     c.   Employment Agreements ........................................57
     d.   Consulting Agreements ........................................57
     e.   Compensation of Directors ....................................57
     f.   Stock Option Plans ...........................................58
          i.   1998 Employee Stock Option Plan .........................58
          ii.  Non-Executive Director Stock Plan .......................58
          iii. 1999 Employee Stock Option Plan .........................59
          iv.  Non-Employee Director Stock Option Plan .................60

11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
     AND MANAGEMENT ....................................................60

12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ....................61

13.  EXHIBITS AND REPORTS ON FORM 8-K...................................61

     a.   Exhibits......................................................61
     b.   Reports on Form 8-K...........................................64


SIGNATURE PAGE .........................................................65

<PAGE>

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

1.   BUSINESS
--------------------------------------------------------------------------------

1(a) Introduction
-----------------

Homes for America  Holdings,  Inc.  was  organized  on January 9, 1996 as a real
estate  operating   company  to  acquire,   develop,   rehabilitate  and  manage
residential  properties  throughout  the United  States.  The Company's  primary
objective is to identify and purchase undervalued residential properties,  which
it  renovates,  operates  and  manages as  Affordable  Housing  and Market  Rate
Communities.   These  properties  are  purchased  with   traditional   financing
arrangements  as well as  through a variety  of  government-sponsored  financing
arrangements  exclusively  available  for  properties  qualifying  as Affordable
Housing.  In addition to the net rental  income  derived  from its  portfolio of
multi-family residential properties, the Company earns a portion of revenues and
profits from  transactional  fees  associated with the  acquisition,  financing,
rehabilitation, operation and possible sale of its acquisitions.

The  Company's  operations  commenced in April 1996.  As of March 31, 2001,  the
Company's portfolio consists of five affordable housing properties and no market
rate housing properties.  The five affordable housing properties are Willow Pond
(Dallas,  Texas),  Putnam  Square  (Bridgeport,  Connecticut),  Prairie  Village
(Elkhart,  Indiana),  Lake's Edge  (Miami,  Florida) and Country Lake (West Palm
Beach, Florida). Two additional properties, Royal Crest, a Market Rate parcel of
undeveloped  land in Arlington,  Texas and Briar Meadows,  a Market Rate housing
property in Dallas, Texas were sold in June of 2000.

Currently,  the Company has one proposed  acquisition  secured by a purchase and
sale  agreement:  Billy's  Creek.  Billy's  Creek  is  a  2.83  acre  parcel  of
undeveloped waterfront land in Fort Myers, Florida on which the Company plans to
construct 150 Market Rate units. Although no assurance can be given, the Company
expects that eventually  approximately  seventy percent of its portfolio will be
Affordable Housing properties and the remainder will be Market Rate.

Affordable  Housing and Market Rate  properties  for potential  acquisition  are
identified  by  maintaining  regular  contact  with an  established  network  of
acquisition  sources,   including  real  estate  brokers,   attorneys,   outside
consultants,   bankers  and  property  owners   throughout  the  United  States.
Investment  decisions  are made by the  Company's  executive  officers  with the
consent  of the Board of  Directors.  The  Company's  strategy  is to  identify,
utilizing  these  acquisition  sources as well as the knowledge and expertise of
its  officers,  Affordable  Housing  and  Market  Rate  properties  that  can be
purchased at a discount.

In   particular,    the   Company   seeks    properties   with   an   identified
operational/physical  deficiency or financing  complexity that can be timely and
efficiently corrected to bring the community to its stabilized market value. For
example, the Company may target properties held by distressed sellers, reluctant
or absentee  owners,  and owners with limited property  management  capabilities
and/or limited capital. Because of these properties' deficiencies,  they tend to
draw  less  competition  from  traditional  buyers  and can  often be  purchased
significantly below replacement cost. Ideally, these properties are also located
in markets that can support  higher rental rates after  repositioning.  By using
its expertise in identifying  and correcting the properties'  deficiencies,  the
Company  believes it is able to acquire these  properties  at attractive  prices
relative to potential performance.

                                  -- Page 1 --
<PAGE>

Upon  acquisition,  the Company seeks to enhance each  property's  value through
rehabilitation and repositioning.  Rehabilitation is the mechanism through which
repositioning  is  achieved.   By  rehabilitating  the  properties  the  Company
acquires, i.e., by improving the properties structurally, the Company is able to
reposition  the  rehabilitated  property from a lower to higher quality class of
property  and  to  improve  the  living  conditions  of  the  tenants  with  the
anticipation  that these  properties will  subsequently be capable of sustaining
higher rents and/or reduced turnover.

The Company also  provides  services to the  properties  to help  enhance  their
value.  These services,  which are included in the management fees earned by the
Company,  often include marketing,  ownership  property reviews,  social service
programs for parents, and outreach programs for children. The social service and
outreach  programs  may  include  computer  learning  workshops,  tutoring,  and
organized  sports  activities.  The Company believes that the quality of tenancy
increases with the amount of services offered, and that providing these services
reduces apartment turnover, helps maintain quality of life, and thereby controls
costs.


1(b) Financing
--------------

Market Rate  properties  are  generally  acquired  with a capital  investment of
between  5% and 20% of the  project's  costs,  with  the  balance  furnished  by
traditional  methods  of real  estate  financing,  including  conventional  debt
provided  by  banks  and  insurance  companies.   The  Company  does  not  place
limitations  on the  percentage  of  assets  that  may be  invested  in any  one
investment,  or on the number, amount or type of mortgages that may be placed on
any one piece of property. However, the amount of conventional debt available as
financing to a property  depends upon the net  operating  income of the property
available  to make  payments of principal  and  interest.  Conventional  lenders
typically  require a ratio of net  operating  income to  principal  and interest
payments from as low as 1.10:1 to as high as 1.35:1.

In addition to the use of  conventional  debt and  Company  capital,  Affordable
Housing  properties  are often  financed with a variety of  government-sponsored
financing  arrangements  exclusively  available  for  properties  qualifying  as
Affordable Housing.  Such financing  arrangements,  including Tax-Exempt Private
Activity  Bonds ("Tax Exempt  Bonds") and Low Income  Housing Tax Credits  ("Tax
Credits") are  advantageous to the Company because they may provide low interest
rate debt  and/or  provide a source of equity,  allowing  the Company to acquire
properties with relatively small amounts of its own capital. In return for these
financing arrangements,  the Company must comply with certain restrictions which
govern, among other things, the income of tenants and the rents charged to them.

In some cases, the Company may acquire a property with existing Tax Exempt Bonds
or Tax Credits. Country Lake and Lake's Edge (representing 40% of the portfolio)
were acquired with Bonds in place. The Company may also acquire  properties with
existing Tax Credits in place.  Willow Pond and Putnam Square  (representing 40%
of the  portfolio)  were acquired  with existing Tax Credits.  Where neither Tax
Exempt Bonds nor Tax Credits  already exist  however,  the Company may apply for
either  Credits,  Bonds,  or both.  Prairie  Village is the only property in the
Company's portfolio (representing 20% thereof) for which the Company applied for
Tax Exempt  Bonds and Tax  Credits.  In return for the Tax Credit and Tax Exempt
Bond  financing  awarded to the  property,  the Company must comply with certain
Restrictions  which govern,  among other  things,  the income of tenants and the
rents charged to them.

                                  -- Page 2 --
<PAGE>


1(b)(i) Tax Exempt Bonds
------------------------

Tax Exempt Private  Activity Bonds ("Tax Exempt Bonds") are issued under Section
142(d) of the  Internal  Revenue Code to provide a  low-interest  source of debt
financing for the acquisition of Affordable Housing properties.

The Company may acquire  properties  that have existing Tax Exempt Bonds already
in place.  For example,  Country Lake and Lake's Edge  (representing  40% of the
portfolio) were acquired with existing Tax Exempt Bonds.  These transactions are
relatively  straightforward.  The Company purchases the properties with existing
bonds in place and resells the bonds to an independent bond house (at profit, if
possible), using the debt generated from the sale to finance the acquisition.

Where Tax Exempt  Bonds do not  already  exist,  the Company may apply for a Tax
Exempt Bond allocation.  As of March 31, 2001, the Company has applied for a Tax
Exempt Bond allocation  once,  which  application  was approved,  to finance the
acquisition  and  rehabilitation  of Prairie  Village  (representing  20% of the
portfolio).

Applications  for Tax Exempt  Bonds are made to the state or local  governmental
entity  controlling the issuance of bonds in the  geographical  region where the
property is located.  Bond allocations are controlled by individual states, each
of which has the ability to empower various agencies to issue Affordable Housing
bonds under state regulated  guidelines.  (For example, the State of Florida has
created the Florida Housing  Authority,  empowered to issue  Affordable  Housing
bonds.)

The  issuance of Tax Exempt  Bonds in each state is subject to a Volume Cap, and
as such,  they are  awarded on a  competitive  basis.  The level of  competition
depends  primarily on the volume of Tax Exempt Bonds and the overall  demand for
those Bonds in the state where the subject property is located.  The Company has
never been denied a Tax Exempt Bond Allocation, although it is possible that the
Company could be denied an  allocation in the future.  Despite the fact that the
Company  would not submit an  application  if it  determined in advance that the
likelihood of approval was low, there is intense competition for both Tax Credit
and Tax  Exempt  Bond  allocations,  and many of our  competitors  have  greater
financial  resources and longer  operating  histories  than do we.  Accordingly,
there can be no assurance  that the Company will not be denied an  allocation in
the future.

Where the Company  determines  that an allocation of Tax Exempt Bonds is likely,
the Company engages outside  consultants  and  professionals  operating near the
location of the subject property to assist in obtaining the required information
and in preparing  the Tax Exempt Bond  applications.  In  connection  with these
applications,  the Company conducts a market study of the property,  provides an
architectural   analysis,   obtains  a  property   appraisal   and  prepares  an
environmental  study/analysis  of the  property.  The  Company  also  provides a
proposed  cost  of  the  entire   project,   which  includes  any   HUD-approved
transactional fees. HUD- approved transactional fees may include: (a) a Builders
and Sponsors  Profit and Risk Allowance  (BSPRA) (up to 15% of  acquisition  and
construction  costs, not including land); (b) a Contractor's Fee, paid under the
HUD 221 D program,  of up to 7% of construction costs, and c) an Acquisition Fee
of up to 5% of the  acquisition  cost.  The  Company may also apply for a credit
enhancement from HUD, which guarantees  repayment of the bonds, thereby enabling
the issuer of the Bonds to charge a lower rate of interest on the loan.

Once the credit  enhancement is obtained and the  application  is approved,  the
issuer of the Tax Exempt Bonds issues and sells the Bonds for the Company.  Upon
the sale of the Bonds to an independent bond house (at profit, if possible), the
Company  uses the proceeds of the sale to finance the  acquisition.  Payments of
principal  and interest on the bonds are made from the  operating  income of the
subject property.

                                  -- Page 3 --
<PAGE>


1(b)(ii) Low Income Housing Tax Credits
---------------------------------------

Low Income  Housing Tax Credits  ("Tax  Credits")  were  established  by the Tax
Reform Act of 1986 to benefit owners of Affordable Housing properties. Since the
Tax Credits may be used to achieve a dollar-for-dollar  reduction in federal tax
liabilities,  they have a cash value  (typically  $0.50-$0.80  per dollar of Tax
Credits).  As such, they are salable as interests in limited  partnerships.  The
sale  of  partnership  interests  (including  the  Tax  Credits)  in  a  limited
partnership  generates  equity to finance the acquisition and development of the
Affordable Housing properties.

In some cases, the Company may acquire properties that have existing Tax Credits
already in place. For example,  Willow Pond and Putnam Square  (representing 40%
of the portfolio) were acquired with existing Tax Credits.  Where Tax Credits do
not already exist,  however,  the Company may apply for them. Prairie Village is
the only property in the Company's  portfolio  (representing  20%) for which the
Company applied for Tax Credits, in which case the allocation was awarded.

Tax  Credit  allocations  are  generally  sought  on a  competitive  basis.  The
allocations  of Tax Credits are  subject to a Tax Credit  Volume Cap,  with each
state  allowed to annually  allocate  Tax Credits up to an amount equal to $1.25
per state resident.  However, if, as in the case of Prairie Village, the Company
first  applies for and is awarded a Tax Exempt Bond  allocation,  the Tax Credit
application  process  becomes  non-competitive.  That is,  without  reducing the
amount of Low Income  Housing Tax  Credits  that a state may  annually  allocate
under the Tax Credit  Volume Cap, the state may also allocate Tax Credits for an
Affordable  Housing  project  for which a Tax Exempt  Bond  allocation  has been
approved.  Because  Bond  allocation  recipients  are not part of the Tax Credit
Volume  Cap,  they do not  compete for the Tax  Credits.  As a result,  once the
application  for  Tax  Exempt  Bonds  has  been  approved  and  the  Tax  Credit
application  is submitted,  an  allocation  of Tax Credits is generally  awarded
provided the minimum requirements - which vary from state to state - are met.

Where a Tax Exempt Bond  allocation has not already been awarded,  however,  Tax
Credit  allocations  are awarded on a  competitive  basis under  guidelines  and
procedures  enacted by each individual  state agency empowered to administer the
program.  In some cases,  there is a definitive time limit  established by state
agencies for  individuals and developers to complete  comprehensive  application
forms and provide  extensive  details about the proposed tax credit project.  In
other cases,  applications are accepted on a rolling basis.  Each agency reviews
the  applications  to determine if they meet the  requirements  and goals of the
agency.  The goals and needs of each particular state may change over time, thus
the criteria of selecting a project for tax credit  allocation can and do change
at the agency's discretion.

For example,  the Texas  Department  of Housing and  Community  Affairs  (TDHCA)
evaluates a number of criteria,  including the development's  cost and financial
feasibility, site conditions, and development team experience. Additionally, the
agency considers  whether:  1) the site is located in an area where the federal,
state, or local  government is trying to encourage  development;  2) the site is
consistent with the local  jurisdiction's  affordable housing development plans;
3) the site is able to serve tenants at lower income  levels,  while at the same
time  providing a unit mix of tax credit and market rate units;  and 4) the site
offers  supportive  services for residents.  While none of the above criteria is
required,  those  projects  that meet all or most of them are given the  highest
priority.

Applications  that  pass  the  underwriting  process  and  are  deemed  to  have
adequately  met the  evaluation  criteria are  presented to the TDHCA's Board of


                                  -- Page 4 --
<PAGE>

Directors for  consideration.  The Board of Directors  awards tax credits at its
discretion,  but generally follows the  recommendations  of its staff.  Although
each state and state agency's  criteria and procedures may vary,  each generally
follows criteria and procedures similar to those established by TDHCA.

If the Company's application for a Tax Credit allocation has been approved,  the
Tax Credits are allocated  ratably over a ten year period  beginning in the year
in which the development is first occupied by tenants  ("Placed in Service") and
ending at the conclusion of the "Tax Credit Period". Developments remain subject
to the Tax  Credit  Restrictions  for a total of 30 years  after  the  Placed in
Service  Date:  the  initial 15 year  period is  referred  to as the  Compliance
Period, and the second 15 year period is referred to as the Extended Use Period.

Only if, as  contemplated by Section  42(h)(6)(E) of the Internal  Revenue Code,
the building were  acquired by  foreclosure  and the housing  credit agency were
unable  to find a buyer  to  operate  the  building  as a  qualified  low-income
building,  would the 30 year  period  be  reduced  to 15 years.  (If the 30 year
period  were  reduced  so that  Restrictions  were no longer  applicable  to the
project, and if no other Restrictions existed that would limit the rents and the
tenant's income, the project could then be operated as a Market Rate property.)

Unless the 30 year period of Restrictions  is reduced as  contemplated  above, a
development is considered to be out of compliance if, during the 30 year period,
(i) it falls below the required  percentage of low income units; (ii) the rental
amounts  exceed the maximum  rates;  or (iii) units are rented to tenants  whose
incomes exceed the maximum allowed.  The penalty for any building falling out of
compliance  during the 15 year  Compliance  Period (and  failing to correct such
non-compliance  within  a  reasonable  period  of  time)  is  recapture  of  the
accelerated  portion of the credit,  with  interest,  for all prior  years.  The
accelerated  portion  of  the  credit  in any  year  is the  amount  of  credits
determined for the year, less the amount that would have been determined for the
year if all credits had been allowed ratably over the 15 year Compliance Period.
(There is no accelerated  portion of credits,  and,  therefore,  no recapture of
these amounts or any other consequence, after the 15th year of Compliance.)

The following chart summarizes the credit recapture:


Year of Recapture Event  Recapture Fraction
--------------------------------------------------------------------------------
Years 2 through 11      One-third of the previously claimed credits
Year 12                 Four-fifteenths of the previously claimed credits
Year 13                 Three-fifteenths of the previously claimed credits
Year 14                 Two-fifteenths of the previously claimed credits
Year 15                 One-fifteenth of the previously claimed credits



1(b)(iii) Tax Credit Partnerships
---------------------------------

Because   Low   Income   Housing   Tax   Credits   may  be  used  to  achieve  a
dollar-for-dollar reduction in federal tax liabilities,  they have a cash value.
As such, a market for Tax Credits exists,  enabling owners of Affordable Housing
projects  with  Tax  Credits  to sell  the  credits,  as  interests  in  limited
partnerships,  for cash. The sale of the partnership  interests generates equity
to finance the acquisition and development of the Affordable Housing properties.

Of the Company's  acquisitions  with Tax Credit financing  (Willow Pond,  Putnam
Square  and  Prairie  Village),  all are  owned by a limited  partnership.  (The
remaining two  properties in the  Company's  portfolio,  Country Lake and Lake's
Edge,  are 100%  directly  owned by the Company.) In all the  partnerships,  the


                                  -- Page 5 --
<PAGE>

Company serves as General  Partner  (through a wholly owned  subsidiary) and the
Limited  Partner,  such as The  Related  Capital  Company,  purchases  a limited
partnership interest.  Because the Tax Credits are issued ratably over a 10 year
period (and are thus not as valuable as a full, immediate issuance), the Limited
Partner  invests  less than a dollar  for  dollar  amount  for the Tax  Credits.
Typically,  the  Limited  Partner  pays  between  $.50 and $.80 per $1.00 of Low
Income Housing Tax Credits for its partnership interests.

Because  the limited  partner's  chief  objective  in  investing  in the limited
partnership is the benefits  derived from the Tax Credits,  the limited  partner
retains a nearly  100%  interest  in the Low Income  Housing  Tax  Credits and a
nearly 100% interest in the profits and losses of the partnership.  Depending on
negotiations,   the  limited   partner  may  also   receive   interests  in  the
partnership's  cash flow and residual value (after return of capital).  However,
since the limited partner  considers  these interests  secondary to those of the
Tax Credits and the losses,  the limited partner is typically  allocated only 10
to 30% of the operating  cash flow and between 10% and 30% of the residual value
of the real  estate  (after  return  of  capital).  Since  the  Company's  chief
objective in entering the  partnership is the revenue and profit  generated from
the  acquisition  and operation of the property,  the Company  usually retains a
70-90%  interest in the cash flow and a 75-90% interest in the residual value of
the partnerships (after return of capital).

As the general  partner in all its limited  partnerships,  the Company is vested
with  exclusive  and  complete  charge of the  overall  management,  assets  and
business of the  partnership  and is solely  involved in and responsible for the
financial policies and day-to-day operations of the property.  While the limited
partner is granted no such  authority,  the  partnership  is arranged to enforce
certain  basic  business  arrangements  in order to guard the tax credits and to
protect the limited partners in the case of certain  untoward  events.  However,
both  legally and  practically,  operation  of the  partnerships  remains in the
control of the  general  partners.  In  consideration  of this  control  and the
Company's  overwhelming  financial  interest  in the  partnerships,  the Company
treats its limited partnerships as wholly-owned subsidiaries.


1(c) Revenue and Profit Generation
----------------------------------

The Company generates revenue and profit from the net rental income derived from
its  properties  as  well as from  the  realization  of  transaction  fees.  The
realization  of  transaction  fees and the  generation of revenue by the Company
depends on a number of  factors,  including  1)  whether  the  property  is 100%
directly owned by the Company or by a limited  partnership;  2) the terms of the
transaction  fees;  3) the stage of  property  ownership;  and 4) the  number of
transactions concluded.

Where the Company  owns 100% of the  property  (namely  Country  Lake and Lake's
Edge),  transactional fees and revenue may be earned in three stages of property
ownership:  construction/rehabilitation,   operations/management,  and  possible
sale. In the construction/rehabilitation  stage, the Company may earn a Builders
and Sponsors Profit and Risk Allowance, or BSPRA. This fee is a specific allowed
amount  paid  under  the  HUD  221 D  program  of up to 15% of  acquisition  and
construction  costs,  not including land, to the Builder Sponsor at the closing.
Also  in  the   construction/rehabilitation   stage,  the  Company  may  earn  a
Contractor's  Fee,  also  paid  under  the  HUD  221 D  program,  of up to 7% of
construction  costs.  (Any  affiliation  between  builder  and  sponsor  must be
disclosed to HUD). In the  operations/management  stage,  the Company  generates
revenue through its ownership of 100% of the property's cash flow.  Finally,  in
the sale stage,  the Company may generate  revenue through its ownership of 100%
of the property's residual value (after return of capital), if sold.



                                  -- Page 6 --
<PAGE>

The  following  chart  denotes  the types of revenue  and profit the Company may
generate  at the  various  stages  of  ownership  from its 100%  directly  owned
acquisitions.  Properties  that the Company owns  directly are owned 100% by the
Company in fee simple.


                  COMPANY REVENUE/PROFIT FROM DIRECT OWNERSHIP
                  --------------------------------------------


Stage of Ownership   Revenue/Profit Type  Revenue/Profit Amount
--------------------------------------------------------------------------------
Construction/Rehab   BSPRA (HUD 221D)   Up to 15% of acquisition and
                                        construction costs, not including land


Construction/Rehab   Contractor's Fee   Up  to  7%   of   construction
                     (HUD 221D)         (Affiliation between builder and
                                        sponsor must be disclosed to HUD)


Operations/ Mgmt.    Cash Flow          100% of the property's cash flow


Sale                 Residual Value     100% of the property's  residual value

--------------------------------------------------------------------------------

Where the property is not 100% owned by the Company,  but rather by a tax credit
limited  partnership  (namely Willow Pond,  Putnam Square and Prairie  Village),
transactional  fees and  revenue  may be  earned in four  stages  of  ownership:
acquisition,  construction/rehabilitation,  operations/management,  and sale. In
the acquisition stage, the Company may earn a HUD-approved  acquisition fee, the
amount  of  which  depends  on  negotiations   with  investors  in  the  limited
partnership,   but   is   typically   1-5%   of   acquisition   costs.   In  the
construction/rehabilitation  stage, the Company may earn a HUD-approved Builders
and  Sponsors  Profit and Risk  Allowance  (BSPRA).  (Since its  inception,  the
Company has earned a single BSPRA fee, upon the  acquisition of Prairie  Village
in 1998.) Also in the construction/rehabilitation  stage, the Company may earn a
HUD-approved  Contractor's  Fee  (typically  5-7% of  construction  costs) and a
Developer's  Fee  (typically  1-5% of total  development  costs),  depending  on
limited partner negotiations.  In the  operations/management  stage, the Company
generates  revenue  through  its  right to  receive  between  75% and 90% of the
property's  cash  flow,  the  exact  percentage  depending  on the  terms of the
partnership  agreement.  The Company may also earn in this stage,  depending  on
negotiations  within the  partnership,  a  Supervisor/Incentive  Management  Fee
(typically 50-95% of net cash flow from operations), a Management Fee (typically
5% of gross income), and an Asset Management Fee (typically 1% of gross income).
Finally,  in the sale stage,  the Company may generate revenue through its right
to receive  between 70% and 90% of the  residual  value of the  property  (after
return of  capital),  if sold.  Additionally,  in the sale stage the Company may
earn a  Disposition/Sales  Fee,  dependent  on  negotiations  with  the  limited
partners, but typically up to 10% of the proceeds from the sale of the asset.

The  following  chart  denotes  the types of revenue  and profit the Company may
generate at the various stages of ownership from its limited  partnership  owned
acquisitions.  Properties  that are owned by a partnership are owned 100% by the
partnership  in fee simple and the Company holds an interest in the  partnership
as described herein.

                                  -- Page 7 --
<PAGE>


           COMPANY REVENUE/PROFIT FROM TAX CREDIT LIMITED PARTNERSHIPS
           -----------------------------------------------------------


Stage of Ownership      Revenue/Profit Type  Revenue/Profit Amount
--------------------------------------------------------------------------------
Acquisition         Acquisition Fee  Depends on negotiations  with investors in
                                     the limited  partnership,  typically  1-5%
                                     of acquisition costs

Construction/Rehab  BSPRA (HUD 221D)  Up to 15% of acquisition and
                                      construction costs, not including land

Construction/Rehab  Contractor's Fee Depends on negotiations  with investors in
                    (HUD 221D )      the limited  partnership,  typically  5-7%
                                     of construction costs


Construction/Rehab                   Developer's Fee Depends on negotiations
                                     with investors in the limited partnership,
                                     typically 1-5% of total development costs


Operations/Mgmt.    Cash Flow        Depends on negotiations  with investors in
                                     the limited partnership,  typically 75-90%
                                     of the property's cash flow


Operations/Mgmt.    Supervisor/Incen Depends on negotiations  with investors in
                    Management Fee   the limited partnership,  typically 50-95%
                                     of net cash flow from operations


Operations/Mgmt.    Management Fee   Depends on negotiations  with investors in
                                     the limited  partnership,  typically 5% of
                                     gross income

Operations/Mgmt.    Asset Mgmt. Fee  Depends on negotiations  with investors in
                                     the limited  partnership,  typically 1% of
                                     gross income


Sale                Residual Value   Depends on negotiations  with investors in
                                     the limited partnership,  typically 70-90%
                                     of the property's residual value

Sale                                 Disposition Fee Depends on negotiations
                                     with investors in the limited partnership,
                                     typically up to 10% of proceeds from the
                                     sale of asset


1(d) Government Regulations
---------------------------

In addition to the previously described government financing  requirements,  the
Company  is  subject  to  environmental  and  other  governmental   regulations.
Compliance with laws and regulations  governing our business can be complicated,
expensive,  and time-consuming and may require significant  managerial and legal
supervision.  Failure  to comply  with such laws and  regulations  could  have a


                                  -- Page 8 --
<PAGE>

materially adverse effect on our business.  Further, any changes in any of these
laws and regulations  could materially and adversely affect our business.  There
is no  assurance  that we will be able to secure on a timely  basis,  or at all,
necessary  regulatory  approvals in the future.  These  regulations  and related
considerations  include,  but are not limited to, federal  government Tax Exempt
Bond and Tax Credit laws and  regulations,  allocations  of specific  amounts of
Bonds  and  Tax  Credits  to the  various  states,  state  regulations,  and the
continued  availability of HUD insurance where  necessary.  In addition,  we are
often dependent on Bond ratings offered to finance real estate purchases.

Environmental  compliance  issues generally do not have a material effect on the
management and earnings of our properties.  However,  we cannot obtain financing
or close a  transaction  without  certifying  that  there  are no  environmental
hazards present on the property. The primary costs relating to the environmental
compliance are  pre-acquisition  inspections.  These costs  typically range from
$5,000 to $20,000  per  project.  In the event  that  there is an  environmental
problem,  mortgage  financing  would be  obstructed  and we would be  unable  to
acquire the property.

The  compliance  and costs  associated  with the Americans  with  Disability Act
("ADA") are always included in the cost of renovating a residential property. In
many  cases,  if  little  or no  renovation  is  required,  the new owner is not
required  to meet  current  ADA  requirements.  This  is  referred  to as  being
"grandfathered" under a previous set of rules or housing codes.

As a general  rule,  the Company  will not  consider a property  for purchase if
local zoning  regulations do not conform with the Company's  intended use of the
property.   Inasmuch  as  the  majority  of  transactions  involve  pre-existing
multi-family  structures in appropriately  zoned areas, such regulations and the
potential for  neighborhood  opposition are virtually  nonexistent.  In the rare
circumstance where this is not the case, the Company would stipulate at contract
that closing be contingent  upon  obtaining  necessary  variances,  easements or
changes in regulations. Feasibility of compliance would be determined in the due
diligence phase of the  transaction,  as would the potential for and severity of
neighborhood  opposition.  If either issue were determined to have an ultimately
adverse effect upon performance of the property,  the pending  transaction would
be terminated.


1(e) Competition
----------------

All of our  properties,  or  properties  under  agreement to be  purchased,  are
located in developed areas. There are numerous other multifamily  properties and
real estate companies,  many of which have greater financial and other resources
than us within  the  market  area of each of these  properties,  and which  will
compete with us for tenants and development and acquisition  opportunities.  The
number of competitive  multifamily  properties and real estate companies in such
areas could have a material effect on: (i) our ability to rent apartments;  (ii)
the rents charged;  and (iii)  development  and acquisition  opportunities.  The
activities of these  competitors  could cause us to pay a higher price for a new
property than we otherwise  would have paid, or may prevent us from purchasing a
desired  property at all,  which could have a materially  adverse  effect on our
business.  In  addition,  there is  intense  competition  for Tax Credit and Tax
Exempt Bond  allocations,  and many of these  competitors have greater financial
resources and longer operating histories than do we.  Accordingly,  there can be
no assurance that we will be able to successfully compete in the future.

While the Company believes that there are many small,  local  competitors in the
locations where it owns properties,  the Company has not specifically identified
them. However,  the Company has specifically  identified two competitors working
on a national  basis.  They include Home  Properties,  a real estate  investment


                                  -- Page 9 --
<PAGE>

trust (REIT) owning or partially owning approximately 250 communities, typically
acquired as  under-managed  properties to which  amenities were added to attract
middle  income  residents.  The second known  competitor  is AIMCO,  a REIT with
interests in approximately 2,000 properties nationwide.

1(f) Employees
--------------

The Company employs  approximately 51 full-time  employees,  including executive
officers.  No employees  are covered by a collective  bargaining  agreement.  We
believe that our relations with our employees are satisfactory.

1(g) New Business Ventures
--------------------------

Homes for America Real Estate Services, Inc., a wholly-owned subsidiary of Homes
for America, was incorporated on July 6, 1999 in the state of Texas.  Operations
commenced in 2000.  This company was organized to serve as a management  company
for Homes For America Holdings' properties, as well as properties owned by third
parties. As of March 31, 2001, Homes For America Real Estate Services, Inc. does
not manage any properties owned by third parties.

MasterBuilt  America,  Inc. was formed as a joint venture on July 1, 1999 in the
state of Virginia  between  Homes For America  Holdings,  Inc.  and  MasterBuilt
Companies, Inc., a commercial building company located in Virginia.  MasterBuilt
America may be engaged by Homes for  America to  construct  and/or  rehabilitate
some of the apartments  owned and operated by Homes For America  Holdings,  Inc.
and its affiliates.

1(h) Glossary of Terms
----------------------

AFFORDABLE HOUSING: any multi-family residential property in compliance with the
Restrictions  of  local,  state or  federal  governmental  agencies,  which  are
designed to make the rental and occupancy  affordable to Low Income Persons and,
in some cases,  Moderate Income Persons.  Affordable Housing, in accordance with
the  Affordable  Housing  Act,  must provide at least 20% of the  apartments  to
individuals  or families whose incomes do not exceed 60% of the median income in
that particular census track.

APPLICABLE FEDERAL RATE OR AFR: either the short term, medium term, or long term
interest  rate for use in  certain  transactions  as  published  monthly  by the
Internal Revenue Service.

BONDS OR  MUNICIPAL  BONDS:  obligations  issued by state or local  governmental
agencies  ,  which  are  generally  sold to the  public  to  raise  capital  for
governmental  activities or governmentally  approved projects. The income earned
on such Bonds may either be exempt from federal income taxation or be includable
in income for federal income tax purposes.

BUILDERS AND SPONSORS  PROFIT AND RISK  ALLOWANCE:  a payment  above the cost of
rehabilitating  apartments. The payment is a specific allowed amount paid by HUD
(up to 15% of acquisition  and  construction  costs,  not including land) to the
Builder  Sponsor at the closing.  Since its inception,  the Company has earned a
single BSPRA fee, upon the acquisition fee of Prairie Village in 1998.

COMPLIANCE  PERIOD:  the fifteen (15) year period commencing with the first year
in which a project actually uses Tax Credits.

ELIGIBLE   BASIS:   the  total  amount  of  development,   rehabilitation,   and
construction  costs  which  are  allowed  under  the  Internal  Revenue  Code in
determining  the total  amount of Low  Income  Housing  Tax  Credits to which an


                                 -- Page 10 --
<PAGE>

Affordable Housing project will be entitled.

EXTENDED USE PERIOD:  the fifteen (15) year period  commencing in the first year
after the end of the Compliance Period.

LOW INCOME HOUSING TAX CREDIT OR TAX CREDIT: a credit against federal income tax
provided by Section 42 of the  Internal  Revenue  Code to  qualified  Affordable
Housing.

LOW INCOME HOUSING TAX CREDIT  RESTRICTIONS:  Restrictions imposed in connection
with the  allocation  of Low Income  Housing Tax Credits  and  contained  in the
agreement  between  the owner of an  Affordable  Housing  project  and the state
agency that allocates the Tax Credits.

LOW INCOME PERSON:  an individual whose annual income does not exceed 80% of the
Area Median Income.

MODERATE INCOME PERSON:  an individual  whose annual income does not exceed 120%
of the Area Median Income.

PLACED IN SERVICE: the date on which a multi-family  residential property can be
lawfully occupied by tenants,  which is  contemporaneous  with the issuance of a
certificate of occupancy by the building department of the local jurisdiction in
which the project is located.

PRIVATE  ACTIVITY  BOND:  a Bond,  the income from which is exempt from  federal
income taxation  because it meets the definitions set forth in Section 142(d) of
the Internal Revenue Code.

QUALIFIED  ALLOCATION PLAN OR QAP: the annual housing plan adopted by each state
pursuant to Section 42 of the Internal  Revenue Code,  which details the housing
needs of the state and the manner in which the state will utilize its portion of
Low Income Housing Tax Credits.

RESTRICTIONS:  the laws, ordinances, or regulations adopted, enacted, or imposed
by local, state or federal government agencies on, or restrictive  covenants and
agreements  entered into between  such  agencies and the owners of,  residential
properties,  which:  (i) limits  the  amount of rent that may be  charged  for a
particular dwelling unit in a multi-family  residential property; (ii) restricts
tenants to those whose annual income is less than a specified maximum,  or (iii)
otherwise  limits  the  use  and/or  availability  of the  dwelling  units  in a
residential project.

SET ASIDE: in a Low Income Housing Tax Credit  Affordable  Housing project,  the
minimum  number of units to be rented to tenants at the maximum  allowable  rent
which, at the owner's election, will be either: (i) 20% of the units rented at a
maximum rent of 50% of the Area Median  Income;  or (ii) 40% of the units rented
at a maximum of 60% of the Area Median Income.

TAX EXEMPT  BOND: a Bond,  including a Private  Activity  Bond,  the income from
which is exempt from federal income  taxation  because the  requirements  of the
Internal Revenue Code are met.

TAX CREDIT  PERIOD:  the ten (10) year  period  commencing  in the first year in
which a project actually uses Tax Credits.

VOLUME CAP:  as it relates to Low Income  Housing  Tax  Credits  under  Internal
Revenue  Code  Section  42(h)(3)(C),  $1.25 per person  resident in the state in
which the Low Income  Housing Tax  Credits are sought.  As it relates to Private
Activity  Bonds under  Internal  Revenue Code  Section 142, for each state,  the
greater of $150 million or $50 per person in such state.


                                 -- Page 11 --
<PAGE>


2.   PROPERTIES
--------------------------------------------------------------------------------


2(a) Properties, Offices and Facilities
---------------------------------------

The  Company's  principal  executive  office  is  located  at the  Country  Lake
property,  which it owns and  manages,  on 6010  Sherwood  Glen Way in West Palm
Beach, Florida 33415. The Company also maintains  leasing/management  offices at
Country Lake.

At One Odell Plaza in Yonkers,  New York,  10701, the Company rents 2,200 square
feet of office  space.  The Company  entered into a 3-year lease with  Mack-Cali
Realty,  100 Clearbrook Road,  Elmsford,  New York,  10523,  commencing in April
1999. The rent for the premises is $3,009 per month.

The Company also maintains  leasing/management  offices located on the following
properties that it owns and manages:

At Willow Pond:      6003 Abrams  Road
                     Dallas,  Texas 75231

At Prairie Village:  740 Prairie Street
                     Elkhart, Indiana 46516

At Lake's Edge:      950 NW 214th Street
                     Miami, Florida 33169



2(b) Current Operations
-----------------------

The Company  (through its wholly owned  subsidiaries)  owns and directly manages
all five of its properties,  each of which has a senior manager  responsible for
the  property's  day to day  operations.  In addition to a senior  manager,  the
Company  periodically  engages outside auditors to provide  compliance and audit
services.

2(b)(i) Willow Pond Apartments
------------------------------

Glen Hills Homes for  America,  Inc.,  a  wholly-owned  subsidiary  of Homes for
America, was incorporated on February 26, 1997 in the state of Texas to serve as
the  general  partner  of  Dallas/Glen  Hills,  LP.  Dallas/Glen  Hills,  LP was
organized  on March 27,  1997 in the state of Texas  for the  purpose  of owning
Willow Pond Apartments,  a 386-unit Affordable Housing complex with existing Tax
Credits in Dallas,  Texas.  The  property  was  purchased  on March 27, 1997 for
approximately $8,400,000.

On March 27,  1997,  Glen Hills Homes For  America,  Inc.  acquired  the general
partnership  interest of Dallas/Glen  Hills,  LP for a capital  contribution  of
$1.00. Through the limited  partnership,  the Company sold a limited partnership
interest to a limited partner in exchange for an investment of $2,500,000.  (The
balance of the funding was obtained  through a standard  market rate mortgage on
the property.)  Since the limited  partner's  primary  financial  motivation for
purchasing  an  interest in the limited  partnership  was the  benefits it would
derive from the Low Income Housing Tax Credits, the limited partner has retained
99.99% of the tax  credits,  profits  and losses and 99.99% of the  profits  and


                                 -- Page 12 --
<PAGE>

losses of the partnership. The limited partner also retains 10% of the cash flow
and 20% of the residual value (after return of capital).

Glen Hills Homes for America,  a wholly owned  subsidiary of the Company and the
general partner of the  partnership,  owns .01% of the tax credits,  profits and
losses and .01% of the profits and losses of  Dallas/Glen  Hills LP. The Company
owns an  aggregate  interest of  approximately  90% of the cash  available  from
operations, and an aggregate interest of approximately 80% in the cash available
from  the sale of the  partnership's  asset or  refinancing  of its debt  (after
return of capital).  In  consideration of the Company's  overwhelming  financial
interest, as well as the rights and responsibilities conferred on the Company to
manage the affairs of the  partnership  and the  property,  the  Company  treats
Dallas/Glen Hills, LP as a wholly-owned subsidiary.

The following table sets forth the interests of the Company, as General Partner,
and the Limited Partner in the Dallas/Glen Hills limited partnership:


WILLOW POND                         General Partner         Limited Partner
--------------------------------------------------------------------------------
Profits and Losses                   0.01%                   99.99%
Income/Loss Allocation               0.01%                   99.99%
Tax Credits, Profits & Losses        0.01%                   99.99%
Tax Credit Allocation                0.01%                   99.99%
Cash Flow                            90.0%                   10.0%
Residual Value                       80.0%                   20.0%



Willow Pond Tax Credit          GP          GP          LP       LP
Allocation                      %         Amount        %       Amount
--------------------------------------------------------------------------------
$  3,502,600                    0.01%     $ 350        99.99%   $3,502,250



After  acquiring  the  property in March of 1997,  the Company  renovated it and
established  a computer  learning  facility  which  provides  tenants  and their
children with  professional  instruction in, among other things,  the use of the
Internet.  Adults are  offered  the  opportunity  to learn word  processing  and
spreadsheet  skills or to otherwise  improve  existing skills to aid them in the
workplace.

In September of 2000,  the Willow Pond property was refinanced for $6,450,000 at
an  interest  rate of  7.99%  on a 12  year  note  with a 30  year  amortization
schedule.  In November of 2000,  an operating  deficit  guaranty of $150,000 was
released  back to the  Company.  As of  March  31,  2001,  the  property  is 93%
occupied.


ADDITIONAL INFORMATION:

Location:                               6003 Abrams Road, Dallas Texas 75231
General Character:                      Two-story garden style apartments
Present Use:                            Multi-family residential
Suitability for Use:                    Excellent;  certificate  of  occupancy
                                        is complete and property is rented
Owned/Intended Purchase:                Owned

Mortgages, liens, etc.:                 1st Mortgage
Term:                                   12 years
Principal Amount:                       $6,450,000


                                 -- Page 13 --
<PAGE>

Interest:                               7.99%
Amortization Provisions:                Yes
Prepayment Provisions:                  Yes
Maturity Date:                          2012
Balance due at Maturity                 $5,407,723

Terms of any lease:                     None
Options to sell:                        None

Renovations Description:                Property is stabilized.  No major
                                        renovation is planned.
Estimated Cost:                         N/A
Method of Financing:                    N/A

Competitive Conditions:                 Property is in a mature urban area that
                                        provides stable occupancy and is
                                        comparable to other properties in the
                                        vicinity.

State of Insurance:                     Property is adequately covered for
                                        casualty and liability

Occupancy Rates:                        2000    1999    1998    1997    1996
                                        ----------------------------------------
                                        96%     96%     95%     91%     87%


Tenants occupying 10% or more:          None
Nature of tenant:                       Residential
Principal Business:                     Multi-family, residential rental
Principal Provisions of leases:         12 month residential lease-non-renewable

Effective Annual Rental per Unit:       2000    1999     1998    1997     1996
                                        ----------------------------------------
     Efficiency                         $3,428  $3,426   $3,244  $3,049   $2,896
     1 Bedroom                           6,001   5,995    5,677   5,336    5,069
     2 Bedroom                           7,714   7,709    7,299   6,861    6,517
     3 Bedroom                           9,772   9,764    9,245   8,690    8,259

Lease Expirations
Tenants whose leases will expire:       All leases expire in 12 months
Area in square feet covered by
such leases:                            288,020
Annual rental represented by such
leases:                                 $2,468,853
Percentage of gross annual revenue
represented by such leases:             98%, balance is laundry, late fees,
                                        misc. charges


Property Depreciation
Federal Tax Basis:                      In accordance with SFAS No. 109
Rate:                                   Deferred
Method:                                 Straight-line method
Life claimed with respect to
property or component                   Building improvements: 27 1/2 - 40 years
                                        Furniture: 7 years

Realty Tax Rate:                        N/A
Annual Realty Taxes:                    N/A
Estimated Taxes on any proposed
improvements:                           N/A

                                 -- Page 14 --
<PAGE>



2(b)(ii) Putnam Square Apartments
---------------------------------

Putnam Homes for America,  Inc., a wholly-owned  subsidiary of Homes For America
Holdings, Inc., was incorporated on October 14, 1997 in the state of Connecticut
for the purpose of serving as the general partner of TVMJG  1996-Putnam  Square,
LP. TVMJG 1996-Putnam Square, LP was organized on April 26, 1997 in the state of
Connecticut for the purpose of owning Putnam Square Apartments.

On September 29, 1997, in return for an indemnification against operating losses
and an agreement to operate and rehabilitate the property, the Company succeeded
to the  interests of the general  partner of TVMJG 1996 - Putnam  Square LP. The
operating  deficit guaranty was provided in an unlimited amount until break-even
operations, defined in the partnership agreement as the date following the first
three  consecutive  months in which cash revenue exceeds  operational  expenses.
Upon  breakeven,  which  occurred on September 1, 2000,  the  operating  deficit
guaranty is limited to $60,000.  The guaranty is to be released five years after
breakeven,  or September 1, 2005. As additional  consideration  for assuming the
general partner's position, the Company received notes totaling $400,000.

Through the limited  partnership  that owns Putnam Square,  an investor  limited
partner made capital contributions of $692,065.  Since the institution's primary
financial motivation for purchasing interests in the limited partnership was the
benefits it would derive from the Low Income  Housing Tax  Credits,  the limited
partner has retained  99% of the tax credits,  profits and losses and 99% of the
profits and losses of the  partnership.  The limited partner also retains 25% of
the cash flow and 25% of the residual value (after return of capital).

Putnam  Homes for  America,  Inc.  the  general  partner,  owns 1.0 % of the tax
credits,  profits  and  losses  and  1.0%  of  the  profits  and  losses  of the
partnership.  The Company retains 75% of cash flow from the property, as well as
75% of the residual value (after return of capital), if the property is sold. In
consideration  of the Company's  extensive  financial  interest,  as well as the
rights and  responsibilities  conferred  on the Company to manage the affairs of
the partnership and the property,  the Company treats TVMJG 1996-Putnam  Square,
LP as a wholly-owned subsidiary.

The following table sets forth the interests of the Company, as General Partner,
and the Limited Partner in the TVMJG 1996-Putnam Square limited partnership:


PUTNAM SQUARE                         General Partner         Limited Partner
--------------------------------------------------------------------------------
Profits and Losses                    1.0%                    99.0%
Income/Loss Allocation                1.0%                    99.0%
Tax Credits, Profits & Losses         1.0%                    99.0%
Tax Credit Allocation                 1.0%                    99.0%
Cash Flow                             75.0%                   25.0%
Residual Value                        75.0%                   25.0%


Putnam Square Tax Credit        GP          GP          LP       LP
Allocation                      %         Amount        %       Amount
--------------------------------------------------------------------------------
 $  1,599,940                   1%        $ 15,999      99%     $  1,583,941



After  acquiring  the  property in November of 1997,  the Company  substantially


                                 -- Page 15 --
<PAGE>

renovated it and it is stabilized.  (No other major  renovation is planned.) The
property is in a mature  urban area and is slightly  above  average  compared to
other similarly  priced  properties in the vicinity.  The property is adequately
covered for casualty and  liability.  As of March 31, 2001, the property is 100%
occupied.


2(b)(iii) Prairie Village Apartments
------------------------------------

Prairie Village Homes for America, Inc., a wholly-owned  subsidiary of Homes for
America,  was  incorporated on July 17, 1997 in the state of Indiana to serve as
the  general  partner  of  Middlebury/Elkhart  LP.  Middlebury/Elkhart,  LP  was
organized  on July 16,  1997 in the state of Indiana  for the  purpose of owning
Prairie Village  Apartments,  a 120-unit  Affordable Housing project in Elkhart,
Indiana for which the Company applied for and received a Tax Exempt Bond and Tax
Credit allocation.

The property was purchased on December 16, 1998 for approximately  $804,000. The
project costs totaled approximately $3,950,000, including the establishment of a
$2,200,000  restricted cash fund for current  renovations from which the Company
drew down during the construction  period,  and the establishment of reserves in
the  amount of  approximately  $425,000  for  future  renovations,  repairs  and
maintenance.  Additionally,  the General Partner  provided an operating  deficit
guaranty in an unlimited  amount  until  break-even  operations,  defined in the
partnership  agreement as the date  following any month for which revenues equal
or exceed  operating  obligations.  Upon  breakeven,  which occurred on March 1,
1999, the guaranty is limited to $120,000.  The guaranty is to be released three
years after Rental Achievement has been made.  (Rental  Achievement occurs after
three  months in which 1) the  permanent  financing  phase has  begun,  2) legal
occupancy  is  secured  for all  units,  and 3) at least  90% of the  units  are
occupied.)

Since  Prairie  Village did not have Tax Exempt Bonds or Tax Credits  already in
place,  the Company first prepared and submitted an application for a Tax Exempt
Bond  allocation.  The application  was approved,  and the Company gained a $2.4
million Tax Exempt  Bond  allocation  and  procured  an  additional  $600,000 of
taxable bonds. The Company then prepared and submitted a Tax Credit application.
Upon approval, the Company gained $1 million of Tax Credits.

On December 1, 1998, the Company  acquired its general  partnership  interest of
Middlebury  Elkhart,  LP for a capital  contribution  of  $100.00.  Through  the
limited  partnership,  the  Company  sold a limited  partnership  interest  to a
limited  partner in exchange for an investment of $1,060,510.  Since the limited
partner's primary financial motivation for purchasing an interest in the limited
partnership  was the  benefits it would  derive from the Low Income  Housing Tax
Credits, the limited partner has retained 99.9% of the tax credits,  profits and
losses and 99.9% of the  profits  and  losses of the  partnership.  The  limited
partner  also  retains  10% of the cash flow and  10-30% of the  residual  value
(after return of capital).

Prairie  Village Homes for America,  the general  partner,  owns 0.1% of the tax
credits,  profits  and  losses  and  .1%  of  the  profits  and  losses  of  the
partnership.  Approximately  90% of the cash flow from this  property and 70% to
90% of the  residual  property  value  (after  return of capital) if sold,  also
resides with the general partner.  In  consideration  of Company's  overwhelming
financial interest, as well as the rights and responsibilities  conferred on the
Company to manage the affairs of the partnership  and the property,  the Company
treats Middlebury/Elkhart, LP as a wholly-owned subsidiary.

The following table sets forth the interests of the Company, as General Partner,
and the Limited Partner in the Middlebury/Elkhart limited partnership:

                                 -- Page 16 --
<PAGE>


PRAIRIE VILLAGE                      General Partner         Limited Partner
--------------------------------------------------------------------------------
Profits and Losses                    0.10%                   99.90%
Income/Loss Allocation                0.10%                   99.90%
Tax Credits, Profits & Losses         0.10%                   99.90%
Tax Credit Allocation                 0.10%                   99.90%
Cash Flow                             90.0%                   10.0%
Residual Value                        70-90%                  10-30%



Prairie Village Tax Credit      GP          GP          LP         LP
Allocation                      %         Amount        %         Amount
--------------------------------------------------------------------------------
 $  1,294,600                   0.10%     $ 1,295     99.90%   $  1,293,305


After  acquiring  the  property in December of 1998,  the Company  substantially
rehabilitated  it,  including  new facades  and  exteriors,  kitchens,  windows,
insulation,  air  conditioning,  carpeting,  landscaping and noise  attenuation.
Additionally,  a computer learning facility was established on the premises. The
property is stabilized,  and no other major renovation is planned.  The property
is in a mature  urban  area and is  slightly  above  average  compared  to other
similarly priced properties in the vicinity.  The property is adequately covered
for casualty and liability. As of March 31, 2001, the property is 99% occupied.


2(b)(iv) Lake's Edge Apartments
-------------------------------

Lake's Edge Homes Holdings,  Inc., a wholly-owned subsidiary of the Company, was
incorporated  on March  25,  1999 in the state of  Florida  for the  purpose  of
serving  as the  General  Partner  of Lake's  Edge  Partners,  LP.  Lake's  Edge
Partners,  LP was  organized on August 29, 1994 in the state of Delaware for the
purpose of owning Lake's Edge  Apartments in North Miami,  Florida.  Lake's Edge
Homes  Holdings,  Inc, the General  Partner,  owns a 99% interest in Lake's Edge
Partners,  LP. The Company owns the  remaining  1% interest in the  partnership.
Lake's Edge Partners,  LP is thus treated as a wholly owned subsidiary that owns
100% of the  property.  The  Company  does  not  plan to  sell  any  partnership
interests.

Homes For America Holdings, Inc. is also the sole owner of LEHH, Inc., which was
formed for the sole purpose of purchasing the outstanding  bonds on the property
and  subsequently  reselling  them  to  an  institutional   investor.  LEHH  was
incorporated on March 25, 1999 in the state of Florida.

The Company  acquired the property,  a 400 unit Affordable  Housing complex with
existing Tax Exempt Bonds in place, on June 30, 1999, for $14,025,000. The total
project  cost of Lake's Edge was  approximately  $16,500,000.  The  acquisition,
including project costs and improvements, was financed with a combination of Tax
Exempt and  taxable  Bonds.  Approximately  $400,000  in  transaction  fees were
realized on this purchase,  and gain on the sale of Bonds totaled  approximately
$825,000,  for a total revenue gain of $1,200,000.  After acquiring the property
in June of 1999, the Company completed  extensive  renovations.  As of March 31,
2001, the property is 98% occupied.


                                 -- Page 17 --
<PAGE>

ADDITIONAL INFORMATION:

Location:                               950 NW 214th St., Miami, Florida 33169
General Character:                      Two- and three-story garden style
                                        apartments
Present Use:                            Multi-family residential
Suitability for Use:                    Excellent;  certificate  of  occupancy
                                        is complete and property is rented
Owned/Intended Purchase:                Owned

Mortgages, liens, etc.:                 1st Mortgage        2nd Mortgage
Term:                                   40 years            10 years
Principal Amount:                       $14,824,884         $1,374,884
Interest:                               6.90%               11.00%
Amortization Provisions:                Yes                 Yes
Prepayment Provisions:                  Yes                 Yes
Maturity Date:                          2035                2010
Balance due at Maturity                 $0                  $0

Terms of any lease:                     None
Options to sell:                        None

Renovations Description:                Carpet, tile, landscaping, lighting,
                                        vinyl siding, paving
Estimated Cost:                         $1,400,000
Method of Financing:                    Mortgage proceeds

Competitive Conditions:                 Property, once renovated, has a slight
                                        competitive edge over other properties
                                        in the area

State of Insurance:                     Property is adequately covered for
                                        casualty and liability

Occupancy Rates:                        2000    1999    1998    1997    1996
                                        ----------------------------------------
                                        95%     90%     87%     85%     83%


Tenants occupying 10% or more:          None
Nature of tenant:                       Residential, Individual families
Principal Business:                     Multi-family, residential rental
Principal Provisions of leases:         12 month residential lease-non-renewable

Effective Annual Rental per Unit:       2000    1999    1998    1997    1996
                                        ----------------------------------------
     1 Bedroom                          $7,509  $6,721  $6,049  $5,565  $5,120
     2 Bedroom                           9,386   8,401   7,561   6,956   6,401
     3 Bedroom                          11,263  10,082   9,073   8,349   7,680


Lease Expirations
Tenants whose leases will expire:       All leases expire in 12 months
Area in square feet covered by
such leases:                            388,000
Annual rental represented by such
leases:                                 $3,641,804
Percentage of gross annual revenue
represented by such leases:             98%, balance is laundry, late fees,
                                        misc. charges



                                 -- Page 18 --
<PAGE>

Property Depreciation
Federal Tax Basis:                      In accordance with SFAS No. 109
Rate:                                   Deferred
Method:                                 Straight-line method
Life claimed with respect to
property or component                   Building improvements: 27 1/2 - 40 years
                                        Furniture: 7 years

Realty Tax Rate:                        N/A
Annual Realty Taxes:                    N/A
Estimated Taxes on any proposed
improvements:                           N/A


2(b)(v) Country Lake Apartments
-------------------------------

Country  Lake Homes  Holdings,  Inc.,  a  wholly-owned  subsidiary  of Homes for
America,  was  incorporated  on April 5,  1999 in the state of  Florida  for the
purpose of 100% directly  owning and operating  Country Lake  Apartments in West
Palm Beach,  Florida.  The Company acquired the property,  a 192 unit Affordable
Housing  complex with  existing Tax Exempt Bonds in place,  on November 5, 1999,
for  $10,100,000.  We own  100% of the  property  and do not  plan  to sell  any
partnership interests.

Homes For America Holdings, Inc. is also the sole owner of CLHH, Inc., which was
formed for the sole purpose of purchasing the outstanding  bonds on the property
and subsequently  reselling the bonds to an institutional investor in connection
with the Country Lake transaction. CLHH was incorporated on April 5, 1999 in the
state of Florida.

The total project cost was approximately $11,800,000. The acquisition, including
project costs and  improvements,  was financed with a combination  of Tax Exempt
and taxable Bonds in the amount of $8,795,000,  and a bridge loan of $1,800,000.
The difference of $1,205,000  represents the Company's equity investment in this
property.

Upon acquisition,  approximately  $450,000 of improvements to this property were
completed. As of March 31, 2001, the property is 96% occupied.

ADDITIONAL INFORMATION:

Location:                               6010 Sherwood Glen Way, West Palm Beach,
                                        Florida 33415
General Character:                      Two-story garden style apartments
Present Use:                            Multi-family residential
Suitability for Use:                    Excellent;  certificate  of  occupancy
                                        is complete and property is rented
Owned/Intended Purchase:                Owned

Mortgages, liens, etc.:                 1st Mortgage  2nd Mortgage  3rd Mortgage
Term:                                   30 years      20 years      18 months
Principal Amount:                       $6,255,000    $2,540,000    $1,800,000
Interest:                               6.00%         13.00%        16.00%
Amortization Provisions:                No            No            No
Prepayment Provisions:                  No            No            No
Maturity Date:                          2027          2018          2001
Balance due at Maturity                 $6,255,000    $2,540,000    $1,800,000

Terms of any lease:                     None
Options to sell:                        None

                                 -- Page 19 --
<PAGE>

Renovations Description:                New perimeter fencing, 60 carports, lake
                                        fountains, painting, landscaping
Estimated Cost:                         $400,000
Method of Financing:                    Mortgage proceeds and equity

Competitive Conditions:                 Property is above average for area

State of Insurance:                     Property is adequately covered for
                                        casualty and liability

Occupancy Rates:                        2000    1999    1998    1997    1996
                                        ----------------------------------------
                                        95%     94%     91%     93%     93%


Tenants occupying 10% or more:          None
Nature of tenant:                       Residential, Individual families
Principal Business:                     Multi-family, residential rental
Principal Provisions of leases:         12 month residential lease-non-renewable

Effective Annual Rental per Unit:       2000    1999    1998    1997    1996
                                        ----------------------------------------
     1 Bedroom                          $7,318  $6,741  $6,134  $5,582  $5,079
     2 Bedroom                           9,504   8,755   7,967   7,250   6,597
     3 Bedroom                          10,397   9,577   8,715   7,930   7,217


Lease Expirations
Tenants whose leases will expire:       All leases expire in 12 months
Area in square feet covered by
such leases:                            200,200
Annual rental represented by such
leases:                                 $1,786,722
Percentage of gross annual revenue
represented by such leases:             98%, balance is laundry, late fees,
                                        misc. charges

Property Depreciation
Federal Tax Basis:                      In accordance with SFAS No. 109
Rate:                                   Deferred
Method:                                 Straight-line method
Life claimed with respect to
property or component                   Building improvements: 27 1/2 - 40 years
                                        Furniture: 7 years

Realty Tax Rate:                        N/A
Annual Realty Taxes:                    N/A
Estimated Taxes on any proposed
improvements:                           N/A



2(c) Proposed Acquisitions Under Contract
-----------------------------------------

2(c)(i) Billy's Creek Apartments
---------------------------------

Homes For America  Holdings,  Inc.  signed a Purchase  and Sale  Agreement  with
Hunt/Hill Partnership,  a Florida general partnership,  on December 15, 2000, to
acquire Billy's Creek a 2.83 acre parcel of undeveloped  waterfront land in Fort


                                 -- Page 20 --
<PAGE>

Myers,  Florida on which the Company  plans to construct  150 Market Rate units.
The purchase price for the land is $1,320,000.

As per the  terms of the  contract,  upon  execution  of the  purchase  and sale
agreement,  and payment of an initial deposit of $25,000 (refundable until March
15, 2001),  the due  diligence  period of 90 days  commenced.  The due diligence
period  is  extendable  by 120 days to April 14,  2001  provided  an  additional
deposit  of  $25,000   (conditionally   non-refundable)  is  made.  The  Company
anticipates  financing the  acquisition  and  development of the property with a
conventional mortgage. The closing date shall be no later than 60 days after the
termination  of the due  diligence  period or  termination  of the  extended due
diligence period, if applicable.


2(d) Discontinued Operations/Sale of Assets
-------------------------------------------

On June 30, 2000, the Company sold two properties  owned by two of the Company's
wholly-owned  subsidiaries:  Briar Meadows Homes For America, Inc. and Arlington
Homes For America,  Inc.  Operations of these subsidiaries ceased June 30, 2000.
The Briar Meadows and  Arlington  properties  were sold for a purchase  price of
$4.8 million to a group of holders  (collectively,  the  "Investors") of certain
common stock,  preferred  stock,  warrants,  and promissory  notes issued by the
Company. The two properties were sold for consideration of:

(a)  The Investors'  assumption of the mortgage  obligations on the  properties:
     $1.5 million for Briar  Meadows and $1.2 million for Royal Crest,  totaling
     $2.7 million;

(b)  The  Investors'  surrender  and release to the Company of all common  stock
     (valued at  $461,093)  preferred  stock  (valued at  $1,618,855),  warrants
     (valued at  $645,052)  and  promissory  notes issued to them by the Company
     (valued at $575,000), valued collectively at $3.3 million, and;

(c)  The Company 's issuing to the Investors a new promissory note in the amount
     of $1.2  million  bearing  interest at 9.5% per annum with a March 15, 2001
     maturity date.

The Company reported a net gain of $330,202 on the sale of these assets in 2000,
calculated as follows:

                                  Arlington/      Dallas/
                                  Royal Crest     Briar Meadows     TOTAL
-------------------------------------------------------------------------------
Carrying Value...............     $ 2,683,171      $ 1,626,627     $ 4,309,798
Sale Proceeds (Fair Value)...      (1,800,000)      (3,000,000)     (4,800,000)
                                  -----------      -----------      -----------
(Gain) Loss .................         883,171       (1,373,373)       (490,202)
Tax .........................            --            160,000         160,000
                                  -----------      -----------      -----------
Net (Gain) Loss .............     $   883,171      $(1,213,373)     $ (330,202)
                                  ===========      ===========      ===========


Briar Meadows,  a 118-unit  Market Rate  residential  complex located in Dallas,
Texas had been purchased for $1,050,000 on December 18, 1998.  Royal Crest, a 17
acre  parcel  of  undeveloped  Market  Rate  land in  Arlington,  Texas had been
purchased for $1,200,000, also on December 18, 1998. Please see Part II, Item 7,
Note 3: Discontinued Operations - Sale of Assets for further detail.



                                 -- Page 21 --
<PAGE>

3.  LEGAL PROCEEDINGS
--------------------------------------------------------------------------------

In January of 2000,  litigation  was  started by the seller of Willow  Pond/Glen
Hills Apartments in Dallas, Texas in order to gain the release of certain escrow
funds.  The  litigation  was  settled in  September  of 2000.  The  project  was
refinanced and the escrow funds were released to the seller.

Other than as described  above, the Company is not a party to any material legal
proceedings.



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

During  fiscal  year  2000,  no matters  were  submitted  to a vote of  security
holders, through the solicitation of proxies or otherwise.


                                    PART II
================================================================================

5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------------------

5(a) Market Price of, and Dividends on, the Registrant's Common Equity and Other
     Shareholder Matters
--------------------------------------------------------------------------------

There is no established trading market for the Company's common stock. No common
stock is subject to outstanding  options or warrants to purchase,  or securities
convertible  into  common  stock.  There is no common  stock  that could be sold
pursuant to Rule 144 under the  Securities Act or that the Company has agreed to
register under the Securities Act for sale by security holders.  Moreover, there
is no common stock that is being, or is proposed to be, publicly  offered by the
Company at this time. No common stock has been offered  pursuant to any Employee
Stock Option Plan.  Although  unlikely,  the possible  future issuance of common
stock  pursuant to a Stock Option Plan may have a material  effect on the market
price of the Company's common stock.



5(b) Recent Sales of Unregistered Securities
--------------------------------------------

The following  information  relates to all securities sold by the Company within
the past three years,  without registration under the Securities Act of 1933, as
amended (the "Act"). No underwriters were involved in these transactions.

In July 1998,  the Company  issued 25,000 shares of Common Stock and warrants to
purchase  30,000 shares of Common Stock to one accredited  investor in a private
transaction  for an aggregate  purchase price of $55,000.  This  transaction was
exempt from  registration  under Section 4(2) of the Act, as a transaction by an
issuer not involving a public offering.

During March 1999,  the Company  issued  24,998  shares of its common stock to a
creditor  as payment  for  accrued  liabilities  in the amount of  $24,998.  The
Company  also  issued  185,000  shares  of  its  common  stock  as  payment  for
professional  fees in the  amount  of  $185,000.  These  issuances  were  exempt
transactions under Section 4(2) of the Act.

                                 -- Page 22 --
<PAGE>

In September 1999, the Company issued  promissory notes to certain  stockholders
of the  Company  (all  of  whom  were  accredited  investors)  for an  aggregate
consideration of $825,000.  This sale was exempt from registration under Section
4(2) of the Act.

During  1999,  the  Company  sold  to  accredited  investors  2.43  units,  each
consisting  of  30,000  shares  of Series A  Cumulative  Convertible  Redeemable
Preferred Stock, for an aggregate price of $1,618,855,  of which an aggregate of
$793,855 was paid in cash and  $825,000 was paid by surrender of the  promissory
notes  referred  to  in  the  preceding  paragraph.   The  Preferred  stock  was
convertible  at any time  after 30 days  from  the  date of the  Closing  of any
underwritten  public offering of the Company's  common shares,  at the option of
the holder,  into a number of shares of common stock equal to $25 divided by the
conversion  price. The conversion price was equal to the lower of (i) $15.00; or
(ii) 80% of the average of the last  reported  sales  prices of the Common Stock
for the ten trading days  immediately  preceding the date of Conversion (but not
less than $10.00) subject to certain  anti-dilution  adjustments.  Redemption of
the Series A Preferred  stock was at the  Company's  option,  upon 30 to 60 days
notice to the  holders,  at a  redemption  price  equal to $25 plus  accrued and
unpaid  dividends.  Quarterly  dividends which accrued from the date of original
issue were payable in cash when  declared by the  Company's  Board of Directors.
This offering was an exempt transaction  pursuant to Section 4(2) of the Act and
Rule 506 promulgated thereunder.

In June 2000, all of the Series A Cumulative  Convertible  Redeemable  Preferred
Stock  referred to above was redeemed and the warrants  issued in July 1998 were
repurchased  by the  Company in  connection  with the sale of Briar  Meadows and
Royal Crest (see Part I, Item 1(i): Discontinued  Operations/Sale of Assets) for
consideration  that  included  the issuance to the  Investors of new  promissory
notes in the aggregate  principal  amount of $1.2 million.  This transaction was
exempt from registration under Section 4(2) of the Act.

In 2000,  the Company  issued  120,000  shares of its common stock (valued at an
aggregate of $80,400) as bonuses to certain employees. Also in 2000, the Company
issued  30,000  shares of common stock to a note holder in settlement of $20,000
of accrued  liabilities.  These transactions were exempt from registration under
Section 4(2) of the Act.


6.   MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

6(a) Overview
-------------

Homes for America Holdings,  Inc. was organized on January 9, 1996 and commenced
operations  in  April  of 1996 as a real  estate  operating  company  formed  to
acquire,  develop,  rehabilitate and manage  Affordable  Housing and Market Rate
properties  throughout  the United  States.  Properties  are  purchased  through
traditional  methods of real  estate  financing  as well as through a variety of
government-sponsored  financing  arrangements  made  exclusively  available  for
Affordable Housing properties, including Tax Exempt Bonds and Low Income Housing
Tax Credits.

The Company's  portfolio  consists of five affordable  housing properties and no
market rate housing  properties.  The five  affordable  housing  properties  are
Willow Pond (Dallas,  Texas), Putnam Square (Bridgeport,  Connecticut),  Prairie
Village (Elkhart,  Indiana), Lake's Edge (Miami, Florida) and Country Lake (West
Palm Beach,  Florida).  Two previously owned  properties,  Royal Crest, a Market
Rate parcel of undeveloped land in Arlington,  Texas and Briar Meadows, a Market
Rate housing property in Dallas, Texas were sold in June of 2000.

                                 -- Page 23 --
<PAGE>

Additionally,  the Company has entered  into a purchase  and sale  agreement  on
Billy's Creek. Billy's Creek is a 2.83 acre parcel of undeveloped, non-operating
waterfront  land in Fort Myers,  Florida on which the Company plans to construct
150 Market Rate units.  Although no assurance can be given,  the Company expects
that eventually  approximately  70% of its portfolio will be affordable  housing
and 30% will be market rate properties.

The Company generates revenue and profit from the net rental income derived from
its properties  and the  realization of  transactional  fees.  Rental income and
related  revenues  (vending,  parking,  late fees, etc.) result from the ongoing
operation of the Company's rental  properties.  Cash receipts from these sources
occur on a relatively steady basis throughout the year, though  fluctuations may
occur.  Depending  on whether the  property is owned  directly by the Company or
through a limited partnership,  the Company may earn various  transactional fees
associated with the acquisition, rehabilitation, management and possible sale of
its  properties.  These fees may include a Builders and Sponsors Profit and Risk
Allowance,  or  BSPRA,  Contractor's  Fee,  Acquisition  Fee,  Developer's  Fee,
Supervisor/Incentive  Management  Fee, and Management  Fee. The Company may also
generate revenue from the possible sale of its properties.

The  Company  was  formed in 1996.  In 1997,  the  Company  acquired  a 386-unit
affordable  housing property,  Willow Pond, in Dallas,  Texas. In November 1997,
the Putnam Square  apartment  complex in Bridgeport,  Connecticut  was acquired,
though  operations  there did not actually begin until January 1998. In December
1998,  the Company  acquired  three  additional  properties:  the 118-unit Briar
Meadows apartments in Dallas,  Texas; a 120-unit  affordable housing property in
Elkhart,  Indiana,  and the 17.7 acre Arlington,  Texas site,  where approval to
construct 210 market rate units was secured. In June, 1999, the Company acquired
the 400-unit Lake's Edge apartments in North Miami,  Florida.  In November 1999,
the Company  acquired the 192-unit  Country Lake  apartments in West Palm Beach,
Florida. On June 30, 2000, Arlington/Royal Crest (land) and Dallas/Briar Meadows
were sold.

The following  discussion  should be read in conjunction  with the  consolidated
financial  statements  appearing in Part II, Item 7 of this form.  In accordance
with SFAS 131, the Company  aggregates the  operations of its various  operating
properties  into a single  segment for  financial  reporting  purposes.  Certain
statements in this "Management's  Discussion and Analysis of Financial Condition
and Results of  Operations"  and elsewhere in this form may  constitute  forward
looking  statements  within the meaning of Section 27A of the  Securities Act of
1933 and  Section  21E of the  Securities  Exchange  Act of 1934.  Although  the
Company  believes  that  the  expectations  reflected  in such  forward  looking
statements are based on reasonable  assumptions,  such statements are subject to
risks and uncertainties,  including those discussed elsewhere in this form, that
could cause actual results to differ from those projected.  Moreover, as we have
been in operation only since 1996, there can be no assurance we will continue to
be a commercially  viable or profitable  business.  We have a limited  operating
history and there can be no assurance that we will be successful in the future.


                                 -- Page 24 --
<PAGE>

6(b) Results of  Operations  for the  Twelve  Months  Ended  December  31,  2000
     Compared to December 31, 1999
--------------------------------------------------------------------------------

6(b)(i) Revenues
----------------

Revenues of $7,116,362 reported in 1999 are for the combined activities of seven
properties.  Five  of  these  (Dallas/Willow  Pond,   Bridgeport/Putnam  Square,
Dallas/Briar Meadows,  Elkhart/Prairie  Village and Arlington/Royal Crest (land)
reflect a full 12 months of  activity.  Miami/Lake's  Edge was  acquired  in the
month of June, and reflects only six months of activity. West Palm Beach/Country
Lake was acquired in November, and reflects only one month's activity.

Revenues  in 2000 of  $8,901,343,  an increase  of  $1,784,981  (25%) over 1999,
reflect  a full 12  months  of  activity  for the  combined  activities  of five
properties,    including   Dallas/Willow   Pond,    Bridgeport/Putnam    Square,
Elkhart/Prairie Village, Miami/Lake's Edge and West Palm Beach/Country Lake, and
a full  6  months  of  activity  of two  properties,  Dallas/Briar  Meadows  and
Arlington/Royal  Crest (land)  through June 30, 2000,  when these two properties
were sold. The increase in revenues is mostly  attributable  to twelve months of
revenues totaling $1,710,815 at West Palm Beach/Country Lake in 2000 compared to
only  one  month  of  revenues  totaling  $257,756  in  1999,  a  difference  of
$1,453,059.

Transactional   fees  earned  by  the  Company,   including   acquisition  fees,
rehabilitation  fees,  general  partner fees, and other fees associated with the
financing and purchase of property  totaled  $595,674 in 1999 and $0 in 2000, as
per the breakdowns indicated below:

Transactional Fees
----------------------------------------------------------
                                   1999              2000
----------------------------------------------------------

Lake's Edge                   $  173,631            $  --
Prairie Village                  422,043               --
                            ------------      ------------
                             $   595,674            $  --
                            ============      ============


6(b)(ii) Expenses
-----------------

Reported  expenses  for 1999 of  $6,371,726  include  a full  twelve  months  of
operating  costs  for five  properties:  Dallas/Willow  Pond,  Bridgeport/Putnam
Square, Dallas/Briar Meadows,  Elkhart/Prairie Village and Arlington/Royal Crest
(land).  Miami/Lake's Edge,  acquired in June,  reflects six months of operating
costs. West Palm  Beach/Country  Lake,  acquired in November,  reflects only one
month's  operating  costs.  The Company remains  committed to reducing  expenses
through  effective  management  practices at its present sites, and to extending
those practices to future acquisitions.

Reported  expenses in 2000 of $9,410,268,  an increase of $3,038,542  (48%) over
1999,  reflect a full 12 months of activity for the combined  activities of five
properties,    including   Dallas/Willow   Pond,    Bridgeport/Putnam    Square,
Elkhart/Prairie Village, Miami/Lake's Edge and West Palm Beach/Country Lake, and
a full  6  months  of  activity  of two  properties,  Dallas/Briar  Meadows  and
Arlington/Royal  Crest (land)  through June 30, 2000,  when these two properties
were sold. The increase in expenses is mostly  attributable to: 1) twelve months


                                 -- Page 25 --
<PAGE>

of expenses at West Palm Beach/Country Lake totaling $2,029,204 in 2000 compared
to only one  month of  expenses  totaling  $298,110  in 1999,  a  difference  of
$1,731,094;  2) twelve months of expenses  totaling  $2,700,650 at Dallas/Willow
Pond in 2000 compared to twelve months of expenses totaling  $2,397,334 in 1999,
a difference of $303,316, due to the increase of administrative, maintenance and
operating  expenses  relating to refinancing and  improvements at  Dallas/Willow
Pond; and 3) twelve months of expenses totaling  $2,034,517 at Miami/Lake's Edge
in 2000  compared  to six months of  expenses  totaling  $1,783,767  in 1999,  a
difference of $250,750.

Real  estate  expenses  include  repairs  and  maintenance,  utilities,  on-site
payroll,  insurance,  property taxes and other direct  expenses.  Administrative
expenses comprise corporate overhead and other items not directly  chargeable to
the rental  properties.  These  include  expenses  such as  corporate  salaries,
outside  professionals'  fees, travel and expenses such as telephones,  supplies
and other office expenses.

For the year ended December 31, 1999, total operating  expenses before interest,
depreciation  and taxes were  $4,118,977.  For the year ended December 31, 2000,
total  operating   expenses  before   interest,   depreciation  and  taxes  were
$5,142,792.  The increase of $1,023,815  (25%) over 1999 is mostly  attributable
to: 1) twelve  months of  expenses  at West  Palm  Beach/Country  Lake  totaling
$393,215 in 2000  compared to only one month of  expenses  totaling  $111,275 in
1999, a difference of $281,940; 2) twelve months of expenses totaling $1,705,696
at  Dallas/Willow  Pond in 2000 compared to twelve  months of expenses  totaling
$1,497,176  in  1999,  a  difference  of  $208,520,   due  to  the  increase  of
administrative,  maintenance and operating  expenses relating to refinancing and
improvements at  Dallas/Willow  Pond; and 3) twelve months of expenses  totaling
$525,750  at  Elkhart/Prairie  Village  in 2000  compared  to  twelve  months of
expenses totaling $374,030 in 1999, a difference of $151,720 due to the increase
of administrative expenses relating to improvements at Elkhart/Prairie Village.

Depreciation and amortization of $954,539 in 1999 reflects a full twelve months'
expenses  on five  properties:  Dallas/Willow  Pond,  Bridgeport/Putnam  Square,
Dallas/Briar Meadows,  Elkhart/Prairie  Village and Arlington/Royal Crest (land)
as well as eleven months' expenses on Miami/Lake's Edge and one month's expenses
on West Palm Beach/Country Lake.  Depreciation and amortization of $1,646,826 in
2000, an increase of $692,287  (73%) from 1999,  reflects a full twelve  months'
expenses  on five  properties:  Dallas/Willow  Pond,  Bridgeport/Putnam  Square,
Elkhart/Prairie Village,  Miami/Lake's Edge and West Palm Beach/Country Lake, as
well as six months' expenses on Dallas/Briar  Meadows and Arlington/Royal  Crest
(land).  The  increase  in  depreciation  and  amortization  expenses  is mostly
attributable  to: 1) twelve months of depreciation and amortization at West Palm
Beach/Country  Lake  totaling  $386,129  in 2000  compared  to only one month of
depreciation  and  amortization  totaling  $82,970  in  1999,  a  difference  of
$303,159;  and 2)  twelve  months  of  depreciation  and  amortization  totaling
$464,569 at Miami/Lake's  Edge in 2000 compared to six months totaling  $236,888
in 1999, a difference of $227,681.

The Company utilizes  accelerated  methods of depreciation over a seven (7) year
life for personal  property.  Realty is depreciated by the straight-line  method
over lives ranging from 25 to 27.5 years.

The 1999 interest expense of $1,298,210 was incurred on outstanding mortgages at
seven   properties:    twelve   months'   expenses   on   Dallas/Willow    Pond,
Bridgeport/Putnam  Square,  Dallas/Briar  Meadows,  Elkhart/Prairie  Village and
Arlington/Royal  Crest (land),  as well as six months'  expenses on Miami/Lake's
Edge and one months' expenses on West Palm Beach/Country Lake. The 2000 interest
expense of $2,620,650,  a $1,322,440  increase (102%) over 1999, was incurred on
outstanding   mortgages  at  seven   properties:   twelve  months'  expenses  on
Dallas/Willow   Pond,   Bridgeport/Putnam   Square,   Elkhart/Prairie   Village,
Miami/Lake's  Edge and  West  Palm  Beach/Country  Lake,  as well as six  months


                                 -- Page 26 --
<PAGE>

expenses'  on  Dallas/Briar  Meadows  and  Arlington/Royal  Crest  (land).  This
increase is mostly  attributable  to  outstanding  mortgage  interest for twelve
months at West Palm Beach/Country  Lake totaling  $1,035,670 in 2000 compared to
outstanding  mortgage  interest for only one month totaling  $103,865 in 1999, a
difference of $931,805.


6(b)(iii) Liquidity and Capital Resources
-----------------------------------------

Unrestricted  cash on hand was  $579,018  at December  31, 1999 and  $318,010 at
December  31,  2000, a decrease of $261,008  (45%).  This  decrease is primarily
attributable to building improvements and pre-acquisition costs. (Please see the
Consolidated Statement of Cash Flows in Part II, Item 7.)

Liquidity  demands on a short-term  basis tend to fluctuate  with the  Company's
acquisition  cycles.  Typically,  when the Company  acquires new properties,  it
incurs significant  expenditures,  including  pre-acquisition costs (such as due
diligence  expenses and deposits on new  acquisitions)  and  acquisition  costs.
Subsequently,  the Company receives fees and  reimbursements  earned at closing,
and working  capital is  replenished.  Long-term  demands on  liquidity  include
working capital to develop and support the Company  infrastructure  and multiple
simultaneous transactions in the future, as well as mortgages,  bonds, and notes
payable, interest payable, taxes payable, and capitalized leases payable. Future
growth  depends  upon the  Company's  ability  to  secure  adequate  capital  to
consummate  acquisitions.  While there can be no  guarantee  that these  capital
needs  will be met,  the  Company  believes  that  bond  financing,  sale of tax
credits,  stock issues and traditional sources of equity and debt financing will
be adequate to meet its capital requirements.

In addition to the impact of the Company's  acquisition cycles on short and long
term  liquidity,  there are a number of  factors  that  could  have an impact on
liquidity.  The  rise and fall of  interest  rates  and the  ability  to  obtain
mortgages with favorable  terms could have a considerable  impact on our ability
to purchase,  sell, or refinance assets. An economic  recession could affect our
ability to rent apartments.  Finally,  increases in insurance rates,  utilities,
and taxes could also have a material impact on liquidity.

There are a number of known events that have or are reasonably  likely to have a
material  impact on  short-term or long-term  liquidity,  including the sales of
Dallas/Briar   Meadows  and  Arlington/Royal   Crest  (land)  and  the  proposed
acquisition of Fort Meyers/Billy's Creek.


SALE OF ARLINGTON/ROYAL CREST (LAND) AND DALLAS/BRIAR MEADOWS

On June 30, 2000,  the Company  sold  Dallas/Briar  Meadows and  Arlington/Royal
Crest  (land) (See Part I, Item 2(d)  Discontinued  Operations/Sale  of Assets.)
Operations of these subsidiaries ceased June 30, 2000.

The Briar Meadows and  Arlington  properties  were sold for a purchase  price of
$4.8 million to a group of holders  (collectively,  the  "Investors") of certain
common stock,  preferred  stock,  warrants,  and promissory  notes issued by the
Company.

The two properties were sold for consideration of:

(a)  The Investors'  assumption of the mortgage  obligations on the  properties:
     $1.5 million for Briar  Meadows and $1.2 million for Royal Crest,  totaling
     $2.7 million;

                                 -- Page 27 --
<PAGE>

(b)  The  Investors'  surrender  and release to the Company of all common  stock
     (valued at  $461,093)  preferred  stock  (valued at  $1,618,855),  warrants
     (valued at  $645,052)  and  promissory  notes issued to them by the Company
     (valued at $575,000), valued collectively at $3.3 million, and;

(c)  The Company's  issuing to the Investors a new promissory note in the amount
     of $1.2  million  bearing  interest at 9.5% per annum with a March 15, 2001
     maturity date.

The Company reported a net gain of $330,202 on the sale of these assets in 2000,
calculated as follows:

                                  Arlington/      Dallas/
                                  Royal Crest     Briar Meadows     TOTAL
-------------------------------------------------------------------------------
Carrying Value ..............     $ 2,683,171      $ 1,626,627     $ 4,309,798
Sale Proceeds (Fair Value)...      (1,800,000)      (3,000,000)     (4,800,000)
                                  -----------      -----------      -----------
(Gain) Loss .................         883,171       (1,373,373)       (490,202)
Tax .........................            --            160,000         160,000
                                  -----------      -----------      -----------
Net (Gain) Loss .............     $   883,171      $(1,213,373)     $ (330,202)
                                  ===========      ===========      ===========

Please see Part II, Item 7, Note 3: Discontinued Operations - Sale of Assets for
further detail.


PROPOSED ACQUISITION OF BILLY'S CREEK

The Company  anticipates  total capital  expenditures  for the  acquisition  and
development of Billy's Creek of $33,380,096,  including a purchase price for the
land of $1,320,000,  unit construction costs of $18,975,000,  miscellaneous site
work,   common   area   and   parking    construction   costs   of   $4,600,000,
architect/engineering  and general  conditions  of  $1,646,850,  a 5% reserve of
$1,327,093, interest of $1,881,154, and sales/marketing costs of $1,881,154. The
Company anticipates securing mezzanine financing in the amount of $7,500,000 and
expects  to  obtain a  construction  loan of  $25,035,072,  22% and 75% of total
sources, respectively. The Company anticipates investing approximately 3% equity
in the deal, or $845,024, from Company funds.




                                 -- Page 28 --
<PAGE>


7.   CONSOLIDATED  FINANCIAL  STATEMENTS  FOR THE  COMPANY  FOR THE YEARS  ENDED
     DECEMBER 31, 2000 AND 1999
-----------------------------------------------------------------------------


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
Homes for America Holdings, Inc.


We have audited the consolidated  balance sheets of Homes for America  Holdings,
Inc. (a Nevada  corporation)  as of December 31, 2000 and 1999,  and the related
consolidated statements of operations, changes in shareholders' equity, and cash
flows  for  the  years  then  ended.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Homes for America  Holdings,
Inc. as of December 31, 2000 and 1999, and the results of its operations and its
cash flows for the years then ended in  conformity  with  accounting  principles
generally accepted in the United States of America.


LAZAR LEVINE & FELIX LLP
New York, New York
May 8, 2001


                                 -- Page 29 --
<PAGE>


                        HOMES FOR AMERICA HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
            FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 (AUDITED)


                                   - ASSETS -


                                                      Year Ended     Year Ended
                                                       12/31/00       12/31/99
                                                       (Audited)      (Audited)
-------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents ...........................$   318,010   $   579,018
Accounts receivable - tenants (Note 2j) .............     87,718        57,025
Accounts receivable - other fees (Note 2j) ..........    639,158       913,970
Restricted deposits and funded reserves -
current (Note 7) ....................................  1,362,270     5,497,304
Prepaid expenses and other current assets ...........    319,153       494,140
Due from officer (Note 4) ...........................     50,500        27,500
Net assets of discontinued subsidiaries (Note 3) ....       --         748,212
                                                     -----------   -----------
TOTAL CURRENT ASSETS ................................  2,776,809     8,317,169
                                                     -----------   -----------

INVESTMENTS IN REAL ESTATE - NET
(Notes 2e, 5, 8 and 9) .............................. 39,396,167    35,343,308
                                                     -----------   -----------

FIXED ASSETS - NET (Notes 2e and 6) .................     48,159        55,050
                                                     -----------   -----------

OTHER ASSETS:
Restricted deposits and funded reserves (Note 7) ....    358,122       529,485
Deferred financing costs - net (Note 2f) ............  1,158,338     1,187,413
Deferred asset management fee - net (Note 2g) .......     78,596        87,170
Pre-acquisition costs (Note 2h) .....................  1,399,889       279,883
Other assets ........................................     84,665       269,373
                                                     -----------   -----------
                                                       3,079,610     2,353,324
                                                     -----------   -----------
                                                     $45,300,745   $46,068,851
                                                     ===========   ===========


                                 -- Page 30 --
<PAGE>


                    - LIABILITIES AND SHAREHOLDERS' EQUITY -


                                                        Year Ended    Year Ended
                                                          12/31/00      12/31/99
                                                        (Audited)     (Audited)
--------------------------------------------------------------------------------

CURRENT LIABILITIES:
Line of credit - bank (Note 10) .....................$    320,000  $       --
Accounts payable and accrued expenses ...............   1,550,028       948,942
Tenants security deposits ...........................     374,714       377,281
Unearned rent (Note 2j) .............................      95,190        39,673
Current portion - liabilities applicable to
   investments  in real estate (Note 8) .............   5,218,865     3,757,097
Current portion - notes payable (Note 9) ............     948,801       734,432
Income taxes payable (Note 2i and 13) ...............     177,000          --
Net liabilities of discontinued subsidiaries (Note 3)      57,706          --
                                                      -----------   -----------
TOTAL CURRENT LIABILITIES ...........................   8,742,304     5,857,425
                                                      -----------   -----------

LIABILITIES APPLICABLE TO INVESTMENTS IN REAL
ESTATE (Note 8) .....................................  32,135,835    32,330,843
                                                      -----------   -----------

LONG-TERM LIABILITIES - NET OF CURRENT PORTION:
Notes payable (Note 9) ..............................     157,852       228,734
Deferred income taxes (Notes 2i and 13) .............     954,600       903,400
                                                      -----------   -----------
                                                        1,112,452     1,132,134
                                                      -----------   -----------

MINORITY INTERESTS IN SUBSIDIARIES (Note 11) ........     805,824     2,276,008
                                                      -----------   -----------

COMMITMENTS AND CONTINGENCIES (Note 14)

SHAREHOLDERS' EQUITY (Note 12):
Preferred stock, Series A, $.001 par value;
5,000,000 shares authorized.  0 and 72,900
shares issued and outstanding in 2000 and 1999,
respectively ........................................        --              73
Common stock; $.001 par value; 25,000,000 s
hares authorized, 8,702,131 and 8,562,181 shares
issued in 2000 and 1999, respectively ...............       8,702         8,562

Additional paid-in capital ..........................   1,230,848     2,778,525
Retained earnings ...................................   2,149,623     1,685,281
Treasury stock, at cost - 123,000 shares ............    (884,843)         --
                                                      -----------   -----------
                                                        2,504,330     4,472,441


                                                     $ 45,300,745  $ 46,068,851
                                                     ============  ============


                                 -- Page 31 --
<PAGE>


                        HOMES FOR AMERICA HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 (AUDITED)




                                                      Year Ended     Year Ended
                                                       12/31/00       12/31/99
                                                       (Audited)      (Audited)
--------------------------------------------------------------------------------
REVENUES:
Rental income (Note 2j) ............................$ 8,135,736    $ 4,819,555
Real estate development fees .......................    205,486        595,674
Interest income ....................................    127,043        103,223
Gain on sale of bonds (Note 1) .....................       --          825,000
Other income .......................................    433,078        772,910
                                                      ---------      ---------
                                                      8,901,343      7,116,362

EXPENSES:
Administrative expenses ............................  2,622,450      2,021,473
Maintenance and operating costs ....................    918,335        868,074
Utilities ..........................................    799,607        703,381
Taxes and insurance ................................    802,400        526,049
Interest expense ...................................  2,620,650      1,298,210
Depreciation and amortization ......................  1,646,826         954,53
                                                      ---------      ---------
                                                      9,410,268      6,371,726
                                                      ---------      ---------

(LOSS) INCOME BEFORE MINORITY INTERESTS AND
PROVISION FOR INCOME TAXES .........................   (508,925)       744,636

Minority interests in net loss of consolidated
subsidiaries (Note 11) .............................    583,787        171,550
                                                      ---------      ---------

INCOME BEFORE PROVISION FOR INCOME TAXES ...........     74,862        916,186

Provision for income taxes (Notes 2i and 13) .......     26,200        313,000
                                                      ---------      ---------

INCOME FROM CONTINUING OPERATIONS ..................     48,662        603,186
                                                      ---------      ---------

DISCONTINUED OPERATIONS (NOTE 3):
Income from operations of discontinued
subsidiary's assets (net of income taxes
of $42,000 and $12,000 for 2000 and 1999,
respectively) ......................................     85,478         22,548
Gain on sale of operating assets of subsidiary -
net of income taxes of .............................$   330,202    $      --
                                                      ---------      ---------
                                                        415,680         22,548


NET INCOME .........................................$   464,342    $   625,734
                                                      ---------      ---------

BASIC AND DILUTED INCOME PER SHARE (NOTE 2k)
Continuing operations ..............................$       .01   $       .07
                                                      ---------      ---------
Discontinued operations ............................        .05           --
                                                      ---------      ---------
                                                    $       .06   $       .07

                                                     ===========   ===========

                              -- Page 32 --
<PAGE>



                        HOMES FOR AMERICA HOLDINGS, INC.
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY


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

                                                 Preferred                     Additional     Retained   Treasury Stock
                                                   Stock       Common Stock  Paid-in Capital  Earnings       at Cost        Total
------------------------------------------------------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1998 ...................   $    --      $   8,352    $   947,955   $ 1,061,832   $      --      $ 2,018,139
Sale of Preferred Shares .......................          73         --        1,618,782          --            --        1,618,855
Preferred stock dividend requirement ...........        --           --             --          (2,285)         --           (2,285)
Issuance of shares in lieu of payment of
   accrued liabilities .........................        --             25         24,973          --            --           24,998

Issuance of shares for professional fees .......        --            185        184,815          --            --          185,000

Fair value of rent .............................        --           --            2,000          --            --            2,000

Net income .....................................        --           --             --         625,734          --          625,734
                                                   ---------    ---------    -----------   -----------   -----------    -----------

BALANCE AT DECEMBER 31, 1999 ...................          73        8,562      2,778,525     1,685,281          --        4,472,441

Shares issued in lieu of employees' compensation        --            120         80,280          --            --           80,400

Issuance of shares in lieu of payment of
   accrued liabilities .........................        --             30         19,970          --            --           20,000

Surrender and retirement of preferred shares ...         (73)        --       (1,618,782)         --            --       (1,618,855)

Purchase and cancellation of shares ............        --            (10)       (29,145)         --            --          (29,155)

Purchase of shares for treasury ................        --           --             --            --        (884,843)      (884,843)

Net income .....................................        --           --             --         464,342          --          464,342
                                                   ---------    ---------    -----------   -----------   -----------    -----------
BALANCE AT DECEMBER 31, 2000 ...................   $    --      $   8,702    $ 1,230,848   $ 2,149,623   $  (884,843)   $ 2,504,330


</TABLE>
                                 -- Page 33 --
<PAGE>

                           HOMES FOR AMERICA HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 (AUDITED)

                                                     Year Ended     Year Ended
                                                     12/31/00       12/31/99
                                                     (Audited)      (Audited)
--------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................ $   464,342    $   625,734
Adjustments to reconcile net income to net cash
provided by operations:
Non-cash expense - rent ...........................        --            2,000
Depreciation and amortization .....................   1,931,872      1,016,187
Compensatory shares ...............................     100,400        185,000
Minority interests ................................    (695,778)      (171,550)
Deferred income taxes .............................      51,200        325,000
Forgiveness of debt ...............................        --          (13,000)
Gain on sale of assets ............................    (490,203)          --
(Increase) decrease in assets:
Accounts receivable - tenants .....................     (28,293)       (35,693)
Accounts receivable - other .......................     331,321       (580,881)
Prepaid expenses and other current assets .........     207,790       (456,111)
Operating escrow ..................................     458,751       (497,138)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities ..........     428,449        363,921
Due to related parties ............................    (204,126)      (214,759)
Tenant security deposits ..........................     (19,574)        93,949
Real estate taxes payable .........................     (97,202)       318,995
Unearned rent .....................................      51,652         30,159
Income taxes payable ..............................     177,000           --
                                                     ----------     ----------
Net cash provided by operating activities .........   2,667,601        991,813
                                                     ----------     ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real property .......................  (3,405,214)    (1,733,730)
Capital expenditures ..............................      (7,890)       (74,809)
Due from officer ..................................     (23,000)       (27,500)
Withdrawals from (additions to) replacement
reserves ..........................................     283,236       (750,423)
Pre-acquisition costs .............................  (1,120,006)       (87,896)
                                                     ----------     ----------
Net cash (utilized) by investing activities .......  (4,272,874)    (2,674,358)
                                                     ----------     ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of preferred shares ........        --        1,618,855
Proceeds from long-term debt ......................   4,435,627           --
Purchase of treasury shares .......................    (913,988)          --
Contributions from minority shareholders ..........        --          362,117
Distributions to minority shareholders ............  (1,939,983)      (115,881)
Net proceeds from short-term loans ................     320,000        525,591
Payments of long-term debt ........................     197,671        (84,396)
Payments for bond issuance costs ..................        --         (205,906)
Payments for financing costs ......................    (755,062)      (605,110)
                                                     ----------     ----------
Net cash provided by financing activities .........   1,344,265      1,495,270
                                                     ----------     ----------

NET (DECREASE) IN CASH AND CASH EQUIVALENTS .......    (261,008)      (187,275)

Cash and cash equivalents, beginning of year ......     579,018        766,293
                                                     ----------     ----------

CASH AND CASH EQUIVALENTS, END OF YEAR ............ $   318,010    $   579,018
                                                     ----------     ----------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid ..................................... $ 2,614,194    $   535,727
Income taxes paid .................................        --             --

                                 -- Page 34 --
<PAGE>


                        HOMES FOR AMERICA HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE 1 - DESCRIPTION OF BUSINESS:

Homes  for  America  Holdings,   Inc.,  a  Nevada  Corporation  ("the  Company")
established in 1996, is engaged in the business of (a) acquiring, rehabilitating
and  managing  select  "Affordable  Housing"   properties;   (b)  acquiring  and
converting  specially  situated,  non-residential  properties  into  residential
rentals or  condominium  sales;  and (c) acquiring  multi-use  residential  real
estate. As to the Affordable Housing portion of the portfolio, the Company sells
partnership interests through newly formed subsidiaries,  including "tax-credit"
benefits,  according  to  Section  42 of the  IRS  Code,  and  depreciation  and
amortization for equity, acquisition and management fees.

     The Company's wholly-owned subsidiaries are:

(i)  Glen Hills  Homes for  America,  Inc.,  a Texas  corporation,  which is the
     General Partner in Dallas/Glen Hills L. P. ("Dallas/Glen/Hills")

(ii) Prairie Village-Homes for America,  Inc., an Indiana corporation,  which is
     the General Partner of Middlebury Elkhart, L.P. ("Prairie Village")

(iii)Putnam Homes for America Holdings, Inc., a Connecticut  corporation,  which
     is the General  Partner of TVMJG  1996-Putnam  Square  Limited  Partnership
     ("Putnam")

(iv) BriarMeadows/Homes for America, Inc., a Texas corporation ("BriarMeadows")

(v)  Arlington/Homes for America, Inc., a Texas corporation ("Arlington")

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

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

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

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

(x)  Homes For America Real Estate Services, Inc., a Texas corporation ("RES")


Glen Hills Homes for America, Inc., Prairie Village-Homes for America, Inc., and
Putnam Homes for America Holdings, Inc., ("the general partners"), have no other
operating activities.

On December 18, 1998,  BriarMeadows  purchased an apartment  property  (land and
building)  located  in  Dallas,  Texas,  from an  unrelated  party for a cost of
$1,050,000.  The Company  financed the entire  purchase  price (see Note 8). The
operations of this rental  property are included in the  consolidated  financial
statements  from the date of  acquisition.  See  Note 3  regarding  sale of this
property.

On December 21, 1998,  Arlington purchased a tract of land in Arlington,  Texas,
from an  unrelated  party,  for an  aggregate  cost of  $1,000,000.  The Company
financed  the  entire  purchase  price (see Note 8). The  Company  had  received


                                 -- Page 35 --
<PAGE>

approval  from the City of Arlington to construct a 210-unit  apartment  complex
and was  negotiating  for  permanent  financing  for  this  project.  See Note 3
regarding sale of this property.

On June 30,  1999,  Lakes  Edge  was  acquired  and,  simultaneously  with  this
transaction,  Lakes Edge purchased  certain  Multifamily  Mortgage Revenue Bonds
(issued  by  the  Housing  Finance  Authority  of  Dade  County,   Florida)  and
consequently, all the rights accorded the holder of such bonds. The bonds, which
were purchased with the proceeds of a loan, were immediately sold and Lakes Edge
recognized a gain of $825,000.  The Lakes Edge property,  a 400-unit  affordable
housing complex is located in Florida.

On November 9, 1999, Country Lake purchased certain Multifamily Mortgage Revenue
Bonds (issued by the Housing  Finance  Authority of Palm Beach County,  Florida)
and  consequently,  all the rights accorded the holder of such bonds.  The bonds
were  purchased  with the  proceeds of a loan.  The Country  Lake  property is a
192-unit affordable housing complex located in Florida.

During 1999, the Company  established a new  subsidiary,  Homes for America Real
Estate  Services,  Inc.,  ("RES").  This new subsidiary will provide  management
services  to the  Company's  other  subsidiaries  as well as to other  unrelated
entities. RES began operations in 2000.

CERTAIN PROVISIONS OF LIMITED PARTNERSHIP AGREEMENTS:

Dallas/Glen Hills, L.P.:

Dallas/Glen  Hills,  L.P.,  (Dallas/Glen  Hills) was formed in October  1995 and
commenced operations in February 1996. The partnership  agreement was amended in
March 1997, to provide for the withdrawal or reduction in ownership  interest of
the existing  partners and the contribution of capital and the admittance of new
partners,  with the general partner being Glen Hills Homes for America,  Inc., a
wholly-owned  subsidiary  of the  Company.  Dallas/Glen  Hills was  organized to
purchase,  rehabilitate  and  operate the Willow Pond  Apartment  Project  ("the
Project")  located in Dallas,  Texas.  The Project received an allocation of low
income  housing tax credits from the Texas  Department  of Housing and Community
Affairs under Section 42 of the Internal  Revenue Code,  which regulates the use
of the  Project as to  occupant  eligibility  and unit gross  rent,  among other
requirements.  As such, the Project is required to lease a minimum of 40% of its
units to families  whose income is 60% or less of the area median gross  income.
The project  must meet the  provisions  of these  regulations  during each of 15
consecutive years in order to remain qualified to receive these credits.

Losses, subject to certain provisions, and tax credits are allocated .01% to the
general partner and 99.99% to the limited partners.  Operating profits,  subject
to certain  provisions,  are allocated first to the extent of losses  previously
allocated then based on cash distributions  already made or to be made. However,
annual  distributable  cash flow is first  utilized to satisfy loans and certain
accrued and unpaid  liabilities,  in accordance with the partnership  agreement,
and  then to  satisfy  various  fees and  obligations  to the  general  partner.
Finally,  any distributable cash flow remaining after the general partner's fees
and obligations are satisfied,  is distributed  50.1% to the general partner and
49.9%  to the  limited  partners.  The  cumulative  effect  of the  distribution
priorities  is  that  the  general  partner  receives  approximately  95% of the
partnership's distribute cash flow, giving it an overwhelming financial interest
in the partnership.  In addition to the general partner's overwhelming financial
interest,  its sole involvement in and responsibility for the financial policies
and  day-to-day  operations  of the  property  and  the  rights  granted  by the
partnership  agreement  to the  general  partner  to manage  the  affairs of the
partnership give the general partner control over the partnership.

Middlebury Elkhart, L.P.:

                                 -- Page 36 --
<PAGE>

Middlebury  Elkhart,  L. P.,  (Prairie  Village)  was formed in July 1997 and in
December  1998,  acquired  a 120-unit  apartment  building  (including  land) in
Elkhart, Indiana, from an unrelated party, for rental to low income tenants. The
original cost of this investment  approximated  $800,000 which was paid in cash.
Rehabilitation of this building was completed in December 2000.  Prairie Village
has received an  allocation  of low income  housing tax credits from the Indiana
Housing Finance Authority under Section 42 of the Internal Revenue Code of 1986,
as amended.  As such,  similar to Dallas/Glen  Hills,  management is required to
lease a minimum of 40% of Prairie Villages units to families whose income is 60%
or less  of the  area  median  gross  income.  Under  the  terms  of an  amended
partnership  agreement dated December 1998,  Prairie  Village-Homes for America,
Inc., became the general partner and has a .1% interest in the partnership.

Profits,  losses and tax credits  generally  are  allocated  to the  partners in
accordance with their ownership  interests.  However,  annual distributable cash
flow is first  utilized  to  satisfy  unpaid  liabilities,  as set  forth in the
partnership  agreement,  then the  remainder is  distributed  80% to the general
partner  and  20%  to  the  limited  partners.  The  cumulative  effect  of  the
distribution  priorities is that the general partner receives  approximately 80%
of  the  partnership's  distributable  cash  flow,  giving  it  an  overwhelming
financial  interest in the  partnership.  In  addition to the general  partner's
overwhelming  financial interest, its sole involvement in and responsibility for
the financial policies and day-to-day  operations of the property and the rights
granted  by the  partnership  agreement  to the  general  partner  to manage the
affairs  of  the   partnership   give  the  general  partner  control  over  the
partnership.


TVMJG 1996-Putnam Square Limited Partnership:

TVMJG  1996-Putnam  Square  Limited  Partnership  (Putnam  Square) was formed in
February 1996 for the purpose of acquiring,  developing and operating an 18-unit
rental  housing  project in  Bridgeport,  Connecticut.  The housing  project has
qualified and been allocated low income housing tax credits  pursuant to Section
42 of the Internal Revenue Code of 1986. The general  partner,  Putnam Homes for
America Holdings, Inc., has a 1% interest in the partnership.

Profits,  losses and tax credits  generally  are  allocated  to the  partners in
accordance with their ownership  interests.  However,  annual distributable cash
flow is first  utilized  to  satisfy  unpaid  liabilities,  as set  forth in the
partnership  agreement,  then the  remainder is  distributed  75% to the general
partner  and  25%  to  the  limited  partners.  The  cumulative  effect  of  the
distribution  priorities is that the general partner receives  approximately 75%
of  the  partnership's  distributable  cash  flow,  giving  it  an  overwhelming
financial  interest in the  partnership.  In  addition to the general  partner's
overwhelming  financial interest, its sole involvement in and responsibility for
the financial policies and day-to-day  operations of the property and the rights
granted by the  partnership to the general  partner to manage the affairs of the
partnership give the general partner control over the partnership.

General:

The general partners have also entered into guaranty agreements with the limited
partners of each partnership, whereby the general partner has agreed to fund (i)
operating  deficits (as defined in each  agreement)  incurred  during a specific
period and (ii) replacement  reserve escrow accounts to meet replacement reserve
obligations during the guaranty period.

Other than fees earned from tax credit  partnerships  pursuant to Section 42 Tax
Credits as described in Note 2(j) Revenue  Recognition,  fees  received from the
partnerships are eliminated upon consolidation.

                                 -- Page 37 --
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a)  Principles of Consolidation:

The  consolidated  financial  statements  are  prepared on the accrual  basis of
accounting in accordance with accounting  principles  generally  accepted in the
United  States of America and include the accounts of the Company and all of its
wholly-owned  subsidiaries  (which  include  the  general  partners).  While the
general  partners  are  generally  entitled  to less than 50% of the profits and
losses of the  limited  partnerships,  under the  partnership  agreements  their
participation in distributable cash flow is always in excess of 75%, giving them
an  overwhelming  financial  interest  in the  partnerships.  In addition to the
general partners'  overwhelming  financial interests,  their sole involvement in
and responsibility  for the financial policies and day-to-day  operations of the
properties and the rights granted by the  partnership  agreements to the general
partners to manage the  affairs of the  partnerships  give the general  partners
control over the partnerships. As such, according to the provisions of Statement
of Position 78-9  "Accounting  for  Investments  in Real Estate  Ventures,"  the
Company,  as the controlling  investor,  accounts for such investments under the
principles of accounting  applicable to  investments in  subsidiaries.  See also
Note 11 regarding Minority Interests.

All   intercompany   balances  and   transactions   have  been   eliminated   in
consolidation.

(b)  Use of Estimates:

In preparing  financial  statements in  accordance  with  accounting  principles
generally  accepted in the United  States of America,  management  makes certain
estimates and assumptions, where applicable, that affect the reported amounts of
assets and liabilities  and disclosures of contingent  assets and liabilities at
the  date  of the  financial  statements,  as well as the  reported  amounts  of
revenues and expenses  during the reporting  period.  While actual results could
differ from those estimates,  management does not expect such variances, if any,
to have a  material  effect on the  Company's  financial  position,  results  of
operations, or cash flows.

(c)  Statements of Cash Flows:

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

(d)  Comprehensive Income:

SFAS 130 "Reporting  Comprehensive  Income"  prescribes  standards for reporting
other comprehensive income and its components.  Since the Company currently does
not have any items of other  comprehensive  income, a statement of comprehensive
income is not yet required.

(e)  Property and Equipment:

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

 Buildings and improvements                         27 1/2 - 40 years
 Furniture and equipment                            7 years

Building  improvements are capitalized,  while  expenditures for maintenance and
repairs  are  charged to  operations.  Depreciation  expense for the years ended
December 31, 2000 and 1999 aggregated $1,646,827 and $845,058, respectively.

                                 -- Page 38 --
<PAGE>

(f)  Deferred Financing Costs:

Costs  directly  associated  with  obtaining  permanent debt financing have been
deferred and are being amortized on a  straight-line  basis over the term of the
permanent  loans.  Accumulated  amortization  at  December  31,  2000  and  1999
aggregated  $371,760 and  $86,716,  respectively.  Amortization  expense for the
years  ended  December  31,  2000  and 1999  aggregated  $285,044  and  $69,661,
respectively.

(g)  Deferred Asset Management Fee:

The  asset  management  fee  paid to an  affiliate  of the  limited  partner  in
Dallas/Glen  Hills is being  amortized  over the life of the 15-year  agreement.
Accumulated  amortization at December 31, 2000 and 1999  aggregated  $32,160 and
$23,586,  respectively.  Amortization  expense for the years ended  December 31,
2000 and 1999 aggregated $8,574 and $8,580, respectively.

(h)  Pre-Acquisition Costs:

Costs  incurred in pursuit of new  acquisitions  including,  but not limited to,
professional,  consulting, travel and due diligence expenditures,  are deferred,
pending  either  the  acquisition  of  the  property  or  the  determination  by
management  that a particular  property  will not be acquired.  Certain of these
costs may be reimbursed to the Company upon  acquisition of the property.  Costs
remaining upon the  consummation  of an acquisition  are  capitalized and become
part of the Company's investment in the related entity. Pursuant to the guidance
of EITF 97-11,  internal  costs  associated  with  identifying  and  acquiring a
property  which will be  operating  upon  acquisition  are expensed as incurred.
Internal costs related to pre  acquisition  activities  incurred to identify and
acquire a property that will be considered as nonoperating upon acquisition, are
capitalized  as  part of the  cost  of  acquisition.  Management  evaluates  the
probability of acquiring  non-operating  properties and  capitalizes the related
internal costs when the  acquisition is reasonably  certain.  Alternatively,  at
such time that  management  determines  that  acquisition of the property is not
feasible, any deferred costs are charged to expense.

At December  31,  2000 and 1999,  pre-acquisition  costs  related to the pending
acquisition of the following properties:


                                 12/31/00    12/31/99
                                 (Audited)   (Audited)
--------------------------------------------------------
Billy's Creek, Florida .....   $  168,167   $     --
Brick Yard, New York .......      122,449         --
Amherst Gardens, New York ..      113,588         --
Yonkers Waterfront, New York      185,889         --
Odessa, Texas ..............       25,000         --
Lake Crystal, Florida ......      369,889         --
Villa Americana, Texas .....      200,458      249,332
Haverford, Kentucky ........      152,715       30,551
Mandarin Pines, Florida ....       61,734         --
                               ----------   ----------
                               $1,399,889   $  279,883
                               ==========   ==========


(i)  Income Taxes:

The Company  accounts  for its income  taxes in  accordance  with  Statement  of
Financial  Accounting  Standards  ("SFAS") No. 109, which requires the asset and


                                 -- Page 39 --
<PAGE>

liability  approach of accounting  for income taxes.  The objective of the asset
and liability method is to establish deferred tax assets and liabilities for the
temporary differences between the financial reporting basis and the tax basis of
the  Company's  assets and  liabilities  at enacted tax rates  expected to be in
effect when such amounts are realized or settled.  Deferred  income taxes result
principally  from utilizing the accrual basis for financial  reporting  purposes
and the cash basis for income tax purposes. No Federal or state income taxes are
payable by the partnerships, and none have been provided for.

(j)  Revenue Recognition:

Rental income is  recognized,  on a  straight-line  basis,  as rent becomes due.
Rental payments received in advance are deferred until earned.  The Company does
not believe that an allowance for doubtful accounts is necessary at this time.

When the Company acquires a rental property that is eligible for tax credits, it
establishes  a limited  partnership  in which a limited  partner makes a capital
contribution to purchase the use of the credits.  The limited partner, by making
its capital contribution, is eligible for a proportionate share of these credits
represented by its equity interest in the limited partnership.

In 1998,  when the Company  acquired  Prairie  Village,  which was allocated tax
credits in 1998, it established the  Middlebury/Elkhart  Limited Partnership.  A
limited partner paid a capital contribution to the partnership to purchase 99.9%
of the tax credits  and 99.9% of the losses of the  partnership.  In  accordance
with the  amended  partnership  agreement,  after the limited  partner  made its
capital  contribution,  the Middlebury/ Elkhart partnership  subsequently paid a
"Guaranteed Payment" to the Company (through its wholly owned subsidiary Prairie
Village Homes For America,  Inc.) for its services  relating to the development,
construction, and attainment of the tax credits.

When the  Middlebury/Elkhart  limited partnership paid Prairie Village Homes For
America,  Inc. the Guaranteed Payment,  Prairie Village Homes For America,  Inc.
recorded  the payment as income in 1998,  the year the fee was  earned.  Whereas
under  consolidation  such a fee would normally be  eliminated,  pursuant to tax
credit  partnerships  created under Section 42 Tax Credits,  under consolidation
such fees are not eliminated,  for the following reason: Tax credit partnerships
under  Section  42 Tax  Credits  allow for fees to be paid  directly  out of the
partnership to the general partner as an expense to the  partnership,  resulting
in substantive increases, when combined with depreciation,  to the partnership's
losses.  These  losses  are  borne as if by a third  party,  since  the  limited
partner, not the limited  partnership,  always retains in excess of 99% of those
losses.  Conversely,  the general partner always retains less than 1% of the tax
credits and losses, at least 90% of the cash flow from the property and at least
70%  to  90%  of  the  residual   property  value  (after  return  of  capital).
Accordingly,  the general  partner  records  such fees as income and the Company
does not eliminate them upon consolidation.

Other than fees earned from tax credit  partnerships  pursuant to Section 42 Tax
Credits as described  above,  fees received from the partnerships are eliminated
upon  consolidation.  Fees from outside  parties and fees earned from tax credit
partnerships  pursuant  to  Section  42  Tax  Credits  as  described  above  are
recognized as earned and are  classified as real estate  development  fee income
from outside third parties.

Interest  earned  on the  Company's  and its  subsidiaries'  bank  accounts  are
recorded as earned and reflected as interest  income.  Other income  consists of
late fees, application fees, commissions etc., and is recorded as earned.

(k)  Earnings Per Share:

Basic and  diluted  earnings  per  share  have been  computed  according  to the


                                 -- Page 40 --
<PAGE>

standards of SFAS No. 128 "Earnings Per Share".  The following schedule presents
the  calculation  of basic  and  diluted  earnings  per share  for  income  from
continuing operations:


                                                  12/31/00    12/31/99
                                                 (Audited)   (Audited)
------------------------------------------------------------------------
Basic/diluted earnings per share:
  Income from continuing operations .........   $   48,662   $  603,186
  Less:  Preferred stock dividend requirement         --          2,285
                                                ----------   ----------
Income from continuing operations
  available to common shareholders ..........   $   48,662   $  600,901
                                                ==========   ==========

Weighted average common stock
  outstanding for basic earnings per share ..    8,666,986    8,456,682
Assumed conversion of cheap warrants ........         --           --
Assumed conversion of convertible
  preferred stock ...........................         --        121,500
                                                ----------   ----------
Weighted average common stock
  outstanding for diluted earnings per share     8,666,986    8,578,182
                                                 =========    =========


(l)  Investment in Joint Venture:

During 1999, the Company formed a 50/50 joint venture with another  entity.  The
Company's  investment in this joint  venture,  which has been  established  as a
limited  liability  company,  is being  reflected  under  the  equity  method of
accounting. At December 31, 2000, the Company's investment has been written down
to $-0-.


(m)  Fair Value of Financial Instruments:

The  carrying  amounts  of cash  and  cash  equivalents,  receivables,  accounts
payable,  and accrued  liabilities  approximate  fair value because of the short
maturity of these instruments.  The carrying amount of investments  approximates
fair market  value.  The carrying  amount of  long-term  debt  approximates  the
estimated fair value of debt and is based on borrowing rates currently available
with similar terms and average maturities.

(n)  Recent Pronouncements:

In December  1999, the  Securities  and Exchange  Commission  (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements"
(SAB No.  101).  SAB No. 101  expresses  the views of the SEC staff in  applying
generally accepted accounting  principles to certain revenue recognition issues.
Subsequently,  SAB Nos. 101A and 101B were issued delaying the implementation of
SAB No.  101 to the  fourth  quarter  of 2000.  The  adoption  of SAB 101 had no
material  impact  on  the  Company's   financial  position  or  its  results  of
operations.

(o)  Stock-Based Compensation:

SFAS No. 123 "Accounting for Stock Based Compensation",  requires the Company to
either record  compensation  expense or to provide  additional  disclosures with
respect to stock awards and stock option grants made after December 31, 1994. No
compensation  expense is recognized pursuant to the Company's stock option plans


                                 -- Page 41 --
<PAGE>

under SFAS No. 123, which is consistent with prior treatment under APB No. 25.

In  March  2000,  the  Financial   Accounting   Standards  Board  (FASB)  issued
Interpretation No. 44 (FIN 44), "Accounting for Certain  Transactions  involving
Stock  Compensation,  an Interpretation of APB Opinion No. 25." Fin 44 clarifies
the application of APB No. 25 for certain issues, including the definition of an
employee,  the treatment of the acceleration of stock options and the accounting
treatment for options assumed in business  combinations.  FIN 44 is effective on
July 1, 2000, but is applicable for certain transactions dating back to December
1998.  The  adoption of FIN 44 did not have a material  impact on the  Company's
financial position or results of operations.

(p)  Reclassifications:

Certain  reclassifications  have been made to the 1999  financial  statements to
correspond to the presentation used in 2000.


NOTE 3 - DISCONTINUED OPERATIONS - SALE OF ASSETS:

On June 30, 2000,  the Company sold the  properties  owned by Briar  Meadows and
Arlington  for  a  purchase  price  of  $4.8  million  to  a  group  of  holders
(collectively,  the "Investors") of its common stock,  preferred stock, warrants
and promissory notes. The two properties were sold for consideration of:

(a)  The Investors'  assumption of the mortgage  obligations on the  properties:
     $1.5 million for BriarMeadows and $1.2 million for Arlington, totaling $2.7
     million

(b)  The  Investors'  surrender  and release to the Company of all common  stock
     (valued  at  $461,093)  (See  note 1  below)  preferred  stock  (valued  at
     $1,618,855)  (see Note  12),  warrants  (valued  at  $645,052)  (See note 2
     below),  and  promissory  notes  totaling  $575,000  issued  to them by the
     Company, valued collectively at $3.3 million, and;

(c)  The Company issued to the Investors a new promissory  note in the amount of
     $1.2  million  bearing  interest  at 9.5% per annum  with a March 15,  2001
     maturity date.

--------------------------------------------------------------------------------

(1)  385,000  shares of common stock were valued at $461,093,  or  approximately
     $1.20 per share.  The fair value  determination of $1.20 per share reflects
     the value agreed to by the unrelated third party accredited Investors.

(2)  30,000  warrants,  which were issued to an unrelated third party accredited
     Investor in 1998 and  exercisable at a price of $1 per share,  were retired
     in  the  June  30,  2000  sale  of  Briar  Meadows  and  Arlington  (land).
     Additionally,  two of the  accredited  Investors  were the  holders  of two
     promissory notes, each in the amount of $225,000, with repayment provisions
     that  included,  in addition to repayment in cash of the full amount of the
     loans, the receipt of options or warrants,  as mutually agreed,  for 75,000
     shares of common  stock  each,  exercisable  at a price of $1 per share and
     expiring  five years from the date of  repayment.  The  Company  valued the
     right to exercise these warrants,  along with the 30,000 warrants issued in
     1998, at $645,052,  or approximately  $3.58 per warrant.  The warrants were
     valued at $3.58  based on the  Company's  then-anticipated  listing  of its
     common stock on a public exchange and expected trading value thereof in the
     range of $4-$5 per share. The Company  believed that the Investors'  future
     exercise of the warrants (at $1 per share) would be  disadvantageous to the
     Company.


                                 -- Page 42 --
<PAGE>

Per APB 29, the transfer of a non-monetary  asset to reduce ownership  interests
should be recorded at the fair value of the asset surrendered when that value is
more clearly evident than the fair value of the asset received.  In the June 30,
2000 sale of the Dallas/Briar  Meadows and  Arlington/Royal  Crest properties to
Company  stockholders,  the fair value of the properties is more clearly evident
than the fair value of the consideration  received (in particular the fair value
of the preferred  stock and warrants) and, as per APB 29, the  accounting  basis
was the fair value of the asset surrendered.

The  Company's  Board of  Directors  determined  that the fair  value of the two
properties,  combined  into  one  sale  to a  group  of  unrelated  third  party
investors,  was $4,800,000,  an increase of $490,202 since their  acquisition in
December of 1998.  This value reflects the highest price that the investors were
willing to pay and the lowest price the Company would accept, and was determined
with industry  standard cap rates and buildable unit values.  Additionally,  the
fair value of each property is supported by independent real estate  appraisals.
(While the fair values and the appraised  values vary slightly,  it is important
to note that, as in this case,  multifamily  properties  are rarely sold for the
exact  appraised  amount  due  to the  timing  of the  reports  relative  to the
transaction as well as transaction-specific negotiations.)

The carrying  value of the Arlington land was  $2,683,171.  The sale proceeds of
the property at the time of sale was $1,800,000,  based on the fair value of the
property  surrendered,  determined  as follows:  a value of $8,570 per buildable
unit (based on an industry  standard range of  $8,000-$9,000  per buildable unit
for this type of vacant,  non-operating  land in the Arlington,  Texas area) was
assigned to each of 210 units for which  multifamily  zoning  approval  had been
gained, resulting in a fair value of approximately $1.8 million. This fair value
calculation is also supported by an independent real estate appraisal  conducted
in August of 2000 (a month after the sale) valuing the property at $1,930,000.

The carrying value of Dallas/Briar Meadows was $1,626,627.  The sale proceeds of
the property at the time of sale was $3,000,000,  based on the fair value of the
property  surrendered,  determined  as  follows:  the net  operating  income  of
$296,292 at the time of sale at a cap rate of 10 percent (an  industry  standard
for this type of operating property in Dallas, Texas), resulting in a fair value
of approximately $3,000,000. This fair value calculation is also supported by an
independent real estate appraisal  conducted in May of 1999 valuing the property
at $2,700,000.  (When the property was appraised in May of 1999 (thirteen months
before the sale), the net operating income at Dallas/Briar Meadows was $274,152,
resulting in a value of approximately  $2.7 million at a cap rate of 10 percent.
The  Company  used this  same cap rate to  determine  the fair  value in June of
2000.)

The  carrying  value of the two  properties  combined was  $4,309,798.  The sale
proceeds for the two properties was the fair value of the properties at the time
of sale,  totaling  $4,800,000.  A gain of  $490,202  (a net gain after taxes of
$330,202) was recorded on the sale of the assets, calculated as follows:

                                  Arlington/      Dallas/
                                  Royal Crest     Briar Meadows     TOTAL
-------------------------------------------------------------------------------
Carrying Value ..............     $ 2,683,171      $ 1,626,627     $ 4,309,798
Sale Proceeds (Fair Value) ..      (1,800,000)      (3,000,000)     (4,800,000)
                                  -----------      -----------      -----------
(Gain) Loss .................         883,171       (1,373,373)       (490,202)
Tax .........................            --            160,000         160,000
                                  -----------      -----------      -----------
Net (Gain) Loss .............     $   883,171      $(1,213,373)     $ (330,202)
                                  ===========      ===========      ===========



                                 -- Page 43 --
<PAGE>

Revenues and net income from the  operations  of the Briar Meadows and Arlington
properties were as follows:


                          12/31/00    12/31/99
                         (Audited)    (Audited)
                        ------------------------
Revenues:
         BriarMeadows   $ 707,932    $ 640,303
         Arlington ..        --           --

Net income (loss)
         BriarMeadows     142,083      (24,481)
         Arlington ..     (56,605)        --



NOTE 4 - DUE FROM OFFICER:

As of December  31,  2000,  an officer had an  outstanding  loan  payable to the
Company in the amount of $50,500.  This loan is due on demand and bears interest
at an annual rate of 8%.



NOTE 5 - INVESTMENTS IN REAL ESTATE:

Investments in real estate properties,  which are held primarily for development
and  operation,  represent  the rental  properties  owned by the Company and the
limited partnerships and consist of the following:



                                                    12/31/00      12/31/99
                                                   (Audited)     (Audited)
------------------------------------------------------------------------------
Buildings and improvements ....................   $ 31,667,053  $ 28,348,182
Furniture, fixtures and equipment .............      3,047,625     2,535,012
Construction in progress ......................      2,679,822     1,090,869
                                                     ---------     ---------
                                                    37,394,500    31,974,063
Less: accumulated depreciation and amortization     (3,086,897)   (1,479,459)
                                                    ----------    ----------
                                                    34,307,603    30,494,604
Land ..........................................      5,088,564     4,848,704
                                                     ---------     ---------
                                                  $ 34,396,167  $ 35,343,308
                                                  ============  ============


In accordance with SFAS 121, "Accounting for the Impairment of Long-Lived Assets
and for  Long-Lived  Assets to be  Disposed  of" the  Company  evaluates,  on an
ongoing basis, the carrying amounts of its investments in real estate (and fixed
assets - see Note 6) to  determine  if there  has been any  impairment  of those
carrying values.  If an impairment is found to exist, it is the Company's policy
to recognize such impairment at that time.

The Company  utilizes  various methods to measure the carrying value of its real
estate assets to determine if an impairment has occurred, including:

a.   Reviewing  the  market  value of a  property  through  the use of  outside,
     independent  appraisals  often  conducted  prior to securing a purchase and


                                 -- Page 44 --
<PAGE>

     sale agreement and also upon the refinancing of the Company's acquisitions.
     Appraisals are often required by lenders as a condition of the financing.

b.   Assets are routinely monitored for significant physical changes. Particular
     concern is given to  maintaining  and upgrading the properties to keep them
     competitive in their respective market places. Again, these are issues that
     are of great  concern  to  lenders.  The  Company  expends a great  deal of
     resources in maintaining the physical integrity of the assets and, in fact,
     has  established a variety of  renovation  and  rehabilitation  escrows for
     exactly that purpose.

c.   The Company  monitors the legal,  regulatory and business  climates for any
     events  that  could  have an adverse  impact on the  carrying  value of the
     assets. Examples of these types of events would include the promulgation of
     new  rules by  governmental  agencies,  new laws  requiring  compliance  or
     otherwise  affecting the operation,  or any other  significant  event. When
     such an  event  is  identified,  the  costs  to  comply  or  remediate  are
     determined and their impact on the property is measured.

d.   The Company  continuously  budgets and makes estimates for future operating
     periods,  including  estimates of whether its properties will be profitable
     and produce positive cash flow in future periods.

In the event that any adverse events are identified that, in the judgment of the
Company,  impair the carrying value of the asset, it is the Company's  policy to
determine the carrying  value of the asset by estimating  the sum of future cash
flows  (undiscounted  and without  interest  charges) and measure it against the
current carrying value of the asset. If the sum of the future cash flows is less
than the carrying value of the asset,  then an impairment  loss is recognized in
accordance with the requirements of SFAS 121.

Through December 31, 2000, there has been no such impairment.


NOTE 6 - FIXED ASSETS:

Fixed assets consist of the following:

                                 12/31/00    12/31/99
                                 (Audited)   (Audited)
--------------------------------------------------------
Office equipment .............   $ 89,500    $ 81,610
Less: accumulated depreciation    (41,341)    (26,560)
                                  -------     -------
                                 $ 48,159    $ 55,050
                                 ========    ========

See also Note 5 regarding impairment.



                                 -- Page 45 --
<PAGE>

NOTE 7 - RESTRICTED DEPOSITS AND FUNDED RESERVES:

The terms of the partnership  agreements require that various escrow accounts be
maintained  in amounts  and for  periods as set forth in each  agreement.  As of
December 31, 2000 and 1999,  restricted  deposits and funded reserves consist of
the following:


                                           12/31/00     12/31/99
                                           (Audited)    (Audited)
-------------------------------------------------------------------
CURRENT ASSETS:
     Tax and escrow reserves ..........   $  287,722   $  465,659
     Rehabilitation reserves ..........      159,679      373,000
     Replacement reserves .............      587,471      758,714
     Debt reduction escrow (Note 8) ...         --      1,500,000
     Restricted mortgage funds (Note 8)      327,398    2,399,931
                                             -------    ---------
                                           1,362,270    5,497,304
                                           ---------    ---------
OTHER ASSETS:
     Operating reserves ...............      358,122      529,485
                                             -------      -------

TOTAL .................................   $1,723,392   $6,029,789
                                          ==========   ==========


NOTE 8 - LIABILITIES APPLICABLE TO INVESTMENTS IN REAL ESTATE:

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


                                    12/31/00      12/31/99
                                    (Audited)     (Audited)
-------------------------------------------------------------
Mortgage loans payable .........  $ 15,551,521  $ 14,243,204
Bonds payable ..................    21,105,000    21,105,000
                                    ----------    ----------
                                    36,656,521    35,348,204
Less: Non-current portion ......   (32,135,835)  (32,330,843)
                                   -----------   -----------
                                     4,520,686     3,017,361
Accrued interest payable .......       132,853       103,244
Accounts payable - acquisition .       105,184       105,184
Real estate taxes payable ......       460,142       531,308
                                       -------       -------
Current portion of liabilities..  $  5,218,865  $  3,757,097
                                  ============  ============


On February 9, 1996,  Dallas/Glen  Hills entered into a mortgage loan  agreement
for $5,350,000.  The mortgage accrued interest at a rate of 8.25% per annum with
monthly principal and interest  payments of $42,182.  The note, with an original
maturity date of March 1, 2011,  was retired  during 2000 upon  refinancing.  In
1996,  Dallas/Glen  Hills also  funded a debt  reduction  escrow  account in the
amount  $1,500,000  to be applied  against the  outstanding  loan  balance  upon
refinancing.  On September 13, 2000,  Dallas/Glen Hills paid a $675,000 mortgage
prepayment  fee from  proceeds  of the  refinancing  transaction,  to retire the
mortgage prior to maturity.



                                 -- Page 46 --
<PAGE>

On September 13, 2000,  Dallas/Glen  Hills executed a $6,450,000  loan agreement
(the "Mortgage Loan") with a commercial  lender to refinance the Project's debt.
Commencing November 2000, monthly principal and interest payments of $47,283 are
due until October 12, 2012 (the "Maturity Date"),  when all remaining  principal
and interest is payable in full. Interest accrues at a rate of 7.99% per annum.

Prairie Village,  in December 1998, entered into a $3,236,900 mortgage loan with
a lender  relating to the issuance of a total of $3,230,000 in Mortgage  Revenue
Refunding  Bonds,  issued by the City of Elkhart,  Indiana.  As of December  31,
1999, the Company had drawn down $2,007,023 with the balance of $1,229,877, held
in an  escrow  account  which  was  released  in  2000  upon  completion  of the
rehabilitation  of this  project.  The loan bears  interest at an annual rate of
5.85%,  with  monthly  payments  of interest  only  through  June 2000.  Monthly
principal  and  interest  payments  of  $19,096  commenced  in July 2000 and are
payable  for 30 years until final  maturity on May 1, 2030.  The loan  agreement
requires monthly  payments of principal and interest  sufficient to meet sinking
fund  requirements  for payments of amounts due under the bonds,  based on their
varying maturities and interest rates.

Putnam Square is obligated  under two  promissory  notes  aggregating  $400,000.
Monthly  payments of principal and interest,  at 8% per annum, of $3,087 are due
to the extent of surplus  cash as  defined  in the  notes.  The notes  mature in
January  2014 and are  secured  by a  mortgage  on the  Bridgeport,  Connecticut
property.  As of  December  31,  2000 and  1999,  the  outstanding  balance  was
$400,000.  $200,000  of this  note is  payable  to the  Company  (and  has  been
eliminated  in  consolidation)  and the  balance  is due to the  former  general
partner.  The  partnership is also obligated  under a promissory note payable to
the Company,  as the general  partner,  in the amount of $200,000 in  connection
with  the   development   fee  (which   amount  has  also  been   eliminated  in
consolidation).  The note bears interest at an annual rate of 7% per annum,  and
is  payable  from cash flow as defined in the  partnership  agreement.  The note
matures on December 31, 2006, and is unsecured.

In September  1999,  Briar Meadows entered into a loan agreement with a bank and
received proceeds in the amount of $1,500,000, with an original maturity date of
January 31, 2001.  The  proceeds  from this loan were used to repay (i) a 15.25%
note in the amount of $500,000,  with an original maturity date of June 17, 2000
and (ii) the balance  outstanding  under a term note in the amount of  $832,463.
The loan accrues interest at the lesser of the "Applicable Rate" or the "Maximum
Lawful Rate", both terms as defined in the agreement.  The $1.5 million note was
assumed by the Investors (see Note 3) when this property was sold in June 2000.

Arlington was  obligated  under a promissory  note in the amount of  $1,200,000,
with an original  maturity date of June 17, 2000. This note accrued  interest at
an annual  rate of 15 1/4% which was  payable  monthly.  The note may be prepaid
under specific conditions as long as three months of interest payments have been
made.  The $1.2 million note was assumed by the Investors (see Note 3) when this
property was sold in June 2000.

In June 1999,  Lakes Edge entered into a loan agreement with a mortgage  company
and received proceeds in the amount of $1,400,000. Interest is payable
monthly  at the rate of 11% per  annum  and the note  matures  in  August  2010.
$1,170,054  is  being  held in an  escrow  account  and  will be  released  when
rehabilitation work is completed in 2001.

In  connection  with the  acquisition  of the Lakes Edge  property,  the Company
assumed the liability of $14,850,000 in Multifamily  Mortgage Revenue Bonds 1985
Series 12,  issued by the Housing  Finance  Authority of Dade  County,  Florida.
These bonds  mature on May 1, 2035,  and the current  interest  rate is 6.9% per
annum.

In November  1999,  Country Lakes entered into a loan  agreement with a mortgage


                                 -- Page 47 --
<PAGE>

company and received  proceeds in the amount of $1,800,000.  Interest is payable
monthly at the rate of 16% per annum,  and  principal  payments  of $25,000  per
month  began in May 2000.  This note  matures  in May 2001.  Country  Lakes also
entered into an additional  agreement with another  financial  institution for a
term loan in the amount of $2,540,000.  Interest on this loan is payable monthly
at the rate of 13% per annum until the loan matures on July 1, 2018.

In  connection  with the  acquisition  of Country  Lakes in November  1999,  the
Company assumed the liability of $6,255,000 in Multifamily Housing Revenue Bonds
Series  1985C,  issued by the Housing  Finance  Authority of Palm Beach  County,
Florida.  These bonds mature on July 1, 2027 and the current interest rate is 6%
per annum.

The aggregate  maturities of mortgage loans payable (exclusive of bonds payable)
for the next five years are $4,520,686;  $197,456;  $215,854; $236,070; $252,288
and $10,126,167 thereafter.

NOTE 9 - NOTES PAYABLE:

Notes payable consists of the following:


                                                        12/31/00     12/31/99
                                                        (Audited)    (Audited)
--------------------------------------------------------------------------------
9% installment note payable secured by the ownership
rights in Dallas/Glen Hills payable in monthly
installments of $6,772, including interest,
maturing in 2004                                      $  348,653   $  263,166

9 1/2% note payable due in 2001 ...................      699,000         --

9 1/2% loan payable on July 23, 2000 ..............         --        225,000

9 1/2% notes payable, collateralized by receivables
from Putnam, payable in July 2000 .................         --        475,000

8% note payable before December 31, 2001 ..........       59,000         --
                                                      ----------   ----------
                                                       1,106,653      963,166
Less: current maturities ..........................      948,801      734,432
                                                      ----------   ----------
                                                      $  157,852   $  228,734
                                                      ==========   ==========


The aggregate  maturities of long-term  debt,  existing as of December 31, 2000,
for  the  next  four  years  are   $948,801;   $69,906;   $76,463  and  $11,483,
respectively.


NOTE 10 - BANK CREDIT LINE:

In November 2000, the Company  entered into an unsecured line of credit with its
bank which  provides for maximum  borrowings  of $750,000.  This line of credit,
which  expires on  November  1, 2001,  bears  interest at an annual rate of 10%.
Outstanding  borrowings  under this line of credit were  $320,000 as of December
31, 2000.

NOTE 11 - MINORITY INTERESTS:

Three wholly-owned subsidiaries of the Company are the general partners of three


                                 -- Page 48 --
<PAGE>

separate  limited  partnership  entities  (see Note 1).  The  partnerships  were
established for the purpose of acquiring rental  properties which are controlled
and managed by the Company.  For  financial  reporting  purposes,  the financial
statements   of  the   partnership   entities  are  included  in  the  Company's
consolidated  financial  statements  due to the control over these entities (see
Note 2a).

The minority  interests  represent the equity investment by the investor limited
partners in the limited  partnerships  that own specific  properties.  Under the
terms of the various partnership agreements,  the limited partners are typically
allocated  99% of the  taxable  income or loss.  Cash flow from the  partnership
property is allocated 75% or more to the general partner,  and residual value is
allocated 80% or more to the general partner. In each case, operating control of
the property rests with the general partner.  The limited partners' interests in
the  partnerships  have been recorded as minority  interest  liabilities (net of
offsets for the limited partners' investment cost to be eligible for tax credits
(see Note 2j)).

NOTE 12 - SHAREHOLDERS' EQUITY:

The Company's  authorized capital consists of 25,000,000 shares of common stock,
$.001 par value.

In September  1998, the Company adopted the 1998 Employee Stock Option Plan (the
"Plan"),  which  provides  for the grant of  options to  purchase  up to 750,000
shares  of  Company  common  stock.  Options  granted  under  this  plan  may be
designated  as incentive  stock  options and the exercise  price of such options
shall  not be less  than the fair  market  value on the date of  grant.  Options
designated as  non-incentive  stock  options may be granted at exercise  prices,
which are less than the fair market  value.  As of December 31, 2000, no options
have been granted under this plan.

Also in September  1998, the Company  adopted the  Non-Executive  Director Stock
Plan (the  "Director  Plan"),  which  provides  for the issuance of a maximum of
400,000  shares of common stock upon the exercise of options  granted under this
plan.  The exercise  price of options  granted  under the Director Plan shall be
equal to the fair market value on the date of grant. As of December 31, 2000, no
options have been granted under this plan.

The Company  granted  options to purchase  100,000  shares of common stock to an
officer of the Company.  These  options,  which were not granted under either of
the  plans  described  above,  and were to be  reflected  under APB 25 (see Note
2(o)),  vested quarterly in the first year of the officer's  employment and were
exercisable at $1.00 per share.  These options were cancelled in 2000,  prior to
the  issuance of year end  December  31,  1999  financial  statements,  when the
officer's employment with the Company was terminated. Accordingly, proforma data
under SFAS 123 is not required.

During 1999, the Company issued 24,998 shares of its common stock as payment for
accrued  liabilities  to unrelated  third parties in the amount of $24,998.  The
Company  also  issued  185,000  shares  of its  common  stock as  payment  to an
unrelated third party for professional fees in the amount of $185,000. Under the
guidance of FASB 123, the two equity transactions described above were accounted
for using the fair  value  method and the common  shares  were  valued at $1 per
share based upon the  consideration  received.  Subsequently  during  1999,  the
Company sold 72,900 shares of Series A Convertible  Redeemable  Preferred  Stock
(2.43 units of 30,000 preferred shares each) to unrelated third party accredited
investors for net proceeds in the amount of $1,618,855  (or $22.20 per preferred
share).  The Series A Preferred  shares had conversion,  redemption and dividend
features referred to below. This equity  transaction was accounted for using the
fair value method.  The fair value of the preferred  stock was  determined by an
unrelated third party placement agent and was confirmed with the purchase of the


                                 -- Page 49 --
<PAGE>

securities by unrelated third party accredited investors for the price set forth
above.

The preferred  shares were  convertible  at the option of the holder at any time
after 30 days from the date of the Closing of any  underwritten  public offering
by the Company  into a number of shares  equal to $25 divided by the  conversion
price. The conversion price was equal to the lower of (i) $15.00; or (ii) 80% of
the average of the last  reported  sales  prices of the Common Stock for the ten
trading days  immediately  preceding the date of  Conversion  (but not less than
$10.00) subject to certain  anti-dilution  adjustments.  The conversion price of
the preferred  stock was determined by an unrelated  third party placement agent
and was confirmed with the purchase of the  securities by unrelated  third party
accredited  investors.  There was no beneficial conversion feature as defined by
EITF 98-5.  Redemption  of the  Series A  Preferred  stock was at the  Company's
option, upon 30 to 60 days notice to the holders, at a redemption price equal to
$25 plus accrued and unpaid  dividends.  Quarterly  dividends which accrued from
the date of original  issue were payable in cash when  declared by the Company's
Board of  Directors.  Dividends in arrears as of December  31, 1999,  aggregated
$2,285.

In June of 2000, the Company retired the preferred shares issued in the December
1999  private  placement  for the same  price  at  which  they  were  issued  in
connection  with a sale by the Company and a purchase  by the  Investors  of two
properties located in Texas (see Note 3).

During 2000,  the Company  purchased  an  aggregate  of 507,550  shares from its
shareholders,  of which 10,000 were cancelled. The 507,550 shares were purchased
from  unrelated  third parties for an aggregate  cost to the Company of $913,998
(approximately $1.80 per share).  Despite valuations of $1.00 per share in 1999,
the Company was willing to pay approximately $1.80 per share because the Company
desired to reduce third party stock holdings  prior to a potential  listing on a
public  exchange.  (The  Company  had  recently  filed  an  amended  Form  10-SB
registration  statement and anticipated to be soon traded on a public exchange).
Moreover,  the fair value  determination  of $1.80 per share  reflects the value
agreed to by the unrelated  third party  shareholders.  In accordance  with GAAP
guidance (FTB 85-6)  regarding  the purchase of treasury  stock in excess of the
current market price, since there is no unstated  consideration  received by the
Company in addition to the treasury stock,  the entire purchase price ($1.80 per
share)  is  accounted  for as the cost of  treasury  shares.  As a result of the
retirement,  none of these unrelated third parties owns any Company stock,  with
the exception of one shareholder who still holds 35,000 shares.

In December 2000, the Company issued 30,000 shares of common stock in settlement
of $20,000 of accrued  liabilities.  The shares issued in this  transaction were
valued at $0.67/share  based on the fair value of  consideration  received (FASB
123). Under FASB 123 guidance,  the Company issued equity instruments to acquire
services from an unrelated third party.  The fair value  determination  of $0.67
per share to settle  accrued  liabilities  reflects  the value  agreed to by the
unrelated third party.

Also in December  2000, the Company issued 120,000 shares of its common Stock as
bonuses to certain employees.  The shares issued in this transaction were valued
at $0.67 per share (or an aggregate of $80,400) and were accounted for using the
fair value method at the date of  issuance.  This fair value  determination  was
made by the Company's  Board of Directors  and reflects the value  acceptable to
the  employees  relating  to  bonuses  earned  in 1997 and  1998.  The  Board of
Directors  concluded  that  $0.67 per share was the fair  value of these  shares
because  that was the  value  acceptable  to the  unrelated  third  party in the
transaction  described in the preceding  paragraph,  whereby the Company  issued
30,000 shares of common stock to settle $20,000 of accrued liabilities.

                                 -- Page 50 --
<PAGE>

NOTE 13 - INCOME TAXES:

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


                                 12/31/00    12/31/99
                                 (Audited)   (Audited)
-------------------------------------------------------
Current tax expense ............   $   --     $   --

Deferred tax expense:
    Federal ....................     23,056    242,750
    State ......................      3,144     70,250
                                      -----     ------
                                   $ 26,200   $313,000
                                   ========   ========



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

                                 12/31/00    12/31/99
                                 (Audited)   (Audited)
-------------------------------------------------------
Deferred asset:
Net operating loss ............ $    --     $    --

Deferred liability:
Conversion of accrual to cash    (954,600)   (903,400)
                                  --------    --------

Net deferred liability ........ $(954,600)  $(903,400)
                                 =========   =========

NOTE 14 - COMMITMENTS AND CONTINGENCIES:

(a)  Operating leases:

For the year ended  December  31,  1998 and  through  April  1999,  the  Company
occupied  office space  provided by an officer of the  Company.  The Company has
recorded  rent  expense for this period at an  estimated  fair value of $500 per
month, with a corresponding credit to additional paid-in capital.

On April 22, 1999, the Company entered into a three-year lease for office space.
Rental commitments under said lease are as follows:

                2001    $39,452
                2002     13,373
                        -------
                        $52,825
                        =======



(b)  Consulting Agreements:

The Company has entered  into a  five-year  agreement  with a corporate  entity,
which owns 1,612,000  shares of the Company's  common stock,  for services to be
provided by an employee of this entity. This individual also serves as the Chief


                                 -- Page 51 --
<PAGE>

Operating  Officer of the Company,  primarily  responsible  for  identifying and
consummating  new  acquisitions.  Under the terms of the  consulting  agreement,
which  commenced  August 1, 1998 and continues to July 31, 2003, the monthly fee
is $15,000 through  December 31, 1998, with annual increases of not less than 5%
effective in January of each year.  This  agreement is renewable  annually  upon
expiration, at similar terms.

(c)  Employment Agreements:

The Company has entered into a five-year employment agreement with an individual
for his services as Chief Executive Officer.  The agreement  commenced August 1,
1998 and  continues  to July 31,  2003.  Under the terms of the  agreement,  the
monthly compensation is $15,500 through December 31, 1998, with annual increases
of not less than 5% effective in January of each year thereafter. The individual
has chosen to have such payments made to the corporation.

(d)  Operating Deficit Guarantees:

The  Company,  through its General  Partner  subsidiaries,  is obligated to make
loans to various  Partnerships  as necessary to fund  operating  expenses,  debt
service  payments,   reserve  and  escrow  accounts,  capital  improvements  and
maintenance  expenses  that  occur  during  certain  periods,  as defined in the
Partnership  agreements.  Such  loans  bear no  interest  and are  repayable  in
accordance with the provisions of the Partnership Agreements.

The  operating  deficit  guaranty of $150,000 in the  Dallas/Glen  Hills limited
partnership was released in November of 2000.

In the TVMJG 1996 - Putnam  Square  limited  partnership,  the  General  Partner
provided an operating  deficit  guaranty in an unlimited amount until break-even
operations, defined in the partnership agreement as the date following the first
three  consecutive  months in which cash revenue exceeds  operational  expenses.
Upon  breakeven,  which  occurred on September 1, 2000,  the  operating  deficit
guaranty is limited to $60,000.  The guaranty is to be released five years after
breakeven, or September 1, 2005.

In the Middlebury Elkhart limited  partnership,  the General Partner provided an
operating  deficit guaranty in an unlimited amount until break-even  operations,
defined in the  partnership  agreement as the date following any month for which
revenues equal or exceed operating obligations.  Upon breakeven,  which occurred
on March 1, 1999,  the  guaranty is limited to  $120,000.  The guaranty is to be
released three years after Rental Achievement has been made. (Rental Achievement
occurs after three months in which (1) the permanent  financing phase has begun,
(2) legal occupancy is secured for all units,  and (3) at least 90% of the units
are occupied.)

(e)  Legal Matters:

In January  2001,  subsequent  to the  balance  sheet  date,  a mortgage  broker
commenced  an action  against the Company  alleging  damages in the  approximate
amount of $250,000 in claims of breach of  contract,  fraud and related  claims.
Counsel to the Company has answered this  complaint  and the Company  intends to
defend itself vigorously against these allegations.

A shareholder has demanded that the Company repurchase, at a substantial profit,
certain  shares of the Company's  stock that she purchased  approximately  three
years ago. She has alleged, though not yet in formal pleadings, that because the
Company has repurchased the shareholdings of other shareholders, it is obligated
to treat her in the same manner.  The Company  believes this position is without
legal  merit.  The Company has brought an action  against this  shareholder  for
repayment of a promissory  note  executed in the  Company's  favor.  The Company
anticipates that, if the Company's action is not resolved,  the shareholder will
assert a claim of entitlement to the  re-purchase of her shares.  In that event,
the Company will defend itself vigorously.

                                 -- Page 52 --
<PAGE>




8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
--------------------------------------------------------------------------------

In December 1998, our Board of Directors determined that it would be in our best
interests to dismiss our independent accountant and auditors,  Rappaport, Steele
& Company,  P.C.,  which acted as our  independent  accountant and auditors with
respect to our financial  statements for the two fiscal years ended December 31,
1996 and 1997. Rappaport, Steele and Company, P.C. was dismissed on December 12,
1998. The replacement of Rappaport,  Steele & Company,  P.C. was recommended and
approved  by our Board of  Directors  and is not the result of any  disagreement
with Rappaport, Steele & Company, P.C. on any matter of accounting principles or
practice, financial statement disclosure or auditing scope or procedure.

During the two fiscal years 1996 and 1997, no report issued by Rappaport, Steele
& Company, P.C. contained any adverse opinion or a disclaimer of opinion, or was
qualified or modified as to uncertainty,  audit scope, or accounting principles.
During the two fiscal years 1996 and 1997, and subsequent periods,  there was no
disagreement  with  Rappaport,  Steele  &  Company,  P.C.  regarding  accounting
principles,  internal  controls or practices,  financial  statement  disclosure,
auditing scope, procedure or any other matter.

Homes For America has provided Rappaport,  Steele & Company, P.C. with a copy of
the  disclosure  made under  this Part II,  Item 3. The  accountant  has in turn
furnished a letter  addressed to the Commission  confirming  their review of and
agreement with the Company's  statements.  This letter has been filed as Exhibit
16 to the Company's registration statement.

In December 1998, our Board of Directors determined that it would be in our best
interests  to  retain  the  services  of Lazar  Levine & Felix,  LLP to  replace
Rappaport,  Steele & Company,  P.C. as our independent  accountant and auditors.
Lazar Levine & Felix, LLP was engaged on December 12, 1998. The firm has audited
our financial statements for fiscal years 1998, 1999 and 2000.

During the two fiscal  years prior to  December  31,  1998,  the Company did not
consult with Lazar,  Levine & Felix, LLP regarding the application of accounting
principles to a specific  completed or  contemplated  transaction or the type of
audit opinion that might be rendered on the Company's financial statements,  nor
was any written or oral advice  provided  to the Company  that was an  important
factor in  reaching a  decision  as to any  accounting,  auditing  or  financial
reporting  issue.  The Company did not consult the new accountant  regarding any
disagreement or event with the former accountant.

During the three fiscal  years 1998,  1999 and 2000,  no report  issued by Lazar
Levine & Felix, LLP contained any adverse opinion or a disclaimer of opinion, or
was  qualified  or  modified  as to  uncertainty,  audit  scope,  or  accounting
principles.  In  addition,  during  the two  fiscal  years  1998 and  1999,  and
subsequent  periods,  there were no disagreements with Lazar Levine & Felix, LLP
regarding accounting principles,  or practices,  financial statement disclosure,
or auditing  scope or  procedure  nor any dispute  between us and Lazar Levine &
Felix, LLP with respect to our status as a "going concern."

Homes For America has provided Lazar,  Levine,  & Felix,  LLP with a copy of the
disclosure made under this section.




                                 -- Page 53 --
<PAGE>


                                    PART III
================================================================================

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


9(a) Directors and Executive Officers, Promoters and Control Persons
--------------------------------------------------------------------

The following is information  concerning the directors and executive officers of
the Company.


NAME                        AGE     OFFICE
----------------------------------  ------------------------------------------
Robert A. MacFarlane        56      Chairman of the Board, President, and
                                    Chief Executive Officer
----------------------------------  ------------------------------------------
R. Karim Chowdhury          44      Director, Secretary/Treasurer and
                                    Chief Financial Officer
----------------------------------  ------------------------------------------
Robert M. Kohn              49      Director and Chief Operating Officer
----------------------------------  ------------------------------------------
Joel Heffron                62      Director
----------------------------------  ------------------------------------------
Daniel G. Hayes             42      Director
----------------------------------  ------------------------------------------


All directors hold office until the next annual meeting of shareholders or until
their successors are elected and qualify.  Officers are elected annually by, and
serve at the  discretion  of,  the Board of  Directors.  There  are no  familial
relationships between or among any of our officers or directors.

Robert A.  MacFarlane has served as the Company's  Chairman of the Board,  Chief
Executive  Officer and President since 1996.  From 1992 to 1996, Mr.  MacFarlane
was an independent  tax-exempt bond and tax credit consultant at FC Partners,  a
real  estate  company in New York.  From 1989 to 1991,  he was  Senior  Property
Acquisitions Officer of the Boutwell Company, a real estate company representing
a Rockefeller  Family Trust,  and receiving all of its funds from that Trust. In
this capacity, Mr. MacFarlane was responsible for the acquisition of residential
and  commercial  properties.  Mr.  MacFarlane was directly  responsible  for the
closing of more than one half-billion  dollars worth of real estate transactions
in Texas alone, two of which were turnaround,  value-added acquisitions totaling
$300 million.

R. Karim  Chowdhury  has been a director of the Company as well as the Company's
Chief Financial Officer since January 10, 2000. From 1997 to 2000, Mr. Chowdhury
was  Chief   Financial   Officer   for   Westbury   Transport,   Inc.,   a  real
estate/transportation  company.  Prior to that,  he  served  as Chief  Financial
Officer of the New York-based  real estate  company JRD  Management  Corporation
from 1986 to 1997.  Mr.  Chowdhury  is a member of the  Institute of Real Estate
Management,  and he holds an  M.B.A.  from  Indiana  University.  His  fields of
expertise include real estate investment, management and development,  strategic
planning, analysis and forecasting, and corporate financial management.

Robert  M. Kohn has been the  Chief  Operating  Officer  and a  director  of the
Company  since 1998 and became the  President  of Homes For America  Real Estate


                                 -- Page 54 --
<PAGE>

Services in 1999. From 1996 to present,  Mr. Kohn has also been the President of
International Business Realty & Consultants,  LLC ("IBRC"), a consulting company
and one of the Company's  shareholders.  Mr. Kohn performs  consulting  services
related to the purchase,  acquisition and management of the Company's properties
on  behalf of IBRC.  From  1979 to 1996,  he was the  President  of real  estate
companies Alfred Kohn Realty  Corporation and Schuyler Realty. In 1986, Mr. Kohn
became the  managing  partner of Kohn Belson  Associates,  managing in excess of
22,000  apartments.  Mr. Kohn has  orchestrated the financing and acquisition of
thousands of multi-family housing units,  converted in excess of $100 million of
rental  properties and warehouses into residential  lofts, and managed more than
22,000  apartments in the New York  metropolitan  area.  Mr. Kohn graduated from
Ohio University with a B.S. in Economics.

Daniel G. Hayes,  Esq.,  has served as Special  Counsel to the Company since its
original  organization and as a member of the Board of Directors since 1998. Mr.
Hayes is Of Counsel to Vanderpool,  Frostick & Nishanian,  P.C., a corporate and
real estate law firm in Manassas,  Virginia.  He has had his private practice in
corporate  governance,  commercial real estate,  and secured finance since 1990,
before  which he served as General  Counsel and  corporate  officer of the Rojac
Group,  Inc., a real estate  development  company in  Rockville,  Maryland,  and
before that of ETICAM Management  Company,  an environmental  management firm in
Alexandria,   Virginia.  He  received  his  Juris  Doctor  degree  from  Cornell
University  in 1982 and is  licensed  to  practice  in the  State  of  Illinois,
District of Columbia, and Commonwealth of Virginia.

Joel  Heffron,  Esq.,  has been a director of Homes For America  Holdings,  Inc.
since 1997.  Mr. Heffron has been President of Risk  Management  Corporation,  a
consulting  company  assisting  businesses in conversion and disposal of assets,
since 1994.  From 1987 to 1994,  he was  President of  Westminster  Equities,  a
company that arranged financing for equipment leasing, and from 1983 to 1987, he
was President of Whitney Stores, Inc., a merchandise store company. From 1966 to
1983,  Mr. Heffron was a partner in the law firm of Sohn,  Gross,  and Findlay &
Heffron  in New  York.  He  holds  a  Bachelor  of Laws  degree  from  New  York
University.

9(b) Committees of the Board of Directors
-----------------------------------------

The Board of Directors has two committees, Audit and Compensation.

Members of the Audit  Committee  are Daniel  Hayes and Joel  Heffron.  The Audit
Committee acts to: i) acquire a complete  understanding  of our audit functions;
ii) review  with  management  our  finances,  financial  condition  and  interim
financial  statements;  iii) review with our  independent  auditors the year-end
financial  statements;  and iv)  review  implementation,  with  the  independent
auditors and management, any action recommended by the independent auditors.

Members  of the  Compensation  Committee  are  Daniel  Hayes  and Joel  Heffron.
Compensation  Committee  functions  include  administration of the 1998 and 1999
Employee Stock Option Plans, the  Non-Executive  Director Stock Option Plan, the
2000 Non-Employee  Director Stock Option Plan, as well as negotiation and review
of all our employment agreements with our executive officers.


9(c) Meetings of the Board of Directors
---------------------------------------

During the fiscal year ended  December 31, 1999,  our Board of Directors  met on
two  occasions.  During the fiscal year ended  December 31,  2000,  our Board of
Directors met on three occasions.  No member of the Board of Directors  attended
less than 75% of the aggregate number of: i) the total number of meetings of the
Board of Directors or; ii) the total number of meetings  held by all  committees
of the Board of Directors.

                                 -- Page 55 --
<PAGE>


9(d) Compliance with Section 16(a) of the Exchange Act
------------------------------------------------------

During the fiscal  year ended  December  31,  2000 and prior  fiscal  years,  no
director,   executive  officer  or  beneficial  owner  completed  a  transaction
necessitating  the filing of reports  required by Section  16(a) of the Exchange
Act.


10.  EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------

10(a) Summary Compensation Table
--------------------------------

The  following  Table  provides  certain  information  concerning  all  Plan and
Non-Plan (as defined in Item 402 (a)(ii) of Regulation  S-B)  compensation  that
the Company awarded,  granted,  or paid during the years ended December 31, 2000
1999, and 1998 to each of the Company's executive officers.


              ANNUAL COMPENSATION AND LONG TERM COMPENSATION AWARDS
                      FOR FISCAL YEARS 2000, 1999 AND 1998


                                                  Other Annual     Long Term
Name/Principal                    Salary/Bonus    Compensation     Compensation
--------------------------------------------------------------------------------

Robert A. MacFarlane (1)
Chairman of the Board, President,
and Chief Executive Officer

Fiscal Year 1998 ...............     $   --        $ 156,000      $   --
Fiscal Year 1999 ...............     $ 186,000     $   --         $   --
Fiscal Year 2000 ...............     $ 210,000     $   --         $   --
--------------------------------------------------------------------------------

R. Karim Chowdhury (2)
Chief Financial Officer

Fiscal Year 1998 ...............     $   --        $   --         $   --
Fiscal Year 1999 ...............     $   --        $   --         $   --
Fiscal Year 2000 ...............     $ 110,288     $   --         $   --
--------------------------------------------------------------------------------

Robert M. Kohn (3)
Director and Chief Operating
Officer

Fiscal Year 1998.............        $   --        $ 277,500      $   --
Fiscal Year 1999 ...............     $   --        $ 410,000      $   --
Fiscal Year 2000 ...............     $   --        $ 312,500      $   --
--------------------------------------------------------------------------------

1.   During fiscal 1998, Mr. MacFarlane received consulting fees of $156,000.

2.   R. Karim  Chowdhury  commenced  employment  with the Company on January 10,
     2000.

3.   Robert M. Kohn's compensation  includes fees earned for consulting services
     and commissions  earned relating to the purchase and sale of  acquisitions.
     During  fiscal  1998,  Mr.  Kohn  received   commissions  of  $145,000  and
     consulting fees of $132,500,  totaling  $277,500.  During fiscal year 1999,
     Mr. Kohn received  commissions of $221,000 and consulting fees of $189,000,
     totaling $410,000.  During fiscal year 2000, Mr. Kohn received  commissions
     of 102,500 and consulting fees of $210,000,  totaling  $312,500.  (See Part
     III, Item 12: Certain Relationships and Related Transactions.)

                                 -- Page 56 --
<PAGE>


10(b) Stock Option Grants
-------------------------

     No stock options were granted  during the years ended December 31, 1999 and
2000.



10(c) Employment Agreements
---------------------------

In August 1998, the Company entered into a five-year  employment  agreement with
its Chief Executive Officer Mr.  MacFarlane,  providing for a base salary at the
rate of $186,000 per year for a period  covering  August 1998  through  December
1999.  Thereafter,  Mr.  MacFarlane's base salary will be determined annually by
the Board of Directors, with a minimum annual increase in base salary of 5%. The
contract provides for the  reimbursement of all reasonable  expenses incurred by
Mr. MacFarlane on our behalf. The contract is subject to termination provisions,
and  includes  a two  year  non-competition  provision.  Mr.  MacFarlane  (or an
affiliated  entity) is entitled to receive separate  compensation in the form of
consulting  and/or  broker fees for sales of Tax Credits in the execution of our
transactions.

This  employment  agreement  was restated at a meeting of the Board of Directors
held March 3, 2000. A new commencement  date of January 1, 2000 was established,
as  was  provision  for  additional  reimbursement  for  health  and  disability
insurance.


10(d) Consulting Agreements
---------------------------

The Company has entered into a five-year  agreement with International  Business
Realty and Consultants,  LLC ("IBRC") a shareholder of the Company, for services
to be provided by Mr. Robert M. Kohn. Mr. Kohn,  Chief  Operating  Officer and a
Director of the Company, is also an officer of IBRC and receives consulting fees
for  services on behalf of IBRC.  Under the terms of the  consulting  agreement,
which  commenced  August 1, 1998 and continues to July 31, 2003, the monthly fee
is $15,000 through  December 31, 1998, with annual increases of not less than 5%
effective in January of each year. The contract  provides for the  reimbursement
of all reasonable  expenses incurred by Mr. Kohn on our behalf.  The contract is
subject to  termination  provisions,  and  includes  a two year  non-competition
provision.  Mr. Kohn (or an affiliated  entity) is entitled to receive  separate
compensation relating to the purchase or sale of properties and tax credits.


10(e) Compensation of Directors
-------------------------------

Directors were not compensated for their services as such during the last fiscal
year.  In the future,  the  Directors  will receive  options to purchase  15,000
shares of our stock for each year of service  under the  Non-Executive  Director
Stock Option Plan. The Directors are  reimbursed for expenses  incurred in order
to attend meetings of the Board of Directors.


                                 -- Page 57 --
<PAGE>

10(f) Stock Option Plans
------------------------

10(f)(i) 1998 Employee Stock Option Plan
----------------------------------------

In September, 1998, the Company adopted the 1998 Employee Stock Option Plan (the
"1998 Plan"),  which provided for the grant of options to purchase up to 750,000
shares  of Common  Stock.  Under the  terms of the 1998  Plan,  options  granted
thereunder may be designated as options which qualify for incentive stock option
("ISO")  treatment  under  Section 422A of the Code,  or as options which do not
qualify ("Non ISO").

The 1998 Plan is administered by the  Compensation  Committee  designated by the
Board of Directors.  The Compensation  Committee has the discretion to determine
eligible  employees to whom, and the times and the price at which,  options will
be granted.  Whether such options shall be ISOs or Non ISOs,  the periods during
which each option shall be exercisable, and the number of shares subject to each
option shall be determined by the Committee.  The Board or Committee  shall have
full  authority to interpret the 1998 Plan, and to establish and amend rules and
regulations pertaining thereto.

Under the 1998 Plan, the exercise price of an option designated ISO shall not be
less than the fair  market  value of the Common  Stock on the date the option is
granted.  However,  in the  event  an  option  designated  ISO is  granted  to a
ten-percent stockholder (as defined in the 1998 Plan), such exercise price shall
be at least 110% of such fair market value.  Exercise  prices of Non ISO options
may be less than such fair market value.  The aggregate  value of shares subject
to options designated ISO and granted to a participant,  that become exercisable
in any calendar year shall not exceed $100,000.  "Fair market value" will be the
closing  NASDAQ bid price or, if our Common Stock is not quoted by NASDAQ,  will
be as reported by the National Quotation Bureau,  Inc., or a market maker of the
our Common Stock or, if the Common  Stock is not quoted by any of the above,  by
the Board of Directors acting in good faith.

The  Compensation  Committee  may,  at its sole  discretion,  grant  bonuses  or
authorize  loans to or guarantee  loans obtained by an optionee,  to enable such
optionee  to pay any taxes that may arise in  connection  with the  exercise  or
cancellation of an option.

Unless sooner terminated, the 1998 Plan will expire in 2008.


10(f)(ii) Non-Executive Director Stock Plan
-------------------------------------------

In September  1998, the Board of Directors  adopted the  Non-Executive  Director
Stock Plan (the "1998  Director  Plan").  The 1998  Director  Plan  provides for
issuance  of a maximum of 400,000  shares of Common  Stock upon the  exercise of
stock options  granted under the 1998 Director  Plan.  Options are granted until
April 2008,  to: i)  non-executive  directors as defined and; ii) members of any
advisory board we establish who are not full-time  employees of us or any of our
subsidiaries.  The 1998 Director Plan provides that each non-executive  director
will  automatically be granted an option to purchase 15,000 shares of our Common
Stock upon joining the Board of Directors, and on each September 1st thereafter,
provided  such  person has served as a  Director  for the 12 months  immediately
prior to such September 1st.  Similarly,  each eligible  director of an advisory
board will receive an option to purchase  10,000 shares of our Common Stock upon
joining the advisory board, and on each September 1st thereafter,  provided such
person has served as a director of the advisory board for the preceding 12 month
period.

                                 -- Page 58 --
<PAGE>

The exercise  price for options  granted  under the 1998  Director Plan shall be
100% of the fair  market  value of the  Common  Stock on the date of grant.  The
"fair market  value" will be the closing  NASDAQ bid price or, if the our Common
Stock is not quoted by NASDAQ,  the price as reported by the National  Quotation
Bureau,  Inc.,  or a market maker of our Common Stock or, if the Common Stock is
not quoted by any of the above, by the Board of Directors  acting in good faith.
Unless and until otherwise provided in the Stock Option Plan, the exercise price
of  options  granted  under the 1998  Director  Plan must be paid at the time of
exercise,  either in cash or by  delivery of shares of our Common  Stock,  or by
equivalent combination of both. The term of each option commences on the date it
is granted,  and unless terminated sooner as provided in the 1998 Director Plan,
expires  five  years  from  the  date  of  grant.  The  1998  Director  Plan  is
administered  by the  Compensation  Committee  of the  Board of  Directors.  The
Committee  has no  discretion  to  determine  which  non-executive  director  or
advisory board member will receive  options,  or the number of shares subject to
the option,  the term, or exercisability of the option.  However,  the Committee
will make all  determinations  of the  interpretation of the 1998 Director Plan.
Options  granted  under the 1998  Director  Plan are not qualified for incentive
stock option treatment.


10(f)(iii) 1999 Employee Stock Option Plan
------------------------------------------

In March,  2000,  we adopted  the 1999  Employee  Stock  Option  Plan (the "1999
Plan"), which provides for the grant of options to purchase up to 800,000 shares
of Common Stock.  Under the terms of the 1999 Plan,  options granted  thereunder
may be designated as options  which qualify for incentive  stock option  ("ISO")
treatment  under  Section 422A of the Code,  or as options  which do not qualify
("Non ISO").

The 1999 Plan is administered by the  Compensation  Committee  designated by the
Board of Directors.  The Compensation  Committee has the discretion to determine
eligible  employees to whom, and the times and the price at which,  options will
be granted.  Whether such options shall be ISOs or Non ISOs,  the periods during
which each option shall be exercisable, and the number of shares subject to each
option shall be determined by the Committee.  The Board or Committee  shall have
full  authority to interpret the 1999 Plan, and to establish and amend rules and
regulations pertaining thereto.

Under the 1999 Plan, the exercise price of an option designated ISO shall not be
less than the fair  market  value of the Common  Stock on the date the option is
granted.  However,  in the  event  an  option  designated  ISO is  granted  to a
ten-percent stockholder (as defined in the 1999 Plan), such exercise price shall
be at least 110% of such fair market value.  Exercise  prices of Non ISO options
may be less than such fair market value.  The aggregate  value of shares subject
to options designated ISO and granted to a participant,  that become exercisable
in any calendar year shall not exceed $100,000.  "Fair market value" will be the
closing  NASDAQ bid price or, if our Common Stock is not quoted by NASDAQ,  will
be as reported by the National Quotation Bureau,  Inc., or a market maker of the
our Common Stock or, if the Common  Stock is not quoted by any of the above,  by
the Board of Directors acting in good faith.

The  Compensation  Committee  may,  at its sole  discretion,  grant  bonuses  or
authorize  loans to or guarantee  loans obtained by an optionee,  to enable such
optionee  to pay any taxes that may arise in  connection  with the  exercise  or
cancellation of an option.

Unless sooner terminated, the 1999 Plan will expire in 2009.




                                 -- Page 59 --
<PAGE>

10(f)(iv) Non-Employee Director Stock Option Plan
-------------------------------------------------

In March 2000, the Board of Directors  adopted the  Non-Employee  Director Stock
Option Plan (the "2000  Director  Plan").  The 2000  Director  Plan provides for
issuance  of a maximum of 60,000  shares of Common  Stock upon the  exercise  of
stock options  granted under the 2000 Director  Plan.  Options are granted until
April 2009,  to: i)  non-employee  directors  as defined and; ii) members of any
advisory board we establish who are not full-time  employees of us or any of our
subsidiaries.  The 2000 Director Plan provides that each  non-employee  director
will  automatically be granted an option to purchase 15,000 shares of our Common
Stock upon joining the Board of Directors, and on each September 1st thereafter,
provided  such  person has served as a  Director  for the 12 months  immediately
prior to such September 1st.  Similarly,  each eligible  director of an advisory
board will receive an option to purchase  10,000 shares of our Common Stock upon
joining the advisory board, and on each September 1st thereafter,  provided such
person has served as a director of the advisory board for the preceding 12 month
period.

The exercise price for options granted under the 2000 Director Plan shall be not
less  than  100% of the fair  market  value of the  Common  Stock on the date of
grant.  The "fair market value" will be the closing  NASDAQ bid price or, if the
our Common Stock is not quoted by NASDAQ,  the price as reported by the National
Quotation Bureau,  Inc., or a market maker of our Common Stock or, if the Common
Stock is not quoted by any of the  above,  by the Board of  Directors  acting in
good faith.  Unless and until  otherwise  provided in the Stock Option Plan, the
exercise  price of options  granted under the 2000 Director Plan must be paid at
the time of  exercise,  either in cash or by  delivery  of shares of our  Common
Stock, or by equivalent  combination of both. The term of each option  commences
on the date it is granted,  and unless terminated sooner as provided in the 2000
Director Plan, expires five years from the date of grant. The 2000 Director Plan
is administered by the Compensation  Committee.  The Committee has no discretion
to determine which non-executive  director or advisory board member will receive
options,  or  the  number  of  shares  subject  to  the  option,  the  term,  or
exercisability   of  the  option.   However,   the   Committee   will  make  all
determinations of the  interpretation of the 2000 Director Plan. Options granted
under the 2000  Director  Plan are not  qualified  for  incentive  stock  option
treatment.




                                 -- Page 60 --
<PAGE>


11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------

The  following  table  sets  forth  certain  information   regarding  beneficial
ownership  of our Common  Stock as of March 31, 2001 by: (i) each  person/entity
who we know to own  beneficially  more than 5% of our outstanding  Common Stock;
(ii) each of our  directors  and  officers;  and (iii) all of our  directors and
officers  as a group.  As of March 31,  2001,  there were  10,109,131  shares of
Common Stock and no shares of Preferred Stock issued and outstanding.

                                                              COMMON STOCK
OWNER                                       SHARES OWNED      PERCENTAGE
--------------------------------------------------------------------------------
Robert MacFarlane (1)                       2,950,500            29.19%
Chairman of the Board, President, and
Chief Executive Officer
One Odell Plaza
Yonkers, New York 10701

Robert Kohn (2)                                   0               0.00%
Director and Chief Operating Officer
One Odell Plaza
Yonkers, New York 10701

R. Karim Chowdhury                                0               0.00%
Director, Secretary/Treasurer and
Chief Financial Officer
One Odell Plaza
Yonkers, NY 10701

Joel Heffron                                200,000               1.98%
Director
c/o Risk Management Corp.
P.O. Box 3685
Beverly Hills, CA 90212

Daniel G. Hayes, Esq.                             0               0.00%
Director
9324 West St., Suite 101
Manassas, VA 20110

83 Boutwell Trust (1)                     1,988,000              19.67%
c/o Daniel G. Hayes, Esq.
9324 West St., Suite 101
Manassas, VA 20110

International Business and Realty
Consultants, LLC (2)                      2,374,500              23.49%
c/o Daniel G. Hayes, Esq.
9324 West St., Suite 101
Manassas, VA   20110

Robert Pozner
454 Stevens Avenue
Ridgewood, NJ 07450                         650,000               6.43%
--------------------------------------------------------------------------------
All Directors and Executive
Officers as a Group                         5,525,000              54.66%
(5 persons)

(1)  Includes  1,988,000  shares of common stock held by 83 Boutwell  Trust,  an
     irrevocable trust in which Robert  MacFarlane,  the Chief Executive Officer
     of Homes for America  Holdings,  Inc., has voting control.  Mr.  MacFarlane
     disclaims  any  pecuniary  or  economic  interest  in the shares held by 83
     Boutwell Trust.

(2)  IBRC is solely owned by Ms.  Christine Kohn, the wife of Mr. Robert Kohn, a
     Director  and the Chief  Operating  Officer of the Company.  IBRC  performs
     services  for the Company and owns all of the  indicated  shares.  Mr. Kohn
     disclaims beneficial interest in the shares held by IBRC.

                                 -- Page 60 --
<PAGE>

12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------

The  Company  engages one of its  shareholders,  International  Business  Realty
Consultants,  LLC ("IBRC") to perform various consulting services related to the
purchase,  acquisition  and  management of our  properties.  Mr. Robert M. Kohn,
Chief Operating Officer and a Director of Homes For America  Holdings,  Inc., is
an officer of IBRC and receives  consulting fees for services on behalf of IBRC,
including  real estate  acquisition  and  development  services,  review and due
diligence  investigation  of prospective  properties,  and the  negotiation  and
representation  of the Company in its acquisitions and the related  applications
for  financing,   including   equity  and  tax  credit  sales  related  to  such
acquisitions.  In addition to  consulting  fees,  Mr. Kohn may receive  separate
compensation  as brokerage fees upon the purchase or sale of acquisitions or tax
credits.

During fiscal 1998,  Mr. Kohn received  commissions  of $145,000 and  consulting
fees of $132,500,  totaling $277,500. During fiscal year 1999, Mr. Kohn received
commissions  of $221,000 and  consulting  fees of $189,000,  totaling  $410,000.
During fiscal year 2000, Mr. Kohn received commissions of 102,500 and consulting
fees of $210,000,  totaling $312,500.  Other than his fees and commissions,  Mr.
Kohn has no interest in any of the above-described transactions.


13.  EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------

13(a) Exhibits

================================================================================

1.   INDEX TO EXHIBITS
--------------------------------------------------------------------------------

3.1*
    Articles of Incorporation

3.2**
    Amended and Restated By-Laws

10.1*
    Amended and Restated Agreement of Limited Partnership of Dallas/Glen Hills,
    L.P dated as of March 27, 1997.

10.2*
    Capital Note dated March 27, 1997 of Related Corporate partners V, L.P.

10.3*
    Promissory Note dated March 21, 1997 of Glen Hills Homes for America, Inc.

10.4*
    Promissory  Note dated  February 8, 1996 for a loan to  Dallas/Glen  Hills,
    L.P. from Hanover Capital Mortgage Corporation.

10.5*
    Dallas/Glen  Hills, L.P. First Amendment to Amended and Restated  Agreement
    of Limited Partnership.

10.6*
    First Amendment to TVMJG 1996 - Putnam Square Limited Partnership Second
    Amended and Restated Agreement of Limited Partnership.

                                 -- Page 61 --
<PAGE>

10.6.1*
    First Amendment to Certification and Agreement dated September 29, 1997.

10.6.2*
    First  Amendment to Partnership  Administration  Services  Agreement  dated
    September 29, 1997.

10.6.3*
    Promissory Note dated April 26, 1996 between TVMJG 1996 - Putnam Square
    Limited Partnership and Donald Snyder.

10.6.4*
    First Amendment to Commercial Promissory Note between TVMJG 1996 - Putnam
    Square Limited Partnership and Joseph Gall.

10.7*
    Agreement of Purchase and Sale dated March 28, 1997 between
    Prairie-Middlebury Associates and the Company.

10.7.1*
    Assignment of Agreement of Purchase and Sale dated July 24, 1997, amending
    an Agreement of Purchase and Sale dated March 28, 1997, between
    Prairie-Middlebury Associates and the Company.

10.7.2*
    Amended  and  Restated  Agreement  of  Limited  Partnership  of  Middlebury
    Elkhart, L.P. dated December 1, 1998.

10.7.3***
    Amendment to Amended  and  Restated  Agreement  of  Limited  Partnership
    of Middlebury Elkhart, L.P. dated December 15, 2000.

10.8*
    Agreement of Purchase and Sale by and between  BRE-N,  Inc. and the Company
    dated July 13, 1998.

10.9*
    Contract of Sale dated  November 2, 1998 between Legato  Investments,  Inc.
    and the Company.

10.9.1*
    Assignment   of  Contract   of  Sale  dated   December   1998   between
    Arlington/Homes For America, Inc. and the Company.

10.10*
    Agreement of Purchase and Sale by and between the Company and William C.
    Mannix, DBA Mannix, Inc.

10.11*
    Property  Purchase  Agreement  dated  March 24,  1999  between  Lake's Edge
    Partners, L.P. and Lakes Edge-Homes Holdings, Inc.

10.12*
    Promissory Note dated July 29, 1998 between the Company and William
    Kaplovitz, Jr.

10.13*
    Consulting Agreement dated August 1, 1998 between the Company and
    International Business & Realty Consultants, L.L.C.

                                 -- Page 62 --
<PAGE>

10.14*
    Employment Agreement dated August 1, 1998 between the Company and Mr. Robert
    A. MacFarlane.

10.15*
    Promissory Note dated June 23, 1999 between the Company and William
    Marovitz.

10.16*
    Promissory Note dated June 28, 1999 between the Company and William
    Kaplovitz.

10.17*
    Promissory Note dated March 3, 1999 between the Company and Actrade Capital,
    Inc.

10.18*
    Joint Venture Agreement between the Company and MasterBuilt, Inc.

10.19*
    Convertible Promissory Note.

10.20*
     Purchase  and Sale  Agreement  between  the  Company  and  Villa  Americana
     Associates, Ltd., dated September 23, 1999

10.21*
     Assignment  and  Assumption  Agreement  between the  Company  and  Parkside
     Associates, Inc. (et. al.), dated October 26, 1999.

10.22**
    Agreement of Purchase and Sale between the Company and Sherwood Glen Willows
    Apartments Real Estate, LP.

10.23**
    Private Placement Memorandum dated December 9, 1999.

10.24**
    Agreement Between the Company and Investors dated June 30, 2000.

10.25**
    Agreement of Purchase and Sale Between the Company and Amherst Gardens
    Associates dated October 15, 2000.

10.26***
    Agreement of Purchase and Sale Between the Company and Lakeview Investment
    Partnership dated November 15, 2000.

10.27***
    Agreement of Purchase and Sale Between the Company and Okeechobee
    Investment, LLC dated November 15, 2000.

10.28***
    Agreement of Purchase and Sale Between the Company and Seven Oaks Apartments
    dated December 14, 2000.

10.29***
    Agreement of Purchase and Sale Between the Company and Hunt/Hill Partnership
    dated December 15, 2000.

                                 -- Page 63 --
<PAGE>

10.29.1****
    Amendment of Agreement of Purchase and Sale Between the Company and
    Hunt/Hill Partnership dated March 26, 2001

10.29.2****
    Second Amendment of Agreement of Purchase and Sale Between the Company and
    Hunt/Hill Partnership dated June 4, 2001

10.30*****
    Agreement of Purchase and Sale Between the Company and Frontier Investments,
    LLC dated August 15, 2001

10.30.1*****
    Amendment of Agreement of Purchase and Sale Between the Company and Frontier
    Investments, LLC dated December 12, 2001

10.31******
    Agreement to Invest Between the Company and St. Charles Townhomes Partners,
    L.P. dated November 30, 2001

10.31.1******
    Amended and Restated Agreement of Limited Partnership Between the Company
    and St. Charles Townhomes Partners, L.P. dated December 1, 2001

10.32*******
     Yonkers Land Disposition and Development Agreement dated December 21, 2001

16***
   Letter on Change in Certifying Accountant dated February 26, 2001

16.1*******
   Letter on Change in Certifying Accountant dated March 5, 2002

21*******
    List of Subsidiaries.

----------
*       Previously filed as an exhibit to Amendment No. 1 to Form 10-SB.
**      Previously filed as an exhibit to Amendment No. 2 to Form 10-SB.
***     Previously filed as an exhibit to Amendment No. 3 to Form 10-SB.
****    Previously filed as an exhibit to Amendment No. 4 to Form 10-SB.
*****   Previously filed as an exhibit to Amendment No. 5 to Form 10-SB.
******  Previously filed as an exhibit to Amendment No. 6 to Form 10-SB.
******* Previously filed as an exhibit to Amendment No. 7 to Form 10-SB.



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

No reports on Form 8-K were filed during fiscal year 2000.


                                 -- Page 64 --
<PAGE>

================================================================================
SIGNATURE PAGE
================================================================================

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused  this  registration   statement  to  be  signed  on  its  behalf  by  the
undersigned, thereunto duly authorized.



                    Homes For America Holdings, Inc.
                    --------------------------------
                    (Registrant)


                    By:    /s/ Robert A. MacFarlane
                    --------------------------------
                    Name:  Robert A. MacFarlane
                    Title: President


                    July 15, 2002
                    --------------------------------
                    Dated




                                 -- Page 65 --