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

                             FORM 10-KSB AMENDMENT 1
                            ------------------------

 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                           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 [X] No [ ]

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 most recent fiscal year were $9,854,350.

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, 2002,  there were
8,310,031 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 ................................6
     d.   Government Regulations .......................................8
     e.   Competition ..................................................8
     f.   Employees ....................................................9
     g.   New Business Ventures ........................................9
     h.   Glossary of Terms ............................................9

2.   PROPERTIES ........................................................10

     a.   Properties, Offices And Facilities ...........................10
     b.   Current Operations ...........................................11
          i.   Willow Pond .............................................11
          ii.  Putnam Square ...........................................13
          iii. Prairie Village .........................................14
          iv.  Lake's Edge .............................................15
          v.   Country Lake ............................................17
          vi.  St. Charles Townhomes....................................19
          vii. Beau Rivage .............................................21
     c.   Proposed Acquisitions Under Contract .........................21
          i.  Yonkers Station Plaza.....................................21
     d.   Discontinued Operations/Sale of Assets........................22

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...........23

     a.   Market Price of, and Dividends on, the Registrant's
          Common Equity and Other Shareholder Matters ..................23
     b.   Recent Sales of Unregistered Securities ......................23

6.   MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
     AND RESULTS OF OPERATIONS .........................................24

     a.   Overview .....................................................24
     b.   Results of Operations  for the Twelve  Months Ended
          December 31, 2001 Compared to December 31, 2000 ..............25
          i.   Revenues ................................................25
          ii.  Expenses ................................................26
          iii. Liquidity and Capital Resources .........................27


<PAGE>

7.   CONSOLIDATED FINANCIAL  STATEMENTS FOR THE COMPANY
     FOR THE YEARS  ENDED DECEMBER 31, 2001 AND 2000 (AUDITED) .........29

     a.   Independent Auditor's Report .................................29
     b.   Consolidated Financial Statements ............................30
          i.   Balance Sheets ..........................................32
          ii.  Statements of Operations ................................37
          iii. Statements of Cash Flows ................................33
          iv.  Statement of Changes in Shareholders' Equity ............34
     c.   Notes to Financial Statements ................................45

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.............55

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

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

11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
     AND MANAGEMENT ....................................................59

12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ....................60

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/construct and manage
residential and multi-use properties throughout the United States. The Company's
primary objective is to identify and purchase undervalued  properties,  which it
renovates/constructs, operates and manages as Affordable Housing and Market Rate
residential  and mixed use  properties.  These  properties  are  purchased  with
traditional   financing   arrangements   as  well  as   through  a  variety   of
government-sponsored  financing arrangements available for properties qualifying
as Affordable  Housing  and/or  located in designated  redevelopment  areas.  In
addition to the net rental income derived from its portfolio of properties,  the
Company  earns a  portion  of  revenues  and  profits  from  transactional  fees
associated  with  the  acquisition,  financing,  rehabilitation,   construction,
operation and possible sale of its acquisitions.

The Company's operations commenced in April 1996. As of the date of this filing,
the Company's  portfolio  consists of six affordable  housing properties and one
market rate housing property.  The six affordable  housing properties are Willow
Pond (Dallas, Texas), Putnam Square (Bridgeport,  Connecticut),  Prairie Village
(Elkhart, Indiana), Lake's Edge (Miami, Florida), Country Lake (West Palm Beach,
Florida) and St.  Charles  Townhomes,  a recently  acquired 252 unit property in
Dallas, Texas. The market rate property,  Beau Rivage (formerly "Amalfi"),  is a
recently acquired 2.83 acre parcel of undeveloped  non-operating waterfront land
in Fort Myers,  Florida on which the Company  plans to construct 118 Market Rate
units.  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.

In  addition,  the Company has entered  into a purchase  and sale  agreement  to
acquire  the  Yonkers   Station   Plaza,   a  .36  acre  parcel  of  undeveloped
non-operating land in Yonkers,  New York on which the Company plans to construct
a 70,817 square foot market rate office  building.  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.

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,  properties  that can be purchased at a
discount.

In particular,  the Company seeks properties located in designated redevelopment
areas and/or  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.

Upon  acquisition,  the Company seeks to enhance each  property's  value through
rehabilitation/construction    and    repositioning.    Rehabilitation    and/or
construction  is the  mechanism  through  which  repositioning  is achieved.  By
rehabilitating and/or constructing the properties the Company acquires, i.e., by
improving the  properties  structurally,  the Company is able to reposition  the


                                   - Page 1 -
<PAGE>

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 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, the acquisition
of properties located in designated  redevelopment areas may be financed in part
with development  grants and other subsidies.  City, state and local governments
may designate areas within their jurisdiction that are in need of redevelopment/
rehabilitation  and  and/or  economic  development.  Once  so  designated,  most
redevelopment  authorities seek to (1) revitalize  economically distressed areas
by stimulating private investment;  (2) encourage businesses to locate, start-up
and/or expand in targeted areas; (3) provide jobs, especially for unemployed and
publicly assisted  individuals,  and; (4) reduce poverty,  unemployment,  public
assistance and blighted conditions in the areas.

Specific  geographic  areas are  designated  "redevelopment  areas" if they meet
objective  criteria  established by applicable city, state or federal  statutes.
For example,  under the New York State Empire Zone program,  redevelopment areas
cannot  exceed  two  contiguous   square  miles  and  must  meet  the  following
eligibility requirements:

1.   a poverty rate of at least 20%;
2.   an unemployment rate of at least 1.25 times the statewide average;
3.   a public assistance rate of 14% or greater;
4.   at least 25% of the land area vacant, abandoned, or otherwise available for
     commercial or industrial development.

Federal,  state and local  governments carry out the redevelopment of designated
areas through various government programs,  including, for example, low interest
loans,  grants  and other  subsidies.  The  Company  files an  application  on a
prescribed  form,  which usually  includes  identification  of the applicant,  a
description of the business,  employment  information,  and a description of the
proposed  investment.

Upon completion of the application process, the Company enters into negotiations
with the government  entity to execute a development  agreement and to determine
what  subsidies  will be available.  For example,  in December 2001, the Company
negotiated a Land  Disposition and Development  Agreement (LDDA  Agreement) with
the City of Yonkers,  New York  whereby  the  Company  was awarded a  $1,000,000
Economic Development Initiative Grant ("EDI Grant") from the City for use in the
development  of the  Station  Plaza  office  building.  (Please see Part I, Item
2(c)(i) Yonkers Station Plaza for further detail.)

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


                                   - Page 2 -
<PAGE>

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  approximately 29% of
the portfolio)  were acquired with Bonds in place.  The Company may also acquire
properties  with existing Tax Credits in place.  Willow Pond,  Putnam Square and
St. Charles  Townhomes  (representing  approximately  43% 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 current portfolio
(representing  14% 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.


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  29% 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 the date of this filing,  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 14%
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


                                   - Page 3 -
<PAGE>

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.


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,  Putnam  Square and St.  Charles
Townhomes  (representing  43% 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  current
portfolio  (representing 14%) 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
Directors for  consideration.  The Board of Directors  awards tax credits at its


                                   - Page 4 -
<PAGE>

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,  Prairie Village and St. Charles Townhomes),  all are owned by a limited
partnership. (The remaining three properties in the Company's portfolio, Country
Lake,  Lake's Edge and Beau Rivage,  are 100% directly owned by the Company.) In
all the  partnerships,  the 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,


                                   - Page 5 -
<PAGE>

since the limited partner  considers  these interests  secondary to those of the
Tax Credits and the losses,  the limited partner is typically  allocated only 0%
to 30% of the operating  cash flow and between 0% 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
70-100%  interest in the cash flow and a 75-100%  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 Company
classifies transaction fees as "Development Fees, Subsidies and Other Income" in
its  financial  statements.  (Please  see Part II,  Item 7, Note 17 and 18.) 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,  Lake's Edge
and Beau Rivage),  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
grants and subsidies from local, state or federal government entities related to
developing  a  project  in  a  designated   redevelopment   area.  Also  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.

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   Grants/Subsidies   Depends on negotiations with government
                                        entity and project cost

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

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



                                   - Page 6 -
<PAGE>

Where the property is not 100% owned by the Company,  but rather by a tax credit
limited partnership (namely Willow Pond, Putnam Square,  Prairie Village and St.
Charles Townhomes),  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 grants and  subsidies
from local, state or federal government entities related to developing a project
in a  designated  redevelopment  area.  Also 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.


           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  Grants/Subsidies  Depends on negotiations with government
                                      entity and project cost

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


                                   - Page 7 -
<PAGE>

                                     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
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  currently  owned  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


                                   - Page 8 -
<PAGE>

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
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. Currently, 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 9 -
<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.



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


                                  - Page 10 -
<PAGE>

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

At St. Charles:      3969 Altoona Drive
                     Dallas, Texas 75233


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

The Company (through its wholly owned subsidiaries)  currently owns and directly
manages  all  seven  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
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:

                                  - Page 11 -
<PAGE>


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. The property is currently 95% 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
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:                        2001    2000    1999    1998    1997
                                        ----------------------------------------
                                        97%     96%     96%     95%     91%


Tenants occupying 10% or more:          None
Nature of tenant:                       Residential


                                  - Page 12 -
<PAGE>

Principal Business:                     Multi-family, residential rental
Principal Provisions of leases:         12 month residential lease-non-renewable

Effective Annual Rental per Unit:       2001    2000     1999    1998     1997
                                        ----------------------------------------
     Efficiency                         $4,812  $3,428  $3,426   $3,244  $3,049
     1 Bedroom                           6,024   6,001   5,995    5,677   5,336
     2 Bedroom                           8,736   7,714   7,709    7,299   6,861
     3 Bedroom                          10,800   9,772   9,764    9,245   8,690

Lease Expirations
Tenants whose leases will expire:       All leases expire in 12 months
Area in square feet covered by
such leases:                            278,024
Annual rental represented by such
leases:                                 $2,611,452
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(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:

                                  - Page 13 -
<PAGE>


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
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. Current occupancy is 94%.


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


                                  - Page 14 -
<PAGE>

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:


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. Current occupancy is 99%.


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.  Current occupancy
is 99%.

In December of 2001, Allegiance Capital Partners,  LLC ("Mezzanine Lender") made
a mezzanine  loan (the "Lake's Edge Mezzanine  Loan") to MD-BI,  LLC, a Delaware
limited liability company (the "Mezzanine  Borrower") in the original  principal
amount of  $4,150,000  at an interest  rate of 12.51% as evidenced by a ten year
note with a 25 year amortization schedule. Mezzanine Borrower is wholly owned by
Homes for America  Holdings,  Inc. The Lake's Edge  Mezzanine Loan is secured in
part by a  hypothecation  of 100% of the limited  partnership  interest of Lakes
Edge Homes Holdings,  Inc. in Lakes Edge Partners, L.P. (51% limited partnership


                                  - Page 15 -
<PAGE>

interest), together with the right to receive distributions with respect to 100%
of the general partnership interests owned by Lakes Edge Homes Holdings, Inc. in
Lakes Edge Partners,  L.P. Additionally,  the Lake's Edge Mezzanine Loan is also
secured by joint and several  guarantees as described herein.  Homes For America
Holdings,  Inc. executed a guaranty for the full amount of the note. Robert Kohn
(Director  and Chief  Operating  Officer of Homes For America  Holdings,  Inc.),
Robert  MacFarlane  (Director and Chief  Executive  Officer of Homes For America
Holdings,  Inc.) and Emilia  Nuccio,  (the wife of Robert  MacFarlane)  executed
limited non-recourse (with carve-out  exceptions)  guarantees containing certain
"springing"  provisions.  The individual  limited  guarantees spring into effect
under  certain  circumstances  including  an event of  bankruptcy  of any of the
guarantors  or the  borrowing  entities,  or in the event of a default under the
Lake's Edge Mezzanine Loan documents  wherein the guarantors shall be liable for
the full amount of the Lake's Edge Mezzanine Loan if the guarantors obstruct the
Mezzanine  Lender  in the  enforcement  of its  rights  under  the  Lake's  Edge
Mezzanine Loan documents and the collateral. In consideration for the individual
guarantors  executing  their  guarantees,  the individual  guarantors  have been
assigned an interest in Willow Pond and Putnam  Square  (limited to the original
principal  balance of the loan plus  interest)  until such time that the note is
paid in full. In addition, Robert Kohn will earn a loan enhancement fee of 1% of
the loan amount per year, and Robert MacFarlane and Emilia Nuccio will each earn
an enhancement fee of .5% of the loan amount per year.

Concurrently,  Mezzanine  Lender  made a separate  mezzanine  loan to  Mezzanine
Borrower in the original  principal  amount of  $1,000,000  (the  "Country  Lake
Mezzanine  Loan") (see Part  I(g)(v)).  The Lake's Edge  Mezzanine  Loan and the
Country Lake Mezzanine Loan are  cross-collateralized  and cross-defaulted,  and
both contain certain prepayment restrictions.


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:                       $14,850,000         $1,321,815
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:                Property is stabilized.  No major
                                        renovation is planned.
Estimated Cost:                         N/A
Method of Financing:                    N/A

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

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

Occupancy Rates:                        2001    2000    1999    1998    1997
                                        ----------------------------------------
                                        97%     95%     90%     87%     85%

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



                                  - Page 16 -
<PAGE>

Effective Annual Rental per Unit:       2001    2000    1999    1998    1997
                                        ----------------------------------------
     1 Bedroom                          $8,295  $7,509  $6,721  $6,049  $5,565
     2 Bedroom                           8,988   9,386   8,401   7,561   6,956
     3 Bedroom                          10,505  11,263  10,082   9,073   8,349

Lease Expirations
Tenants whose leases will expire:       All leases expire in 12 months
Area in square feet covered by
such leases:                            384,000
Annual rental represented by such
leases:                                 3,455,460
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(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.  In June of 2001, the first and second  mortgages on the Country Lake
property were refinanced. The first mortgage for $6,255,000 was refinanced at an
interest  rate of 5.89% on a 30-year note with a 30-year  amortization  schedule
and a maturity in 2031. The second  mortgage for $2,540,000 was refinanced at an
interest  rate of 7.45% on a 10-year note with a 30-year  amortization  schedule
and a maturity in 2011. Current occupancy is 98%

In December of 2001, Allegiance Capital Partners,  LLC ("Mezzanine Lender") made
a mezzanine loan (the "Country Lake Mezzanine  Loan") to MD-BI,  LLC, a Delaware
limited liability company (the "Mezzanine  Borrower") in the original  principal
amount of  $1,000,000  at an interest  rate of 12.51% as evidenced by a ten year
note with a 25 year amortization schedule. Mezzanine Borrower is wholly owned by
Homes for America  Holdings,  Inc. The Country Lake Mezzanine Loan is secured in
part by a hypothecation  of 490 shares of the common stock comprising 49% of the
existing  common  stock  of  Country  Lake  Homes  Holdings,   Inc.,  a  Florida
corporation,  together with the right to receive all dividends,  cash securities
or other  distributions  with  respect  to another  510  shares of common  stock
comprising 51% of the existing common stock of Country Lake Homes Holdings, Inc.
owned by Homes  for  America  Holdings,  Inc.  Additionally,  the  Country  Lake
Mezzanine  Loan is also  secured by joint and several  guarantees  as  described


                                  - Page 17 -
<PAGE>

herein. Homes For America Holdings, Inc. executed a guaranty for the full amount
of the note.  Robert Kohn  (Director  and Chief  Operating  Officer of Homes For
America Holdings, Inc.), Robert MacFarlane (Director and Chief Executive Officer
of Homes For  America  Holdings,  Inc.) and Emilia  Nuccio,  (the wife of Robert
MacFarlane) executed limited non-recourse (with carve-out exceptions) guarantees
containing  certain  "springing"  provisions.  The individual limited guarantees
spring into effect under certain circumstances  including an event of bankruptcy
of any of the guarantors or the borrowing entities, or in the event of a default
under the Country Lake Mezzanine Loan documents  wherein the guarantors shall be
liable for the full amount of the Country Lake  Mezzanine Loan if the guarantors
obstruct  Mezzanine  Lender in the  enforcement  of its rights under the Country
Lake Mezzanine  Loan  documents and the  collateral.  In  consideration  for the
individual guarantors executing their guarantees, the individual guarantors have
been  assigned  an interest  in Willow  Pond and Putnam  Square  (limited to the
original  principal  balance of the loan plus interest) until such time that the
note is paid in full. In addition,  Robert Kohn will earn a loan enhancement fee
of 1% of the loan amount per year, and Robert  MacFarlane and Emilia Nuccio will
each earn an enhancement fee of .5% of the loan amount per year.

Concurrently,  Mezzanine  Lender  made and funded a separate  mezzanine  loan to
Mezzanine  Borrower in the original  principal  amount of $4,150,000 (the "Lakes
Edge Mezzanine  Loan") (see Part I(g)(iv)).  The Country Lake Mezzanine Loan and
the Lakes Edge Mezzanine Loan are cross-collateralized and cross-defaulted,  and
both contain certain prepayment restrictions.

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
Term:                                   30 years      10 years
Principal Amount:                       $6,255,000    $3,775,000
Interest:                               5.89%         7.45%
Amortization Provisions:                Yes           Yes
Prepayment Provisions:                  No            No
Maturity Date:                          2031          2011
Balance due at Maturity                 $6,255,000    $2,540,000

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 above average for area

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

Occupancy Rates:                        2001    2000    1999    1998    1997
                                        ----------------------------------------
                                        97%      95%     94%     91%     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:       2001    2000    1999    1998    1997
                                        ----------------------------------------
     1 Bedroom                          $8,298  $7,318  $6,741  $6,134  $5,582
     2 Bedroom                           9,240   9,504   8,755   7,967   7,250
     3 Bedroom                          11,196  10,397   9,577   8,715   7,930




                                  - Page 18 -
<PAGE>

Lease Expirations
Tenants whose leases will expire:       All leases expire in 12 months
Area in square feet covered by
such leases:                            193,775
Annual rental represented by such
leases:                                 $1,730,064
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(b)(vi) St. Charles Townhomes
------------------------------

St. Charles Homes for America,  Inc., a wholly-owned  subsidiary of the Company,
was  incorporated  on  November  30,  2001 in the state of Texas to serve as the
general  partner  of St.  Charles  Townhomes  Partners,  L.P.,  a Texas  Limited
Partnership.  St. Charles Townhomes Partners, L.P. was organized on July 1, 1988
in the state of Texas for the purpose of acquiring, developing and operating St.
Charles  Townhomes,  a 252-unit  Affordable Housing apartment complex located in
Dallas, Texas.

On November 30, 2001, St. Charles Homes for America,  Inc.  acquired the general
partnership interest of St. Charles Townhomes Partners, L.P. and, pursuant to an
Agreement to Invest,  invested  $400,000 in the  Partnership for its partnership
interest rights and an additional $100,000 for certain operating expenses.

Since the limited partner's  primary  financial  motivation for participating in
the limited  partnership  was the  benefits it would  derive from the Low Income
Housing Tax Credits,  the limited  partner has retained  100% of the tax credits
and 100% of the profits and losses of the  partnership.  St.  Charles  Homes for
America,  Inc.,  the  general  partner  of the  partnership,  owns an  aggregate
interest of 100% of the cash available from operations and an aggregate interest
of 100% in the  cash  available  from  the  sale of the  partnership's  asset or
refinancing  of  its  debt.  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 St. Charles Townhomes Partners, L.P. as a wholly-owned subsidiary.

The following  table sets forth the interests of the  Company's  subsidiary,  as
General Partner,  and the Limited Partner in the St. Charles  Townhomes  limited
partnership:


ST. CHARLES TOWNHOMES            General Partner         Limited Partner
--------------------------------------------------------------------------------
Profits and Losses                   0.0%                   100.0%
Income/Loss Allocation               0.0%                   100.0%
Tax Credits, Profits & Losses        0.0%                   100.0%
Tax Credit Allocation                0.0%                   100.0%
Cash Flow                            100.0%                   0.0%
Residual Value                       100.0%                   0.0%



St. Charles Tax Credit          GP          GP          LP       LP
Allocation                      %         Amount        %       Amount
--------------------------------------------------------------------------------
$  1,229,353                    0.0%     $ 0        100.0%   $1,229,353

                                  - Page 19 -
<PAGE>


After acquiring the property in December of 2001, the Company began an extensive
$1,600,000  rehabilitation  project.  Although no  assurance  can be given,  the
Company expects this property to stabilize within 24 months.  Current  occupancy
is 60%.


ADDITIONAL INFORMATION:

Location:                               3969 Altoona Drive, Dallas, Texas 75233
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:                                   5 Years
Principal Amount:                       $5,000,000
Interest:                               8.5%
Amortization Provisions:                Yes
Prepayment Provisions:                  Yes
Maturity Date:                          June 12, 2003
Balance due at Maturity                 $4,356,762

Terms of any lease:                     None
Options to sell:                        None

Renovations Description:                Property is not yet stabilized.  A major
                                        renovation is currently underway.
Estimated Cost:                         N/A
Method of Financing:                    N/A

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

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

Occupancy Rates:                        2001    2000    1999    1998    1997
                                        ----------------------------------------
                                        60%     71%      74%    79%      80%


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:       2001     2000      1999    1998    1997
                                        ----------------------------------------
     2 Bedroom                          $8,208   $8,208   $7,644  $7,500  $6,936
     3 Bedroom                           9,252    9,252    8,616   8,292   7,812

Lease Expirations
Tenants whose leases will expire:       All leases expire in 12 months
Area in square feet covered by
such leases:                            311,844
Annual rental represented by such
leases:                                 $2,337,552

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

                                  - Page 20 -
<PAGE>

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


2(b)(vi) Beau Rivage
--------------------

On February  19, 2002,  the Company  (though its wholly  owned  subsidiary  Beau
Rivage-Homes for America, LLC) purchased Beau Rivage (formerly "Amalfi"), a 2.83
acre parcel of undeveloped  non-operating waterfront land in Fort Myers, Florida
for $1,320,000.  Beau-Rivage-Homes for America, LLC was incorporated on December
12, 2001 in the state of Florida to  construct,  own and operate 115 Market Rate
units on the property.

Concurrently with the closing of the property, the Company executed a $1,750,000
loan  agreement  with a  commercial  lender to finance  the  purchase.  The note
matures on May 19,  2003 and  accrues  interest at a rate of 16%. At closing the
lender  disbursed  $228,105 to a reserve account to fund the first six months of
interest.  The note is  guaranteed  by Homes for America  Holdings,  Inc. and is
secured by the property.  In December 2001,  the Company  executed a Development
Agreement  with The  Community  Redevelopment  Agency of the City of Ft.  Myers,
Florida  whereby  the  Company is  eligible  to receive  tax  increment  rebates
totaling up to $3,000,000  over a 15 year period as an inducement to undertaking
development in a designated community redevelopment area.

The Company  estimates a total  development cost of $31,198,459,  including unit
construction  costs of  $16,357,900,  miscellaneous  site work,  common area and
parking  construction  costs  of  $3,367,045,   architect/engineering  costs  of
$591,736, general conditions of $1,031,717, an Insurance/Bonds/Profit to Builder
of $2,694,875,  interest of 2,892,376,  and sales/marketing costs of $4,263,210.
The  Company  anticipates  securing  approximately  90%  financing:  79%  from a
construction  loan of  $24,698,459,  and 11% from the sale of the $3,000,000 tax
increment rebate from the City of Fort Myers. The Company anticipates investing,
or joining in a partnership for an equity investment of, approximately 9% equity
in the deal, or $3,500,000, from Company funds.


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

2(c)(i) Yonkers Station Plaza
-----------------------------

Homes For America  Holdings,  Inc.  signed a Land  Disposition  and  Development
Agreement with the City of Yonkers Community  Development Agency  ("Agency"),  a
public benefit  corporation having its principal office in Yonkers,  New York on
December 21,  2001,  to acquire a .36 acre parcel of  non-operating  undeveloped
land in  Yonkers,  New York on which the  Company  plans to  construct  a 70,817
square foot, six-floor Market Rate office building.

As per the terms of the  contract,  the Company has agreed to purchase  the land
for  $500,000.  The Company  expects to close and to begin  construction  of the
project within 60 days of the completion of an adjacent 650 space parking garage
to be  constructed  by the City of Yonkers.  Completion of the parking garage by
the City of Yonkers is expected by December 31, 2002.

The Company  estimates a total  acquisition and development  cost of the Yonkers
Station  Plaza  of  $12,500,000,  including  a  purchase  price  for the land of
$500,000,  architect and engineering  costs of $325,000,  construction  costs of
$7,200,000,  tenant  improvements of $1,850,619,  leasing and marketing costs of
$875,000,  interest of $500,000,  reserves of $477,478 and closing/miscellaneous
costs of $771,903. The Company anticipates securing approximately 94% financing:
62% from a construction loan of $7,700,000,  24% from a $3,000,000 loan from the
City of Yonkers,  which is subordinated to the construction  loan, and 8% from a
$1,000,000  grant  awarded to the  Company by the City of  Yonkers.  The Company
anticipates  investing  approximately  6% equity in the deal, or $800,000,  from
Company funds.




                                  - Page 21 -
<PAGE>

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. This note was paid in full in July of 2001.

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.



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

The Company is not a party to any material legal proceedings.



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

During  fiscal  year  2001,  no matters  were  submitted  to a vote of  security
holders, through the solicitation of proxies or otherwise.

                                  - Page 22 -
<PAGE>


                                     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.

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.

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.

                                  - Page 23 -
<PAGE>



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 as a real
estate operating company to acquire, develop,  rehabilitate/construct and manage
residential and multi-use properties throughout the United States. The Company's
primary objective is to identify and purchase undervalued  properties,  which it
renovates/constructs, operates and manages as Affordable Housing and Market Rate
residential  and mixed use  properties.  These  properties  are  purchased  with
traditional   financing   arrangements   as  well  as   through  a  variety   of
government-sponsored  financing arrangements available for properties qualifying
as Affordable  Housing  and/or  located in designated  redevelopment  areas.  In
addition to the net rental income derived from its portfolio of properties,  the
Company  earns a  portion  of  revenues  and  profits  from  transactional  fees
associated  with  the  acquisition,  financing,  rehabilitation,   construction,
operation and possible sale of its acquisitions.

The Company's operations commenced in April 1996. As of the date of this filing,
the Company's  portfolio  consists of six affordable  housing properties and one
market rate housing property.  The six affordable  housing properties are Willow
Pond (Dallas, Texas), Putnam Square (Bridgeport,  Connecticut),  Prairie Village
(Elkhart, Indiana), Lake's Edge (Miami, Florida), Country Lake (West Palm Beach,
Florida) and St.  Charles  Townhomes,  a recently  acquired  252 unit  apartment
complex in Dallas,  Texas.  The market  rate  property,  Beau  Rivage  (formerly
"Amalfi"), is a recently acquired 2.83 acre parcel of undeveloped  non-operating
waterfront  land in Fort Myers,  Florida on which the Company plans to construct
118 Market Rate units.  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.

In  addition,  the Company has entered  into a purchase  and sale  agreement  to
acquire  the  Yonkers   Station   Plaza,   a  .36  acre  parcel  of  undeveloped
non-operating land in Yonkers,  New York on which the Company plans to construct
a 70,817 square foot market rate office  building.  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.

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.

In addition to rental income, the Company may earn various  transactional  fees,
which may include:

1)   grants and subsidies paid by local, state or federal government entities in
     accordance  with   development   agreements   entered  into  in  designated
     redevelopment areas, with payments generally being made upon execution of a
     development  agreement.  These  grants  and  subsidies  are  recorded  as a
     liability  when  received and  recognized  as income when the related costs
     they are  intended  to defray  are  incurred.  Accordingly,  the grants and
     subsidies  are  generally   recognized   over  the  two-year  life  of  the
     development project;

2)   fees for the acquisition, construction/rehabilitation, operation/management
     and possible sale of properties,  including a Builders and Sponsors  Profit
     and Risk  Allowance  (BSPRA),  a Contractor's  Fee, an  Acquisition  Fee, a
     Developer's  Fee, a  Supervisor/Incentive  Management Fee, a Management Fee
     and an Asset  Management  Fee.  These  fees  are  typically  paid  from the
     proceeds  of  the  financing  or  refinancing  of  transactions  and/or  in
     accordance   with  specific   terms  of  the   development  or  partnership
     agreements;

3)   gains  generated from the settlement of insurance  claims in excess of cost
     to repair, paid by insurers once a claim has been settled.

                                  - Page 24 -
<PAGE>

These transactional fees are classified as Development Fees, Subsidies and Other
Income in the Company's financial statements.  (Please see Part II, Item 7, Note
17 and 18.)

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. On November 30, 2001, the Company acquired St. Charles  Townhomes,  a
252 unit affordable housing complex in Dallas,  Texas. On February 19, 2002, the
Company  acquired  Beau  Rivage  (formerly  "Amalfi"),  a 2.83  acre  parcel  of
undeveloped  non-operating  waterfront land in Fort Myers,  Florida on which the
Company plans to construct 118 Market Rate units.

In  addition,  the Company has entered  into a purchase  and sale  agreement  to
acquire  the  Yonkers   Station   Plaza,   a  .36  acre  parcel  of  undeveloped
non-operating land in Yonkers,  New York on which the Company plans to construct
a 70,817 square foot market rate office building.

The following  discussion  should be read in conjunction  with the  consolidated
financial statements appearing in Part F/S 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.


6(b) Results of  Operations  for the  Twelve  Months  Ended  December  31,  2001
     Compared to December 31, 2000
--------------------------------------------------------------------------------

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

Revenues of $8,901,343 reported in 2000 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  at two  properties,
Dallas/Briar  Meadows and  Arlington/Royal  Crest (land)  through June 30, 2000,
when these two properties were sold.

Revenues in 2001 of  $9,854,350,  an increase  of  $953,007  (10.7%)  over 2000,
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
one month of activity at  Dallas/St.  Charles  through  December 31,  2001.  The
increase in revenues is partially  attributable  to  recognition  of $496,075 in
proceeds from a $1,000,000  grant from the City of Yonkers (New York) for use in
the  development  of the Station Plaza  Building.  (Please see Part F/S, Item 1,
Note  18  for  further  detail.)  Additionally,  rental  income  increased  from
$8,135,736  in 2000 to  $8,963,094  in 2001,  a  difference  of  $827,358.  This
increase is  attributable to one month of rental income of $71,344 at Dallas/St.
Charles  (owned  for one month in 2001 but not owned in 2000) and for  increased
occupancy and rental rates for the remaining five properties.

In  addition  to  rental  operating  revenues,  the  Company  may  earn  various
transactional  fees, which have been classified as Development  Fees,  Subsidies


                                  - Page 25 -
<PAGE>

and Other  Income  in the  Company's  financial  statements.  Development  Fees,
Subsidies  and Other Income earned by the Company  totaled  $845,563 in 2001 and
$638,564  in 2000,  an  increase  of  $206,999  (24%).  This  increase is mostly
attributable  to  recognition  of proceeds  totaling  $496,075 from a $1,000,000
grant from the City of Yonkers for use in the  development  of the Station Plaza
Building.


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

Reported expenses in 2000 of $9,410,268 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 for two  properties,
Dallas/Briar  Meadows and  Arlington/Royal  Crest (land)  through June 30, 2000,
when these two properties were sold.

Reported  expenses in 2001 of $10,487,139,  an increase of $1,076,871 (11%) over
2001,  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
one month of activity at  Dallas/St.  Charles  through  December 31,  2001.  The
increase in expenses is mostly attributable to outstanding  mortgage interest of
$31,256 for one month at Dallas/St.  Charles and one month of increased interest
expense when both Country Lake and Lakes Edge executed Mezzanine Loan Agreements
with a mezzanine lender on December 5, 2001.  (Interest expense for Country Lake
was $1,035,670 in 2000 and $1,063,727 in 2001, an increase of $28,057;  interest
expense for Lake Edge was $667,680 in 2000 and $965,105 in 2001,  an increase of
$297,425.  The  increase  in  expenses  is also  attributable  to an increase in
maintenance and operating expenses at Lake's Edge ($87,819 in 2000 and $324,178,
an increase of  $236,359),  due to  mezzanine  financing  related  expenses  and
property tax and insurance increases at the property.

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, 2000, total operating  expenses before interest,
depreciation  and taxes were  $5,142,792.  For the year ended December 31, 2001,
total  operating   expenses  before   interest,   depreciation  and  taxes  were
$5,671,137.  The increase of $528,345 (10%) over 2000 is mostly  attributable to
maintenance and operating expenses,  taxes and insurance expenses which incurred
normal  increases at all  properties  with the  exception  of Lakes Edge,  where
mezzanine  financing related  maintenance and operating  expenses increased from
$87,819 in 2000 to $324,178 in 2001 and  property  tax and  insurance  increased
from $229,905 in 2000 to $461,716 in 2001.

Depreciation  and  amortization  of  $1,646,826  in 2000  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).  Depreciation  and  amortization of $1,797,749 in
2001,  an increase of $150,923  (9%) from 2000,  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 one month's expenses at Dallas/St. Charles.

The Company  utilizes  accelerated  methods of depreciation  over a 5 to 10 year
life for personal  property.  Realty is depreciated by the straight-line  method
over lives ranging from 27.5 to 40 years.

The 2000 interest expense of $2,620,650 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 expenses' on Dallas/Briar Meadows
and  Arlington/Royal  Crest (land).  The 2001 interest expense of $3,018,253,  a
$397,603 increase (15%) over 2000, was incurred on outstanding  mortgages at six
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 one month's  expense on Dallas/St.  Charles.  This increase is


                                  - Page 26 -
<PAGE>

mostly attributable to outstanding mortgage interest for one month at Dallas/St.
Charles of $31,256 and one month of increased interest expense when both Country
Lake and Lakes Edge executed  Mezzanine Loan Agreements with a mezzanine  lender
on December 5, 2001.  Interest  expense for Country Lake was  $1,035,670 in 2000
and $1,063,727 in 2001, an increase of $28,057;  interest  expense for Lake Edge
was $667,680 in 2000 and $965,105 in 2001, an increase of $297,425.


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

Unrestricted  cash on hand was $318,010 at December 31, 2000 and  $1,510,624  at
December 31, 2001, an increase of $1,192,614 (375%).  This increase is primarily
attributable  to the  mezzanine  financing  activities at Lakes Edge and Country
Lake. (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, the Country Lake and Lake's Edge
Mezzanine loans, the proposed development of the Ft. Myers/Beau Rivage property,
the proposed rehabilitation of Dallas/St.  Charles, and the proposed acquisition
and development of the Yonkers/Station Plaza property.

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 1, Note 3:  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;

(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.


                                  - Page 27 -
<PAGE>

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.

COUNTRY LAKE AND LAKE'S EDGE MEZZANINE LOANS

In December of 2001, the Company (through two wholly owned subsidiaries) entered
into two mezzanine loans pursuant to which it borrowed the amounts of $4,150,000
and $1,000,000 in association  with the Lake's Edge and Country Lake properties,
respectively.  (Please see Part I(g)(iv-v) Lake's Edge and Country Lake for more
detail.) The interest rate on the loans, totaling $5,150,000, is 12.51% on a ten
year  note  with a 25  year  amortization  schedule.  Using  proceeds  from  the
mezzanine loans, the Company paid off a $1,800,000 note,  outstanding borrowings
of  $570,000  on a line of  credit  and  closing/escrow  expenses  of  $892,001,
resulting in a short term  increase in liquidity of  $1,887,999.  The payment of
the  $1,800,000  note will  decrease  annual debt service by  $288,000,  and the
payment of the $570,000 of debt will decrease annual debt service by $39,900,  a
total decrease of $327,900.  The addition of the mezzanine  loans will result in
an increase in annual debt service of $130,932 for Country Lake and $543,368 for
Lake's Edge,  a total  increase of $674,300.  The effect of the  foregoing  debt
repayment  and the addition of the  mezzanine  loans is a net increase in annual
debt service of $346,400.


PROPOSED DEVELOPMENT OF FORT MYERS/BEAU RIVAGE

The  Company  estimates a total  development  cost of  $31,198,459  for the Beau
Rivage project, including unit construction costs of $16,357,900,  miscellaneous
site  work,   common  area  and  parking   construction   costs  of  $3,367,045,
architect/engineering  costs of $591,736,  general conditions of $1,031,717,  an
Insurance/Bonds/Profit  to Builder of  $2,694,875,  interest of  2,892,376,  and
sales/marketing   costs  of  $4,263,210.   The  Company   anticipates   securing
approximately 90% financing:  79% from a construction  loan of $24,698,459,  and
11% from the sale of a  $3,000,000  tax  increment  rebate from the City of Fort
Myers.  The Company  anticipates  investing,  or joining in a partnership for an
equity investment of,  approximately 9% equity in the deal, or $3,500,000,  from
Company funds.


PROPOSED REHABILITATION OF DALLAS/ST. CHARLES

The Company anticipates total capital expenditures for the rehabilitation of St.
Charles Townhomes of $7,700,000, including a takeout of the current mortgage and
prepayment  penalty  totaling  $5,100,000,  rehabilitation  costs of $1,600,000,
rehabilitation  reserves,  operating  deficit  reserves  and  interest  reserves
totaling  $500,000,  and closing costs and miscellaneous fees totaling $500,000.
The  Company  expects  to  secure  approximately  100%  financing  through a new
mortgage in the amount of $7,700,000.

PROPOSED ACQUISITION AND DEVELOPMENT OF YONKERS/STATION PLAZA

The Company  estimates a total  acquisition and development  cost of the Yonkers
Station  Plaza  of  $12,500,000,  including  a  purchase  price  for the land of
$500,000,  architect and engineering  costs of $325,000,  construction  costs of
$7,200,000,  tenant  improvements of $1,850,619,  leasing and marketing costs of
$875,000,  interest  of  $500,000,  reserves of $477,478  and  acquisition  fee,
closing  costs and  miscellaneous  costs of  $771,903.  The Company  anticipates
securing   approximately  94%  financing:   62%  from  a  construction  loan  of
$7,700,000,  24% from a  $3,000,000  loan  from the  City of  Yonkers,  which is


                                  - Page 28 -
<PAGE>

subordinated to the construction loan, and 8% from a $1,000,000 grant awarded to
the  Company  by  the  City  of  Yonkers.  The  Company  anticipates   investing
approximately 6% equity in the deal, or $800,000, from Company funds.



7.   CONSOLIDATED  FINANCIAL  STATEMENTS  FOR THE  COMPANY  FOR THE YEARS  ENDED
     DECEMBER 31, 2001 AND 2000 (AUDITED)
-----------------------------------------------------------------------------


                          INDEPENDENT AUDITORS' REPORT


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

We have audited the balance sheet of Homes for America Holdings,  Inc. (a Nevada
Corporation)  as of December 31,  2001,  and the related  statements  of income,
retained  earnings,  and cash  flows for the year 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 audit. The financial  statements of Homes for America  Holdings,  Inc. as of
December 31,  2000,  were  audited by other  auditors  whose report dated May 8,
2001,  expressed an unqualified  opinion on those statements.  The report of the
other auditors follows on the next page.

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

In our opinion,  the 2001 financial statements referred to above present fairly,
in all material respects,  the financial position of Homes for America Holdings,
Inc. as of December 31,  2001,  and the results of its  operations  and its cash
flows  for the year  then  ended in  conformity  with  U.S.  generally  accepted
accounting principles.


Thomas Stephen & Company, LLP
Southlake, Texas
March 15, 2002



                          INDEPENDENT AUDITORS' REPORT
            FOR THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE COMPANY
            FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 (AUDITED)


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.

                                  - Page 29 -
<PAGE>

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



                        HOMES FOR AMERICA HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
            FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000 (AUDITED)


                                   - ASSETS -


                                                     Year Ended     Year Ended
                                                      12/31/01       12/31/00
                                                      (Audited)      (Audited)
--------------------------------------------------------------------------------
CURRENT ASSETS
     Cash and cash equivalents (Note 7) .............  $ 1,510,624  $   318,010
     Accounts receivable-tenants (Note 2l) ..........       84,207       87,718
     Developer subsidies and other fees receivable
     (Notes 2l and 18) ..............................    1,462,198      639,158
     Restricted deposits and funded reserves (Note 8)    1,331,759      973,242
     Prepaid expenses and other current assets ......       50,326      319,153
     Due from officer (Note 4) ......................       54,540       50,500
                                                       -----------  -----------
TOTAL CURRENT ASSETS ................................    4,493,654    2,387,781

INVESTMENTS IN REAL ESTATE-NET
     (Notes 2a, 2g, 5 and 9) ........................   44,359,688   39,396,167
                                                       -----------  -----------

FIXED ASSETS-NET (Notes 2g and 6) ...................       31,019       48,159
                                                       -----------  -----------

OTHER ASSETS
     Restricted deposits and funded reserves (Note 8)      697,997      747,150
     Deferred financing costs-net (Note 2h) .........    2,070,440    1,158,338
     Deferred asset management fee-net (Note 2i) ....       70,079       78,596
     Pre-acquisition costs (Note 2j) ................    1,445,508    1,399,889
     Other assets ...................................       23,118       84,665
                                                       -----------  -----------

                                                         4,307,142    3,468,638
                                                       -----------  -----------

TOTAL ASSETS ........................................  $53,191,503  $45,300,745
                                                       ===========  ===========


See notes to financial statements.



                                  - Page 30 -
<PAGE>


                    - LIABILITIES AND SHAREHOLDERS' EQUITY -


                                                     Year Ended     Year Ended
                                                      12/31/01       12/31/00
                                                      (Audited)      (Audited)
--------------------------------------------------------------------------------

CURRENT LIABILITIES
     Line of credit-bank (Note 11) ..............  $    250,000   $    320,000
     Accounts payable and accrued expenses ......       738,118      1,550,028
     Tenant security deposits ...................       417,989        374,714
     Unearned rent (Note 2l) ....................        70,657         95,190
     Current portion-liabilities applicable to
     investments in real estate (Note 9) ........     1,694,804      5,218,865
     Current portion-notes payable ..............       235,935        948,801
     Income taxes payable (Note 14) .............         5,000        177,000
     Deferred repair expenses (Note 17) .........       109,609              0
     Deferred grant income (Note 18) ............       503,925              0
     Due to minority partners (Note 19) .........       154,523              0
     Net liabilities of discontinued subsidiaries             0         57,706
                                                   ------------   ------------

TOTAL CURRENT LIABILITIES .......................     4,180,560      8,742,304
                                                   ------------   ------------

LONG-TERM LIABILITIES-NET OF CURRENT PORTION
     Liabilities applicable to investments in
     real estate (Note 9) .......................    45,049,008     32,135,835
     Notes payable (Note 10) ....................        81,833        157,852
     Deferred income taxes (Notes 2k and 14) ....       319,791        954,600
                                                   ------------   ------------
                                                     45,450,632     33,248,287
                                                   ------------   ------------

MINORITY INTERESTS IN SUBSIDIARIES (Note 12) ....       426,927        805,824
                                                   ------------   ------------

COMMITMENTS AND CONTINGENCIES (Note 15)
SHAREHOLDERS' EQUITY (Note 13)

     Common stock; $.001 par value; 25,000,000
     shares authorized, 8,310,031 and 8,702,131
     shares issued in 2001 and 2000, respectively         8,310          8,702
     Additional paid in capital .................     1,230,848      1,230,848
     Retained earnings ..........................     2,827,822      2,149,623
     Treasury stock, at cost ....................      (933,596)      (884,843)
                                                   ------------   ------------

TOTAL SHAREHOLDERS' EQUITY ......................     3,133,384      2,504,330
                                                   ------------   ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......  $ 53,191,503   $ 45,300,745
                                                   ============   ============

See notes to financial statements.

                                  - Page 31 -
<PAGE>

                        HOMES FOR AMERICA HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000 (AUDITED)

                                                     Year Ended     Year Ended
                                                      12/31/01       12/31/00
                                                     (Audited)      (Audited)
-------------------------------------------------------------------------------
REVENUES
    Rental income (note 2l) ........................$  8,963,094   $  8,135,736
    Real estate development fees, subsidies and
    other income (Notes 17 and 18) .................     845,563        638,564
    Interest income ................................      45,693        127,043
                                                    ------------   ------------
                                                       9,854,350      8,901,343
                                                    ------------   ------------
EXPENSES
    Administrative expenses ........................   1,807,494      2,622,450
    Maintenance and operating costs ................   1,564,060        918,335
    Utilities ......................................   1,068,096        799,607
    Taxes and insurance ............................   1,231,487        802,400
    Interest expense ...............................   3,018,253      2,620,650
    Depreciation and amortization (Note 16) ........   1,797,749      1,646,826
                                                    ------------   ------------
                                                      10,487,139      9,410,268
                                                    ------------   ------------
INCOME (LOSS) BEFORE MINORITY INTERESTS AND
    PROVISION FOR INCOME TAXES .....................    (632,789)      (508,925)
    Minority interest in net loss of consolidated
    subsidiaries ...................................     681,179        583,787
                                                    ------------   ------------

INCOME BEFORE PROVISION FOR INCOME TAXES ...........      48,390         74,862
    Provision for income taxes-current (Note 14) ...       5,000              0
    Provision (benefit) for income taxes-deferred
    (Note 14) ......................................    (634,809)        26,000
                                                    ------------   ------------

INCOME FROM CONTINUING OPERATIONS ..................     678,199         48,862
                                                    ------------   ------------
DISCONTINUED OPERATIONS
    Income from operations of discontinued
    subsidiary's assets (net of income taxes of
    $42,000 for 2000) ..............................           0         85,478
    Gain on sale of operating assets of subsidiary
  (net of income taxes of $160,000 for 2000)(Note 3)           0        330,202
                                                    ------------   ------------
                                                               0        415,680
                                                    ------------   ------------

NET INCOME .........................................$    678,199   $    464,542
                                                    ============   ============
BASIC AND DILUTED INCOME PER SHARE
    Continuing operations ..........................$       0.08   $       0.01
    Discontinued operations ........................                       0.05
                                                    ------------   ------------

                                                    $       0.08   $       0.06
                                                    ============   ============
See notes to financial statements.


                                  - Page 32 -
<PAGE>

                        HOMES FOR AMERICA HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000 (AUDITED)


                                                     Year Ended      Year Ended
                                                     12/31/01         12/31/00
                                                     (Audited)        (Audited)
--------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income .......................................... $   678,199   $   464,342
                                                      -----------   -----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization .......................   1,797,749     1,931,872
Compensatory shares .................................           0       100,400
Minority interests ..................................    (378,897)     (695,778)
Deferred income taxes ...............................    (634,809)       51,200
Gain on sale of assets ..............................           0      (490,203)
Gain from insurance proceeds ........................    (315,689)            0
(Increase) decrease-accounts receivable-tenants .....       3,511       (28,293)
(Increase) decrease-accounts receivable-other .......    (827,080)      331,321
(Increase) decrease-prepaid expenses and other
current assets ......................................     268,827       207,790
(Increase) decrease-operating reserve accounts ......    (358,517)      458,751
(Increase) decrease-other assets ....................      61,547             0
Increase (decrease)-accounts payable and accrued
liabilities .........................................    (811,911)      428,449
Increase (decrease)-due to related parties ..........     154,523      (204,126)
Increase (decrease)-tenant security deposits ........      43,275       (19,574)
Increase (decrease)-current real estate liabilitiies      623,289       (97,202)
Increase (decrease)-unearned rent ...................     (24,533)       51,652
Increase (decrease)-liabilities of discontinued
subsidiaries ........................................     (57,706)            0
Increase (decrease)-deferred repair expenses ........     109,609             0
Increase (decrease)-deferred grant income ...........     503,925
Increase (decrease)-income taxes payable ............    (172,000)      177,000
                                                      -----------   -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES ....     663,312    2,667,601
                                                      -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in rental property .......................  (1,691,150)   (3,405,214)
Capital expenditures ................................           0        (7,890)
Due from officer ....................................           0       (23,000)
Withdrawals from (Additions to) replacement
reserves, net .......................................      49,153       283,236
Preacquisistion costs, net of reimbursements ........     (45,620)   (1,120,006)
                                                      -----------   -----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES ....  (1,687,617)   (4,272,874)
                                                      -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long term debt ........................           0     4,435,627
Mezzanine loan proceeds .............................   5,150,000             0
Mortgage refinancing proceeds .......................   3,775,000             0
Mortgages retired from loan proceeds ................  (4,340,000)            0
Mortgage principal payments .........................    (223,480)            0
Purchase of treasury shares .........................     (49,145)     (913,988)
Distributions to minority shareholders ..............           0    (1,939,983)
Net proceeds (repayments)-lines of credit ...........     (70,000)      320,000
Long term note proceeds (repayments) ................    (788,885)      197,671
Payments for financing costs ........................  (1,236,573)     (755,062)
                                                      -----------   -----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES ....   2,216,917     1,344,265
                                                      -----------   -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS    1,192,612      (261,008)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ........     318,010       579,018
                                                      -----------   -----------
CASH AND CASH EQUIVALENTS, END OF YEAR .............. $ 1,510,624   $   318,010
                                                      ===========   ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid ....................................... $ 3,045,850   $ 2,614,194
                                                      ===========   ===========
Income taxes paid ................................... $         0   $         0
                                                      ===========   ===========

See notes to financial statements.

                                  - Page 33 -
<PAGE>


<TABLE>
<S>                                             <C>             <C>          <C>          <C>           <C>             <C>
                                                      HOMES FOR AMERICA HOLDINGS, INC.
                                         CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

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


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

Cancellation of shares .........................      --            (392)          --             --            --             (392)

Purchase of shares for treasury ................      --            --             --             --         (48,753)       (48,753)
Net Income (Loss) ..............................      --            --             --          678,199          --
678,199
                                                   -----------   -----------   -----------   -----------   -----------   -----------

Balance at December 31, 2001 ...................   $  --       $   8,310    $ 1,230,848    $ 2,827,822   $  (933,596)   $ 3,133,384
                                                   ===========  ===========   ===========   ===========   ===========   ===========


</TABLE>

                                  - Page 34 -
<PAGE>


                        HOMES FOR AMERICA HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


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
rental or  condominium  units;  and (c)  acquiring  multi-use  residential  real
estate. As to the Affordable  Housing portion of the portfolio,  the Company may
sell  limited  partnership  interests  through  newly formed  subsidiaries.  The
limited  partnership   interests  are  purchased  by  third  party  real  estate
syndicators  (the "minority  interest")  primarily for the Section 42 tax credit
benefits and tax losses generated for their investors.

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

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

vi.  Country Lake Homes Holding, Inc., a Florida Corporation ("Country Lake")

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

viii. Homes For America Real Estate Services, Inc., a Texas Corporation ("RES")

ix.  St.  Charles  Homes for America,  Inc., a Texas  Corporation,  which is the
     General Partner of St. Charles Townhomes Partners, L.P. ("St. Charles")

x.   Briar  Meadows/Homes  for  America,   Inc.,  a  Texas  Corporation  ("Briar
     Meadows") (dissolved in 2001)

xi.  Arlington/Homes  for  America,  Inc.,  a  Texas  Corporation  ("Arlington")
     (dissolved in 2001)

xii. MD-BI, LLC, a Delaware Corporation, formed in connection with the mezzanine
     loans made on the Lake's Edge and Country Lake properties, and

xiii.MD-MGR,  Inc.,  a  Delaware  Corporation,  formed  in  connection  with the
     mezzanine loans made on the Lake's Edge and Country Lake properties.


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

On December 18, 1998,  Briar Meadows  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 9). 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 in 2000.

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 9). 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 in 2000.

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").  RES began  operations  in 2000 and  provides
management  services to the  Company's  other  subsidiaries  as well as to other
unrelated entities.

On  November  30,  2001,  the Company  acquired a  controlling  general  partner
interest in St. Charles Townhomes Partners,  L.P., a Texas Limited  Partnership.
The partnership was formed in 1998 and currently operates a 252-unit  affordable
housing apartment complex located in Dallas,  Texas. Pursuant to an Agreement To
Invest dated  November 30, 2001,  the Company  agreed to invest  $400,000 in the
Partnership for it's partnership  rights and an additional  $100,000 for certain
operating expenses.


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  distributable  cash flow, giving it a dominant financial interest
in the  partnership.  In addition to the general  partner's  dominant  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 exclusively  manage the affairs
of the partnership give the general partner control over the partnership.

Middlebury Elkhart, L.P.:

Middlebury  Elkhart,  L. P.,  (Prairie  Village) was formed in July 1997 and. in
December  1998,  acquired  a 120-Unit  apartment  building  (including  land) in


                                  - Page 36 -
<PAGE>

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 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 a  dominant  financial  interest  in  the
partnership.  In addition to the general partner's dominant 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  exclusively  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 a dominant  financial
interest in the  partnership.  In addition  to the  general  partner's  dominant
financial interest, its sole involvement in and responsibility for the financial
policies and day-to-day operations of the

St. Charles Townhomes Partners, L.P.:

St. Charles Townhomes  Partners,  L.P.(St.  Charles) was formed in July 1988 for
the purpose of acquiring,  developing and operating a 252-unit rental affordable
housing  project in Dallas,  Texas.  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 partnership  agreement was amended on December 1, 2001
to  provide  for  the  withdrawal  of  the  existing  general  partner  and  the
contribution  of capital  and the  admittance  of the new general  partner,  St.
Charles Homes for America,  Inc., a wholly owned subsidiary of the Company.  St.
Charles Homes For America, 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 operating liabilities,  as set forth in
the partnership agreement, then the remainder is distributed 100% to the general
partner.  The  cumulative  effect  of the  distribution  priorities  is that the
general  partner  receives 100% of the  partnership's  distributable  cash flow,
giving it a dominant financial  interest in the partnership.  In addition to the
general  partner's  dominant  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


                                  - Page 37 -
<PAGE>

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(l) (Revenue  Recognition),  all fees paid to the
general partner have been eliminated upon consolidation.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.   Real Estate

Real estate is recorded at cost. Costs related to the acquisition,  development,
construction and improvement of properties are  capitalized.  Interest costs are
capitalized until construction is substantially complete.  During 2001, $452,775
of interest  was  capitalized  related to the  rehabilitation  of Lakes Edge and
Country Lakes. When retired or otherwise disposed of, the related asset cost and
accumulated  depreciation  are removed from the respective  accounts and the net
difference,  less any amount realized from disposition,  is reflected in income.
Ordinary  repairs and  maintenance  that do not extend the life of the asset are
expensed as incurred.

b.   New Accounting Pronouncements

The  Company  has  adopted  Statement  of  Financial  Accounting  Standards  No.
133--Accounting for Derivative  Instruments and Hedging Activities (SFAS 133) as
of  January 1, 2001.  The  Company  owns no  derivative  instruments  and is not
involved in hedging  activities,  thus the  adoption of SFAS 133 has not had any
impact the Company's financial position, results of operations, or cash flows.

On June 29, 2001,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial  Accounting  Standards  No.  141 (SFAS  141),  Business
Combinations,  and No. 142 (SFAS 142), Goodwill and Other Intangible Assets. The
provisions of SFAS 141 require the use of purchase  accounting  for all business
combinations and the separate  allocation of purchase price to intangible assets
if specific  criteria are met. The  provisions of SFAS 142 provide that goodwill
and intangible  assets with indefinite  useful lives should not be amortized but
rather  tested at least  annually for  impairment.  Intangible  assets that have
finite useful lives should continue to be amortized over their estimated  useful
lives.  SFAS 142 also  provides  specific  guidance  for  testing  goodwill  and
intangible  assets for  impairment.  The Company does not anticipate  that these
standards  will have a  material  impact on the  Company's  financial  position,
results of  operations,  or cash flows.  The provisions of SFAS 141 apply to all
business combinations initiated after June 30, 2001. The Company will adopt SFAS
142 effective January 1, 2002.

In October 2001, the FASB issued Statement of Financial  Accounting Standard No.
144,  "Accounting  for the Impairment or Disposal of Long-Lived  Assets",  which
addresses  financial  accounting and reporting for the impairment or disposal of
long-lived assets.  This standard  harmonizes the accounting for impaired assets
and  resolves  some of the  implementation  issues of SFAS 121.  It retains  the
fundamental  provisions of Statement 121 for (a)  recognition and measurement of
the impairment of long-lived  assets to be held and used and (b)  measurement of
long-lived  assets  to be  disposed  of by  sale.  It  also  retains  the  basic
provisions for presenting  discontinued  operations in the income  statement but
broadens the scope to include a component of an entity  rather than a segment of
a business.  The Company will adopt this standard effective January 1, 2002. The
Company  does not expect  this  pronouncement  to have a material  impact on the
Company's financial position, results of operations, or cash flows.

c.       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  partnerships in which a subsidiary of
the Company is the general partner).  While the general partners are 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 in
excess of 75%, giving them a dominant financial interest in the partnerships. In
addition to the  general  partners'  dominant  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  exclusively  manage the affairs of the
partnerships give the general partners control over the  partnerships.  As such,


                                  - Page 38 -
<PAGE>

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 12 regarding Minority Interests.

All material  intercompany  balances and  transactions  have been  eliminated in
consolidation.

d.   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.

e.   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.

f.   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.

g.   Property and Equipment:

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

         Buildings and improvements 27 1/2 - 40 years Land Improvements 15 years
         Furniture and equipment 5-10 years

Building  improvements are capitalized,  while  expenditures for maintenance and
repairs  are  charged to  operations.  Depreciation  expense for the years ended
December 31, 2001 and 2000 aggregated $1,464,761 and $1,353,208 respectively.

h.   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. When a permanent loan is refinanced,  all remaining unamortized
costs  related to the  previous  financing  are charged to expense.  Accumulated
amortization  at December  31, 2001 and 2000  aggregated  $150,788  and $371,760
respectively.  Amortization  expense for the years ended  December  31, 2001 and
2000 aggregated $324,471 and $285,044, respectively.

i.   Deferred Asset Management Fees:

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, 2001 and 2000  aggregated  $40,677 and
$32,160,  respectively.  Amortization  expense for the years ended  December 31,
2001 and 2000 aggregated $8,517 and $8,574, respectively.

j.   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 Emerging Issues task Force 97-11,  internal costs associated with identifying


                                  - Page 39 -
<PAGE>

and acquiring a property that 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  non-operating  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, 2001 and 2000,  the  Company's  pre-acquisition  costs were as
follows with respect to the pending acquisition of the following properties:

                                                2001    2000
-----------------------------------------------------------------
Billy's Creek, Florida ....................  $419,671  $168,167
Brick Yard, New York ......................   169,827   122,449
Amherst Gardens, New York .................   129,379   113,588
Yonkers Waterfront, New York ..............   496,075   185,889
Odessa, Texas .............................      --      25,000
Lake Crystal, Florida .....................      --     369,889
Villa Americana, Texas ....................   199,159   200,458
Haverford, Kentucky .......................      --     152,715
Mandarin Pines, Florida ...................      --      61,734
Elkhart, Indiana ..........................    31,397      --
                                          ----------- -----------
                                           $1,445,508 $ 1,399,889
                                          =========== ===========

k.   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
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.


l.   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  Section  42 tax  credits  and tax losses
generated  by  depreciation.   The  limited  partner,   by  making  its  capital
contribution,  is eligible for a  proportionate  share of these  credits and tax
losses 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.  Under
consolidation such a fee would normally be eliminated.  However,  fees paid from
the partnership to the general  partner as an expense to the partnership  result
in substantive  increases 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 75% of the


                                  - Page 40 -
<PAGE>

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.  The
Company recognized no such fees as income during 2000 and 2001.

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.


m.   Earnings Per Share:

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

                                      2001           2000
--------------------------------------------------------------
Basic/diluted earnings per share:

Income from continuing operations   $  678,199    $   48,662

Less: Preferred stock dividend
requirement ......................        --            --
                                   ------------   ------------
Income from continuing operations
available to common shareholders .  $  678,199    $   48,662
                                   -----------    ------------
Weighted average common stock
outstanding for basic earnings per
share ............................   8,506,081     8,666,986

Assumed conversion of cheap
warrants .........................        --            --

Assumed conversion of convertible
Preferred stock ..................        --            --
                                   ------------   ------------
Weighted average common stock
outstanding for diluted earnings
per share ........................   8,506,081     8,666,986
                                   ============   ============

n.   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, 2001 and 2000,  the Company's  investment  has been
written down to $-0-.

o.   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.

The partnership  estimates that the fair value of all its financial  instruments
does  not  differ  materially  from  their  aggregate  carrying  values  in  the
accompanying   balance  sheet.  The  estimated  fair  value  amounts  have  been
determined by the partnership using available market information and appropriate
valuation  methodologies.  Considerable  judgment  is  necessarily  required  in
interpreting   market  data  to  develop  the  estimates  of  fair  value,  and,


                                  - Page 41 -
<PAGE>

accordingly,  the estimates are not  necessarily  indicative of the amounts that
the  Partnership  could  realize  in a  current  market  exchange.  None  of the
financial instruments are held for trading purposes.



p.   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
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 was 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.

q.   Reclassifications:

Certain  reclassifications  have been made to the 2000  financial  statements to
correspond to the presentation used in 2001.


NOTE 3--DISCONTINUED OPERATIONS --SALE OF ASSETS:

From time to time in the normal course of business,  the Company may recognize a
gain from the sale of an asset.  Such gains are recognized  when the sale of the
asset is consummated.

On June 30,  2000,  the  Company  reported a gain of  $490,202 (a net gain after
taxes of  $330,202)  on the sale of the  properties  owned by Briar  Meadows and
Arlington.  The  properties  were sold on June 30, 2000 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 Briar Meadows 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  13),  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. This note was paid in full in July 2001.

----------

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


                                  - Page 42 -
<PAGE>

     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.


According to 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, 2001 and 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:


                                       2001            2000
----------------------------------------------------------------
Buildings and improvements ......  $ 40,159,223   $ 31,667,053

Furniture, fixtures and equipment     3,286,651      3,047,625

Construction in progress ........          --        2,679,822
                                   ------------    ------------
                                     43,445,874     37,394,500

Less accumulated depreciation ...    (5,187,388)    (3,086,897)
                                   ------------    ------------
                                     38,258,486     34,307,603
Land ............................     6,101,202      5,088,564
                                   ------------    ------------
                                   $ 44,359,688   $ 39,396,167
                                   ============    ============


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 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 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
     sale agreement and also upon the refinancing of the Company's acquisitions.

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,


                                  - Page 44 -
<PAGE>

     has established a variety of renovation and rehabilitation escrows for 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 all impairment loss is recognized in
accordance with the  requirements of SFAS 121.  Through December 31, 2001, there
has been no such impairment.

NOTE 6--FIXED ASSETS:

Fixed assets consist of the following:

                                     2001            2000
-----------------------------------------------------------

Office Equipment                   $ 89,500     $ 89,500
Less: accumulated depreciation      (58,481)     (41,341)
                                    --------     --------
                                    $31,019      $48,159
                                    ========     ========

See also Note 5 regarding impairment.


NOTE 7--CONCENTRATIONS OF RISK

The  partnerships  maintain  their  cash in bank  deposit  accounts  at  various
financial  institutions.  The balances,  at times, may exceed federally  insured
limits. At December 31, 2001 the balances in three accounts  exceeded  federally
insured limits by $1,115,456. The Company has not experienced any losses in such
accounts and believes it is not exposed to any significant credit risk to cash.


NOTE 8--RESTRICTED DEPOSITS AND FUNDED RESERVES:

The terms of the partnership agreements and loan agreements require that various
escrow  accounts be  maintained  in amounts and for periods as set forth in each
agreement,  As of December  31, 2001 and 2000,  restricted  deposits  and funded
reserves consist of the following:


                                             2001        2000
----------------------------------------------------------------
CURRENT ASSETS:
Tax and escrow reserves ...............  $  360,939  $  287,722
Operating reserves ....................     268,886     358,122
Debt Service reserves .................     701,934        --
Restricted mortgage funds (Note 8) ....        --       327,398
                                         ----------  ----------
                                          1,331,759  $  973,242
                                         ----------  ----------

OTHER ASSETS:
Replacement and Rehabilitation reserves     697,997     747,150
                                         ----------  ----------
TOTAL .................................  $2,029,756  $1,720,392
                                         ==========  ==========

                                  - Page 45 -
<PAGE>

NOTE 9--LIABILITIES APPLICABLE TO INVESTMENTS IN REAL ESTATE:

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

                                     2001            2000
------------------------------------------------------------
Mortgage loans payable .......  $ 19,875,147   $ 15,551,521
Bond mortgage loans payable ..    25,547,197     21,105,000
                                ------------   ------------
                                  45,422,344     36,656,521
Less: Non-current portion ....   (45,049,008)   (32,135,835)
                                ------------   ------------
                                     373,336      4,520,686
Due to reserve accounts ......       278,000           --
Accrued interest payable .....       370,815        132,853
Accounts payable - acquisition          --          105,184
Real estate taxes payable ....       672,653        460,142
                                ------------   ------------
Current portion of liabilities  $  1,694,804   $  5,218,865
                                ============   ============

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 of $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.

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  that  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.  As of December 31, 2001,
the  Partnership  has not had  sufficient  operating cash flow to make principal
payments.  The notes mature in January 2014 and are secured by a mortgage on the
Bridgeport,  Connecticut  property.  As of  December  31,  2001  and  2000,  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 $1,500,000  note was
assumed by third party  investors  (see Note 3) when this  property  was sold in


                                  - Page 46 -
<PAGE>

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 $1,200,000 note was
assumed by third party  investors  (see Note 3) when this  property  was sold in
June 2000.

In October 1999,  Lakes Edge entered into a $14,850,000  loan  agreement  with a
bank to  refinance  the  project's  debt in  connection  with  the  issuance  of
$14,850,000  Non-Taxable  Multifamily  Mortgage  Revenue  Refunding Bonds Series
1999D-1 issued by the Housing Finance Authority of Miami-Dade  County,  Florida.
Monthly  interest  only  payments of $85,388 at 6.9% per annum are payable until
September  2010,  when  principal  payments  sufficient  to  meet  bond  sinking
requirements  commence.  The note  matures  in May 2035  and is  secured  by the
project's rental property.

In October 1999, Lakes Edge entered into a $1,400,000 loan agreement with a Bank
to refinance  the project's  debt in connection  with the issuance of $1,400,000
Taxable  Multifamily  Mortgage Revenue  Refunding Bonds Series 1999D-2 issued by
the Housing Finance Authority of Miami-Dade County,  Florida.  Monthly principal
and interest  payments of $19,026 are payable at the rate of 11% per annum.  The
note  matures in August 2010 and is secured by the  project's  rental  property.
Proceeds of this note were held in escrow and  released as  rehabilitation  work
was completed on Lakes Edge during 2000 and 2001.

In November  1999,  Country Lakes entered into a loan  agreement with a mortgage
company and  received  proceeds in the amount of  $1,800,000.  Interest  accrued
monthly at the rate of 16% per annum,  and  principal  payments  of $25,000  per
month began in May 2000.  The note,  which matured in May 2001, was paid in full
on December 5, 2001 from proceeds of the Lakes Edge Mezzanine  Loan  transaction
described below.

Country Lakes entered into a loan agreement with a financial  institution  for a
term loan in the amount of $2,540,000. Interest on this loan accrues at the rate
of 13% per annum until the loan  matures on July 1, 2018.  This loan was paid in
full on June 21, 2001 from  proceeds of the  $3,775,000  Fannie Mae  Multifamily
Note described below.

On June 21, 2001,  Country Lakes  executed a $3,775,000  Fannie Mae  Multifamily
Note to refinance the project's debt.  Commencing July 2001,  monthly  principal
and  interest  installments  of $32,683  are payable  until June 2011,  when all
remaining  principal and interest is due. The note accrues interest at an annual
rate of 7.45% and is secured by the project's rental property.

On June 1,  2001,  Country  Lakes  executed  a  $6,255,000  Multifamily  Note to
refinance  the  project's  debt in  connection  with the issuance of  $6,255,000
Multifamily  Housing Mortgage Revenue  Refunding Bonds Series 2001 issued by the
Authority.  During 2001, Country Lakes paid a $250,200  prepayment fee to retire
the previous mortgage and recorded the fee as interest expense during 2001.

Interest  only  monthly  payments  of  $30,701  (initially  at 5.89% per  annum)
commence  in June 2001 and are  payable  until May 2011.  Commencing  June 2011,
principal  and interest  payments are payable in 240 monthly  installments  at a
mortgage note interest  rate then in effect.  All unpaid  principal and interest
are due May 2031. The mortgage is secured by the project's rental property.

On December 5, 2001,  the Company  executed  Mezzanine  Loan  Agreements  with a
mezzanine  lender in the amounts of $4,150,000 for Lakes Edge and $1,000,000 for
Country Lakes (the "Mezzanine Loans"). Proceeds of the Mezzanine Loans were used
to retire the $1,800,000 Country Lake mortgage and provide operating capital for
the rental properties.

The mezzanine loans are secured by pledged ownership and distribution  interests
of the respective subsidiaries and Company officer guarantees. Additionally, the
Company  has  executed  Mezzanine  Cash  Management  Agreements  whereby  excess
distributable operating cash is swept into collateral accounts controlled by the
mezzanine lender to service the respective  properties' first,  second and third
mortgages.  All mezzanine loan security  interests are  subordinate to the first
and second mortgage loans on Country Lake and Lakes Edge.

The mezzanine loans accrue  interest at 12.51%,  are amortized over 25 years and
mature  June 2011 and June  2013 for the  Lakes  Edge and  Country  Lake  loans,
respectively.  On January 2, 2002,  monthly  principal and interest  payments of


                                  - Page 47 -
<PAGE>

$45,281 and $10,911 commence on the Lakes Edge and Country Lake mezzanine loans,
respectively.

The aggregate  maturities of mortgage  loans payable for the next five years are
$373,336 in 2002, $416,684 in 2003, $453,083 in 2004, $495,951 in 2005, $541,444
in 2006 and $43,141,846 thereafter.

NOTE 10--NOTES PAYABLE:

Notes payable consists of the following:
                                                        2001          2000
-----------------------------------------------------------------------------
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 ...............  $  150,804  $  348,653

9-1/2% note payable due in 2001 ....................        --       699,000
Trade acceptance drafts payable ....................     107,964
8% notes payable to Company officers ...............      59,000      59,000
                                                      ----------  ----------
                                                         317,768   1,106,653
Less; current Maturities ...........................     235,935     948,801
                                                      ----------  ----------
                                                      $   81,833  $  157,852
                                                      ==========  ==========


The aggregate maturities of notes payable as of December 31, 2001, for the next
five years are $235,935 in 2002, $77,037 in 2003, $4,796 in 2004 and $0
thereafter.


NOTE 11--BANK CREDIT LINE:

In November  2000,  the Company  entered into an unsecured line of credit with a
bank that  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 $0 and  $320,000  as of
December 31, 2001 and 2000,  respectively.  This line of credit was paid in full
in December 2001.

In July 2001,  the Company  entered into an unsecured loan agreement with a Bank
in the amount of  $250,000,  which  bears  interest  at an annual rate of 5.75%.
Outstanding borrowings were $250,000 as of December 31, 2001.


NOTE 12--MINORITY INTERESTS:

Four wholly owned  subsidiaries of the Company are the general  partners of four
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 its entities (see Note
2c).

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.  Operating  control  of the
properties  rests  solely  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.


NOTE 13--SHAREHOLDERS' EQUITY:

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



                                  - Page 48 -
<PAGE>

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, 2001, 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, 2001, 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(p)),  vest  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,  pro forma
data as required by SFAS 123 is not provided.

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  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.

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


                                  - Page 49 -
<PAGE>

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.



NOTE 14--INCOME TAXES:

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


                                        2001        2000
------------------------------------------------------------
    Current tax expense
    Federal .......................       --          --
    State .........................  $   5,000        --
    Deferred tax expense (benefit):
    Federal .......................   (634,809)  $  23,056
    State .........................       --         3,144
                                     ----------  ----------
    Total expense (benefit) .......  $(629,809)  $  26,200
                                     ==========  ==========





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


                                            2001          2000
---------------------------------------------------------------
Current deferred tax asset-conversion of
accrual to cash                            $ 458,595   $    --
                                           ----------  ----------
Total current deferred tax assets .......    458,595        --
                                           ----------  ----------
Current deferred tax liability-conversion
of accrual to cash                          (663,639)   (954,600)

Non-current deferred tax liability
Tax over book depreciation ..............   (114,747)       --
                                           ----------  ----------
Total deferred tax liabilities ..........   (778,386)   (954,600)
                                           ----------  ----------
Net deferred tax liability ..............  $(319,791)  $(954,600)
                                           ==========  ==========




                                  - Page 50 -
<PAGE>

NOTE 15--COMMITMENTS AND CONTINGENCIES:

a.   Consulting and Employment Agreements-Officers:

The Company has entered  into a  five-year  agreement  with a corporate  entity,
which owns 1,674,500  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
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.

During 2001, the Company  capitalized  $161,456 of consulting  fees paid to this
related party (into pre-acquisition costs on the accompanying balance sheet) for
services related to the acquisition of the Billy's Creek, Florida property. Also
during 2001,  the Company  capitalized  (into  deferred  financing  costs on the
accompanying   balance  sheet)   additional   consulting  fees  of  $46,069  and
commissions  of $34,906  that this  entity  earned for  services  related to the
mezzanine loan transactions.  This entity earned additional commissions totaling
$50,094 during 2001.

On August 1, 1998,  the Company  entered into a five-year  employment  agreement
with its Chief  Executive  Officer for his services as such.  Under the terms of
the  employment  agreement,  which  expires  July 31,  2003,  the base salary is
$186,000 per year through  December 31, 1999, with annual  increases of not less
than 5%  effective  in January  of each  year.  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.  This agreement
terminates July 31, 2003.

The  Chief  Executive  Officer  has  chosen  to have  payments  made  under  his
employment  agreement paid to a corporation  controlled by him. During 2001, the
Company capitalized  $170,177 of payments made under the employment agreement to
this corporation (into  pre-acquisition costs on the accompanying balance sheet)
for services related to the acquisition of the Yonkers, New York property.  Also
during 2001,  the Company  capitalized  (into  deferred  financing  costs on the
accompanying  balance sheet) additional payments under the employment  agreement
totaling $39,890 and commissions of $48,585 that this entity earned for services
related to the  mezzanine  loan  transactions.  This  entity  earned  additional
commissions totaling $36,415 during 2001.



b.   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 expenses.  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.)

                                  - Page 51 -
<PAGE>

In the St. Charles Townhomes limited  partnership,  the Company may be obligated
to make  credit  deficit  payments  to the  limited  partner  in the  event  the
scheduled amount of low-income  housing tax credits  projected are not delivered
to the  limited  partner  through  the  2009  tax  year.  The  Company  does not
anticipate any tax credit  shortfalls.  Additionally,  the Company may be liable
for payment of up to $100,000 for  operating  trade  accounts  payable  incurred
prior to the admittance of the Company as general partner.

c.   Legal Matters:

In January  2001,  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  answered  this
complaint, the Company defended itself vigorously against these allegations and,
subsequent to December 31, 2001,  reached a final settlement to the plaintiff in
the amount of $12,000.

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.

d.   Operating Leases

On April 22, 1999, the Company entered into a three-year lease for office space.
Rental commitments under said lease are as follows: $13,373 in 2002.


NOTE 16--CHANGE IN ACCOUNTING ESTIMATE:

Beginning  in 2001,  the  Company  changed  the  useful  lives of its West  Palm
Beach/Country  Lake and  Miami/Lake's  Edge properties from 27 years to 40 years
and furniture,  fixtures and equipment from 5 or 7 years to 10 years in order to
more accurately  reflect the assets'  reasonable useful lives. The net effect of
these adjustments  resulted in a prior year overstatement of depreciation in the
amount of $414,767  ($.11 per share) and a cumulative  net income  adjustment of
$9,146 (.0011 per share) for the twelve months ended December 31, 2001.


NOTE 17--OTHER INCOME

In the  first  quarter  of 2001,  the  Company  filed  an  insurance  claim  for
reimbursement  for roof damages  sustained at the Lakes Edge property from which
proceeds in the amount of $677,192 were  received in November,  2001. A net gain
of $315,689  was  recognized  in 2001 when the claim was settled and the related
expense for repairs was determined.  This gain is not of an unusual nature given
the  environment in which the company  operates and has been classified as other
income on the accompanying consolidated statement of operations. The Company has
recorded  deferred  repair  expenses of $109,609 at December 31, 2001 related to
anticipated repair expenses which had not been incurred as of December 31, 2001.


NOTE 18--DEVELOPMENT SUBSIDIES

From  time to time in the  normal  course  of  business,  the  Company  may earn
development grants or other subsidies and fees related to developing projects in
designated redevelopment areas.

In December  2001,  the Company  received a $1,000,000  commitment  related to a
Economic  Development  Initiative  Grant ("EDI  Grant") from the City of Yonkers
(New York) for use in the predevelopment of the Station Plaza Office Building in
the City of Yonkers Urban Renewal Project. Under terms of a Land Disposition and
Development Agreement (LDDA Agreement), the proceeds compensated the Company for
services provided during the  pre-development  stage including costs incurred in
connection with obtaining government  approvals,  predevelopment costs and other
soft costs related to the pre-construction  phase of the project. As of December
31, 2001,  the Company had recorded a $1,000,000  grant  receivable,  recognized
$496,075 of grant income and recorded $503,925 of deferred revenue.

                                  - Page 52 -
<PAGE>


NOTE 19-SUBSEQUENT EVENT-FT. MYERS LAND PURCHASE

On February 19, 2002, the Company purchased for $1,320,000,  land to be used for
the  development of a 21-story  condominium  project in Ft. Myers  Florida.  The
project  ("Billy's  Creek" or "Beau Rivage") will be developed by a newly formed
wholly owned subsidiary, Beau Rivage-Homes for America, LLC. Concurrent with the
closing of the property, the Company executed a $1,750,000 loan agreement with a
commercial lender to finance the purchase.  The note matures on May 19, 2003 and
accrues interest at a rate of 16%. At closing the lender disbursed $228,105 to a
reserve account to fund the first six months of interest. The note is guaranteed
by Homes for America Holdings,  Inc. and is secured by the property. In December
2001,  the  Company   executed  a  Development   Agreement  with  The  Community
Redevelopment  Agency of the City of Ft. Myers,  Florida  whereby the Company is
eligible to receive tax increment  rebates  totaling up to $3,000,000  over a 15
year period as an inducement to develop in a designated community  redevelopment
area.


NOTE 20--DUE TO MINORITY PARTNERS

Due to minority  partners on the  accompanying  December  31, 2001  consolidated
balance sheet  represents  $154,523 of  administrative  management fees and cash
flow/refinancing   distributions   payable  to  minority   limited  partners  in
accordance with Partnership Agreement provisions.



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

In March of 2002, our Board of Directors determined that it would be in our best
interests to dismiss our  independent  accountant  and auditors,  Lazar Levine &
Felix, LLP, which acted as our independent  accountant and auditors with respect
to our financial  statements for the three fiscal years ended December 31, 1998,
1999 and 2000.  Lazar Levine & Felix,  LLP was  dismissed on March 5, 2002.  The
replacement  of Lazar Levine & Felix,  LLP was  recommended  and approved by our
Board of Directors and is not the result of any disagreement with Lazar Levine &
Felix,  LLP on any  matter  of  accounting  principles  or  practice,  financial
statement disclosure or auditing scope or procedure.

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.  During the three fiscal years 1998,  1999 and 2000,  and subsequent
periods,  there was no  disagreement  with Lazar Levine & Felix,  LLP  regarding
accounting  principles,  internal  controls or  practices,  financial  statement
disclosure, auditing scope, procedure or any other matter.

Homes For  America has  provided  Lazar  Levine & Felix,  LLP with a copy of the
disclosure  made under this Part I, Item 13.  Lazar  Levine & Felix,  LLP 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 16.1 to the Company's registration statement.

In March of 2002, our Board of Directors determined that it would be in our best
interests  to retain the  services of Thomas  Stephen & Company,  LLP to replace
Lazar Levine & Felix,  LLP as our  independent  accountant and auditors.  Thomas
Stephen & Company, LLP was engaged on March 11, 2002.

The Company has not consulted with Thomas  Stephen & Company,  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.

No report issued by Thomas Stephen & Company,  LLP contains any adverse  opinion
or a disclaimer  of opinion,  or was  qualified  or modified as to  uncertainty,
audit scope, or accounting  principles.  There have been no  disagreements  with
Thomas Stephen & Company,  LLP regarding  accounting  principles,  or practices,
financial statement  disclosure,  or auditing scope or procedure nor any dispute


                                  - Page 53 -
<PAGE>

between the Company and Thomas Stephen & Company, LLP with respect to our status
as a "going concern."

Homes For America has provided Thomas Stephen & Company,  LLP with a copy of the
disclosure made under this section.



                                    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        58    Chairman of the Board, President, and
                                  Chief Executive Officer
----------------------------------------------------------------------------
R. Karim Chowdhury          45    Director, Secretary/Treasurer and
                                  Chief Financial Officer
----------------------------------------------------------------------------
Robert M. Kohn              51    Director and Chief Operating Officer
----------------------------------------------------------------------------
Joel Heffron                64    Director
----------------------------------------------------------------------------
Daniel G. Hayes             44    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
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


                                  - Page 54 -
<PAGE>

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.  Mr. Kohn is also the  President of
International Business Realty & Consultants,  LLC, which is a shareholder of the
Company and which provides consulting services to the Company.

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, 2001,  our Board of Directors  met on
three  occasions.  During the three months  ended March 31,  2002,  our Board of
Directors  met on two  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.


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

During the fiscal  year ended  December  31,  2001 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.



                                  - Page 55 -
<PAGE>

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, 2001,
2000 and 1999 to each of the Company's executive officers.


              ANNUAL COMPENSATION AND LONG TERM COMPENSATION AWARDS
                      FOR FISCAL YEARS 2001, 2000 and 1999


                                                  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 1999 ...............     $ 186,000     $   --         $   --
Fiscal Year 2000 ...............     $ 210,000     $   --         $   --
Fiscal Year 2001 ...............     $ 210,067     $  85,000      $   --
--------------------------------------------------------------------------------

R. Karim Chowdhury (2)
Chief Financial Officer

Fiscal Year 1999 ...............     $   --        $   --         $   --
Fiscal Year 2000 ...............     $ 110,288     $   --         $   --
Fiscal Year 2001 ...............     $ 115,000     $   --         $   --
--------------------------------------------------------------------------------

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

Fiscal Year 1999 ...............     $   --        $ 410,000      $   --
Fiscal Year 2000 ...............     $   --        $ 312,500      $   --
Fiscal Year 2001 ...............     $   --        $ 292,525      $   --
--------------------------------------------------------------------------------

1.   During fiscal year 2001, Mr. MacFarlane received salary compensation in the
     amount of $210,067 and commissions of $85,000, totaling $295,067.

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 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.  During fiscal year 2001, Mr. Kohn received  commissions
     of $85,000 and consulting fees of $207,525,  totaling  $292,525.  (See Part
     III, Item 12: Certain Relationships and Related Transactions.)


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

No stock options were granted during the years ended December 31, 2001 and 2000.


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

In August 1998, the Company entered into a five-year  employment  agreement with
Mr. MacFarlane  providing for a base salary at the rate of $186,000 per year for


                                  - Page 56 -
<PAGE>

a  period  covering  August  1998  through   December  1999.   Thereafter,   Mr.
MacFarlane's base salary is 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. This agreement terminates July 31, 2003.


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.

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


                                  - Page 57 -
<PAGE>

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.

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


                                  - Page 58 -
<PAGE>

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.


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.


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 the  date of this  filing  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, 2002,  there were  8,310,031
shares of Common Stock issued and outstanding.

                                                              COMMON STOCK
OWNER                                       SHARES OWNED      PERCENTAGE
--------------------------------------------------------------------------------
Robert MacFarlane (1)                     2,000,500              24.10%
Chairman of the Board, President, and
Chief Executive Officer
One Odell Plaza
Yonkers, New York 10701

                                  - Page 59 -
<PAGE>

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               2.41%
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              23.95%
c/o Daniel G. Hayes, Esq.
9324 West St., Suite 101
Manassas, VA 20110

International Business and Realty
Consultants, LLC (2)                      1,674,500              20.17%
c/o Daniel G. Hayes, Esq.
9324 West St., Suite 101
Manassas, VA   20110

Robert Pozner
454 Stevens Avenue
Ridgewood, NJ 07450                         650,000               7.83%
--------------------------------------------------------------------------------

All Directors and Executive
Officers as a Group                         3,875,000              46.68%
(5 persons)

(1)  Includes  1,988,000 shares of common stock held by 83 Boutwell Trust,  over
     which Robert  MacFarlane,  the Chief Executive Officer of the Company,  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.




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  year  1999,  Mr.  Kohn  received  commissions  of  $221,000  and
consulting  fees of $189,000,  totaling  $410,000.  During fiscal year 2000, Mr.


                                  - Page 60 -
<PAGE>

Kohn received commissions of $102,500 and consulting fees of $210,000,  totaling
$312,500.  During fiscal year 2001, Mr. Kohn received commissions of $85,000 and
consulting  fees of  $207,525,  totaling  $292,525.  Other  than  his  fees  and
commissions,   Mr.  Kohn  has  no   interest  in  any  of  the   above-described
transactions.

In August 1998, the Company entered into a five-year  employment  agreement with
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 is 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. This agreement terminates July 31, 2003.

During  fiscal  year  1999,  Mr.  MacFarlane  received  salary  compensation  of
$186,000.  During fiscal year 2000, Mr. MacFarlane  received salary compensation
of  $210,000.   During  fiscal  year  2001,  Mr.   MacFarlane   received  salary
compensation of $210,067 and commissions of $85,000, totaling $295,067.

In December of 2001, Allegiance Capital Partners,  LLC ("Mezzanine Lender") made
two  mezzanine  loans (the  Lake's Edge  Mezzanine  Loan of  $4,150,000  and the
Country Lake Mezzanine Loan of $1,000,000)  totaling $5,150,000 to MD-BI, LLC, a
Delaware limited liability company and a wholly owned subsidiary of the Company.
In  connection  with the  mezzanine  loans,  Robert  Kohn  (Director  and  Chief
Operating  Officer  of Homes For  America  Holdings,  Inc.),  Robert  MacFarlane
(Director and Chief Executive Officer of Homes For America  Holdings,  Inc.) and
Emilia Nuccio,  (the wife of Robert  MacFarlane)  executed limited  non-recourse
(with  carve-out   exceptions)   guarantees   containing   certain   "springing"
provisions.  In  consideration  for the individual  guarantors  executing  their
guarantees,  the individual  guarantors have been assigned an interest in Willow
Pond and Putnam Square  (limited to the original  principal  balance of the loan
plus  interest)  until  such  time that the note is paid in full.  In  addition,
Robert Kohn will earn a loan  enhancement  fee of 1% of the  combined  mezzanine
loan amount per year, and Robert  MacFarlane and Emilia Nuccio will each earn an
enhancement fee of .5% of the combined  mezzanine loan amount per year.  (Please
see Part I(g)(iv-v) for greater detail.) Other than the consideration  described
herein,  Mr.  Kohn,  Mr.  MacFarlane  and Mrs.  Nuccio  have no  interest in 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.

                                  - Page 61 -
<PAGE>

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.

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.

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

                                  - Page 63 -
<PAGE>

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 2001.


                                  - 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


                    December 5, 2002
                    --------------------------------
                    Dated




                                  - Page 65 -