**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB**





(Mark
      One)





xQUARTERLY
      REPORT UNDER
      SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For
      the
      quarterly period ended September 30, 2007





o TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For
      the
      transition period from _____________ to ______________


Commission
      file number __________________________________




**FREEDOM
                  FINANCIAL GROUP, INC.**(Exact
                  name of small business issuer as specified in its
                  charter)


Delaware
              43-1647559(State
                  or other jurisdiction of incorporation or organization)
              (I.R.S.
                  Employer Identification No.)




3058
                  East Elm Street, Springfield, Missouri 65802(Address
                  of principal executive offices)(417)
                  886-6600(Issuer's
                  Telephone Number)(Former
                  name, former address and former fiscal year, if changed since last
                  report)





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
o





**APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**


**PROCEEDINGS
      DURING THE PRECEDING FIVE YEARS**





Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court.  Yes xNo
o




**APPLICABLE
      ONLY TO CORPORATE ISSUERS**





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date:





As
      of
      November 12, 2007 19,787,543 shares of Common Stock, $0.0001 par value were
      outstanding.





Transitional
      Small Business Disclosure Format: Yes o No
x







**TABLE
      OF CONTENTS**





**PART
              I. - FINANCIAL INFORMATION**
            **3****ITEM 1.**
            **Financial
                Statements**
            **3****ITEM 2.**
            **Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations**
            **16****ITEM 3.**
            **Controls
                and Procedures**
            **33****PART
                II. – OTHER INFORMATION**
            **34****ITEM 1.**
            **Legal
                Proceedings**
            **34****ITEM 2.**
            **Unregistered
                Sales of Equity Securities and Use of Proceeds**
            **34****ITEM 3.**
            **Defaults
                Upon Senior Securities**
            **34****ITEM 4.**
            **Submission
                of Matters to a Vote of Security Holders**
            **34****ITEM 5.**
            **Other
                Information**
            **35****ITEM 6.**
            **Exhibits**
            **36****INDEX
                TO EXHIBITS**
            **36**




2




**PART
      I.** - **** **FINANCIAL
      INFORMATION**





**ITEM
      1.** **Financial
      Statements**




**Report
      of Independent Registered Public Accounting Firm**




Audit
      Committee, Board of Directors and Stockholders


Freedom
      Financial Group, Inc.


Springfield,
      Missouri




We
      have
      reviewed the accompanying consolidated balance sheet of Freedom Financial Group,
      Inc. as of September 30, 2007, and the related consolidated statements of
      operations for the three-month and nine-month periods ended September 30, 2007
      and stockholders’ equity and cash flows for the nine-month period ended
      September 30, 2007. These interim financial statements are the responsibility
      of
      the Company’s management.





We
      conducted our reviews in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). A review of interim financial
      information consists principally of applying analytical procedures to financial
      data and making inquiries of persons responsible for financial and accounting
      matters. It is substantially less in scope than an audit conducted in accordance
      with the standards of the Public Company Accounting Oversight Board, the
      objective of which is the expression of an opinion regarding the financial
      statements taken as a whole. Accordingly, we do not express such an
      opinion.





Based
      on
      our reviews, we are not aware of any material modifications that should be
      made
      to the consolidated financial statements referred to above for them to be in
      conformity with accounting principles generally accepted in the United States
      of
      America.




**/s/
      Weaver & Martin, LLC** ****




Kansas
      City, Missouri


November
      13, 2007




3




**FREEDOM
      FINANCIAL GROUP, INC.**




**Consolidated
      Balance Sheets**




**Unaudited****September 30****,**
            
            **December 31,****2007**
            
            **2006****Assets**Cash
                and cash equivalents
            
            $
            1,549,917
            
            $
            1,276,994Finance
                receivables, net
            
            
            10,202,286
            
            
            9,676,164Repossessed
                assets
            
            
            162,425
            
            
            326,185Accrued
                interest receivable
            
            
            126,626
            
            
            131,428Property
                and equipment, net
            
            
            280,015
            
            
            277,181Deferred
                financing costs
            
            
            34,419
            
            
            112,290Other
                assets
            
            
            61,163
            
            
            21,753Total
                assets
            
            $
            12,416,851
            
            $
            11,821,995


**Liabilities
                and Stockholders’ Equity****Liabilities**Bank
                line of credit
            
            $
            1,600,196
            
            $
            419,309Accounts
                payable
            
            
            8,559
            
            
            15,867Accrued
                expenses
            
            
            31,258
            
            
            107,147Accrued
                compensation costs
            
            
            25,914
            
            
            53,903Dealer
                holdbacks
            
            
            32,430
            
            
            48,895Dealer
                reserves
            
            
            39,043
            
            
            37,873Total
                liabilities
            
            
            1,737,400
            
            
            682,994**Stockholders’
                Equity**Common
                stock, $0.0001 par value; 36,000,000 shares authorized; 19,927,001
                shares
                issued; 19,787,543 and 19,927,001 shares outstanding at September
                30, 2007
                and December 31, 2006, respectively
            
            
            1,993
            
            
            1,993Additional
                paid-in-capital
            
            
            13,802,633
            
            
            13,802,633Retained
                earnings (deficit)
            
            
            (4,686,055
            )
            
            (3,596,479
            )Accumulated
                other comprehensive income
            
            
            1,573,183
            
            
            930,854Treasury
                stock, at cost; 139,458 and 0 shares at September 30, 2007 and December
                31, 2006, respectively
            
            
            (12,303
            )
            
            ―Total
                stockholders’ equity
            
            
            10,679,451
            
            
            11,139,001Total
                liabilities and stockholders’ equity
            
            $
            12,416,851
            
            $
            11,821,995





*See
      Notes to Consolidated Financial Statements.*




4


**FREEDOM
      FINANCIAL GROUP, INC.**


**Consolidated
      Statements of Operations**


**Unaudited**




**Three Months Ended**
            
            **Nine Months Ended****September****30,**
            
            **September 30,**
            
            **September 30,**
            
            **September 30,****200****7**
            
            **2006**
            
            **2007**
            
            **2006****Revenues**Interest
                income
            
            $
            679,924
            
            $
            685,385
            
            $
            2,006,125
            
            $
            2,032,608Other
                income
            
            
            50,006
            
            
            100,501
            
            
            148,865
            
            
            175,704Total
                revenues
            
            
            729,930
            
            
            785,886
            
            
            2,154,990
            
            
            2,208,312**Interest
                Expense**
            
            
            65,604
            
            
            24,505
            
            
            215,799
            
            
            24,505**Revenues
                After Interest Expense**
            
            
            664,326
            
            
            761,381
            
            
            1,939,191
            
            
            2,183,807**Provision
                for Credit Losses**
            
            
            420,623
            
            
            166,178
            
            
            1,161,837
            
            
            708,338**Net
                Revenues After Provision for Credit Losses**
            
            
            243,703
            
            
            595,203
            
            
            777,354
            
            
            1,475,469**Operating
                Expenses**
            
            
            646,367
            
            
            708,726
            
            
            1,866,929
            
            
            2,162,376**Operating
                Loss**
            
            
            (402,664
            )
            
            (113,523
            )
            
            (1,089,575
            )
            
            (686,907
            )**Provision
                for Income Taxes**
            
            
            —
            
            
            —
            
            
            —
            
            
            —**Net
                Loss**
            
            $
            (402,664
            )
            $
            (113,523
            )
            $
            (1,089,575
            )
            $
            (686,907
            )**Basic
                and Diluted Loss Per Share**
            
            $
            (0.02
            )
            $
            (0.01
            )
            $
            (0.05
            )
            $
            (0.06
            )





*See
      Notes to Consolidated Financial Statements.*




5


**FREEDOM
      FINANCIAL GROUP, INC.**


**Consolidated
      Statements of Stockholders’ Equity**


**Unaudited**


**Redeemable**
                **Convertible**
              
              **Common
                  Stock**
              
              **Additional**
              
              **Retained**
              
              **Accumulated**
                **Other**Preferred
                          Stock
              
              **Shares**
              
              **Amount**
              
              **Paid-in**
                **Capital**
              
              **Earnings**
                **(Deficit)**
              
              **Comprehensive**
                **Income**
              
              **Treasury
                  Stock**
              
              **Total****Balance,
                  December 31, 2006**
              
              $
              0
              
              
              19,927,001
              
              $
              1,993
              
              $
              13,802,633
              
              $
              (3,596,479
              )
              $
              930,854
              
              $
              0
              
              $
              11,139,001Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (1,089,576
              )
              
              —
              
              
              —
              
              
              (1,089,576
              )Foreign
                  currency translation adjustment
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              642,329
              
              
              —
              
              
              642,329Comprehensive
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (447,247
              )Purchase
                  of treasury stock
              
              
              ―
              
              
              (139,458
              )
              
              ―
              
              
              ―
              
              
              ―
              
              
              ―
              
              
              (12,303
              )
              
              (12,303
              )**Balance,****September 30, 2007**
              
              $
              0
              
              
              19,787,543
              
              $
              1,993
              
              $
              13,802,633
              
              $
              (4,686,055
              )
              $
              1,573,183
              
              $
              (12,303
              )
              $
              10,679,451**Balance,
                  December 31, 2005**
              
              $
              13,798,817
              
              
              9,965,759
              
              $
              997
              
              $
              0
              
              $
              (2,446,970
              )
              $
              947,188
              
              $
              0
              
              $
              12,300,032Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (686,907
              )
              
              —
              
              
              —
              
              
              (686,907
              )Foreign
                  currency translation adjustment
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              154,878
              
              
              —
              
              
              154,878Comprehensive
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (532,029
              )Stock
                  grant
              
              
              —
              
              
              962,493
              
              
              96
              
              
              4,716
              
              
              —
              
              
              —
              
              
              —
              
              
              4,812**Balance,
                  September****30, 2006**
              
              $
              13,798,817
              
              
              10,928,252
              
              $
              1,093
              
              $
              4,716
              
              $
              (3,133,877
              )
              $
              1,102,066
              
              $
              0
              
              $
              11,772,815





*See
      Notes to Consolidated Financial Statements.*




6


**FREEDOM
      FINANCIAL GROUP, INC.**


**Consolidated
      Statements of Cash Flows**


**Unaudited**




**For the
                Nine****Months
                Ended**
              **September 30,****200****7**
            
            **2006****Operating
                Activities**Net
                loss
            
            $
            (1,089,575
            )
            $
            (686,907
            )Adjustments
                to reconcile net loss to net cash provided by (used in) operating
                activitiesDepreciation
            
            
            36,935
            
            
            34,049Provision
                for credit losses
            
            
            1,161,837
            
            
            708,338Deferred
                discount income
            
            
            (285,191
            )
            
            (417,093
            )Recovery
                of charged-off finance receivables
            
            
            528,109
            
            
            321,936Stock
                grant expense
            
            
            —
            
            
            4,812Amortization
                of deferred financing fees
            
            
            115,207
            
            
            22,458Changes
                inOther
                assets
            
            
            (26,586
            )
            
            (27,653
            )Accounts
                payable and accrued expenses
            
            
            (115,579
            )
            
            (8,522
            )Other
                liabilities
            
            
            ―
            
            
            (44,092
            )Net
                cash provided by (used in) operating activities
            
            
            325,157
            
            
            (92,674
            )**Investing
                Activities**Purchase
                of finance receivables
            
            
            (5,819,725
            )
            
            (5,725,898
            )Principal
                collected on finance receivables
            
            
            4,490,121
            
            
            4,765,350Payments
                of dealer reserves
            
            
            (9,344
            )
            
            (9,654
            )Payments
                of dealer holdbacks
            
            
            (53,139
            )
            
            (128,393
            )Purchase
                of property and equipment
            
            
            (1,770
            )
            
            (16,613
            )Net
                cash used in investing activities
            
            
            (1,393,857
            )
            
            (1,115,208
            )**Financing
                Activities**Payment
                of deferred financing fees
            
            
            (37,336
            )
            
            (149,664
            )Line
                of credit advances, net
            
            
            1,180,887
            
            
            164,689Purchase
                of treasury stock
            
            
            (12,303
            )
            
            ―Net
                cash provided by financing activities
            
            
            1,131,248
            
            
            15,025**Effect
                of Exchange Rate Changes on Cash and Cash
                Equivalents**
            
            
            210,375
            
            
            12,341**Net****Increase
                (Decrease) in Cash and Cash Equivalents**
            
            
            272,923
            
            
            (1,180,516
            )**Cash
                and Cash Equivalents, Beginning of Period**
            
            
            1,276,994
            
            
            2,192,075**Cash
                and Cash Equivalents, End of Period**
            
            $
            1,549,917
            
            $
            1,011,559





*See
      Notes to Consolidated Financial Statements.*




7


**FREEDOM
      FINANCIAL GROUP, INC.**


**Notes
      to Consolidated Financial Statements**


**Unaudited**




**Note
      1:** **General**




The
      accompanying unaudited consolidated financial statements of Freedom Financial
      Group, Inc. (the “Company”) have been prepared pursuant to the rules and
      regulations of the Securities and Exchange Commission (the “SEC”) for reporting
      on Form 10-QSB. Accordingly, certain information and footnotes required by
      generally accepted accounting principles for complete financial statements
      have
      been omitted. The consolidated balance sheet of the Company as of December
      31,
      2006 has been derived from the audited consolidated balance sheet of the Company
      as of that date. These interim statements should be read in conjunction with
      the
      audited consolidated financial statements for the year ended December 31, 2006
      and notes thereto included in the Company’s Form 10-KSB filed with the SEC on
      March 27, 2007.




The
      information contained herein reflects all normal and recurring adjustments,
      which, in the opinion of management, are necessary for a fair presentation
      of
      the results of operations and financial position. The results of operations
      for
      the interim periods are not necessarily indicative of the results to be expected
      for the full year.




**Note
      2:** **Basis
      of Presentation**




The
      consolidated financial statements include the accounts of Freedom Financial
      Group, Inc. (FFG), and FFG’s wholly owned Canadian subsidiary, T.C.G. – The
      Credit Group Inc. (TCG), which collectively comprise a single reporting segment,
      the “Company.” All significant intercompany transactions have been eliminated in
      consolidation.




In
      accordance with the American Institute of Certified Public Accountants’
Statement of Position 90-7, *Financial
      Reporting by Entities in Reorganization Under the Bankruptcy
      Code* (SOP
      90-7), the Company adopted fresh start reporting as of January 1, 2003, the
      effective date of the Plan of Reorganization.




**Note
      3:** **Finance
      Receivables and Allowance for Credit Losses**




Finance
      receivables consist of the following at September 30, 2007 and December 31,
      2006, respectively:




**2007**
            
            **2006**Automobiles
            
            $
            10,023,077
            
            $
            9,110,368Other
            
            
            1,489,198
            
            
            1,674,956Total
                finance receivables
            
            
            11,512,275
            
            
            10,785,324LessUnearned
                discount
            
            
            407,298
            
            
            388,193Allowance
                for credit losses
            
            
            902,691
            
            
            720,9671,309,989
            
            
            1,109,160Net
                finance receivables
            
            $
            10,202,286
            
            $
            9,676,164




Approximately
      24% and 29% of the above finance receivables as of September 30, 2007 and
      December 31, 2006, respectively, are Canadian in origin.




8




Amounts
      contractually receivable (including principal and interest) under our finance
      receivables at September 30, 2007, were as shown in the following table. The
      Company expects our actual collections to differ significantly from the amounts
      presented below as a result of prepayments, delinquent payments, partial
      payments and nonpayments.




2007
            
            $
            1,664,2432008
            
            
            5,647,8742009
            
            
            4,131,0972010
            
            
            2,632,5722011
            
            
            976,2152012
            
            
            83,457Total
            
            $
            15,135,458




Activity
      in the allowance for credit losses related to finance receivables for the three
      months ended September 30, 2007 and 2006, respectively, was as
      follows:




**2007**
            
            **2006**Balance,
                beginning of period
            
            $
            823,004
            
            $
            447,951Provision
                charged to expense
            
            
            420,623
            
            
            166,178Losses
                charged off
            
            
            (525,314
            )
            
            (355,741
            )Recoveries
                of previously charged off amounts
            
            
            170,923
            
            
            177,769Effect
                of foreign currency translation
            
            
            13,455
            
            
            (413
            )Balance,
                end of period
            
            $
            902,691
            
            $
            435,744




Activity
      in the allowance for credit losses related to finance receivables for the nine
      months ended September 30, 2007 and 2006, respectively, was as
      follows:




**2007**
            
            **2006**Balance,
                beginning of period
            
            $
            720,967
            
            $
            412,228Provision
                charged to expense
            
            
            1,161,837
            
            
            708,338Losses
                charged off
            
            
            (1,375,090
            )
            
            (1,043,219
            )Recoveries
                of previously charged off amounts
            
            
            364,349
            
            
            350,776Effect
                of foreign currency translation
            
            
            30,628
            
            
            7,621Balance,
                end of period
            
            $
            902,691
            
            $
            435,744




The
      Company’s nonearning finance receivables totaled $304,828 at September 30, 2007.
      The Company provided an allowance for credit losses related to these receivables
      of $274,345.




9




**Note
      4:** **Bank
      Line of Credit**




On
      August
      18, 2006, the Company entered into a revolving credit loan and security
      agreement with Heartland Bank (“Heartland”) to provide the Company with a
      revolving line of credit of up to $3,000,000 to be used for working capital
      and
      general corporate and operating purposes. The maximum loan amount is limited
      to
      the lesser of $3,000,000 or 50% of the outstanding principal balance of the
      Company’s domestic finance receivables meeting certain underwriting and
      delinquency criteria. Borrowings under the line of credit bear interest at
      the
      bank’s prime rate plus 3% (10.75% at September 30, 2007) and are collateralized
      by substantially all of the Company’s assets, including the Company’s
      wholly-owned subsidiary, TCG. On August 15, 2007, the original loan maturity
      date of August 18, 2007 was extended to February 1, 2008.




The
      loan
      agreement contains covenants, among others, that 1) require the Company to
      maintain a minimum net worth of $10,000,000 as of the end of each fiscal
      quarter, 2) restrict the Company’s ability to declare or pay dividends, and 3)
      limit the amount of capital expenditures the Company can incur in any fiscal
      year. The Company was not in violation of any financial covenants as of
      September 30, 2007.




The
      Company incurred fees payable to its investment banking firm and to Heartland
      totaling $179,664 in connection with consummating the revolving credit loan
      agreement. These fees were recorded as deferred financing fees when paid and
      were amortized to interest expense over the twelve-month original term of the
      loan agreement on a straight-line basis. The Company incurred fees totaling
      $10,950 in connection with the line of credit extension. The extension fees
      have
      been recorded as deferred financing fees and are being amortized to interest
      expense over the term of the extension.




The
      Company also issued warrants to purchase its common stock in connection with
      consummating the revolving credit loan agreement. The warrants were determined
      to have a nominal fair value on their date of issuance and therefore the Company
      did not recognize any expense related thereto. As of September 30, 2007 none
      of
      the warrants have been exercised and warrants to purchase up to 436,778 shares
      of the Company’s common stock at an exercise price of $0.63 per share and up to
      291,185 shares at an exercise price of $0.70 per share were outstanding. These
      warrants expire in August 2011 and are subject to certain anti-dilution
      protections.




**Note
      5:** **Income
      Taxes**




We
      adopted the provisions of Financial Accounting Standards Board (“FASB”)
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an
      interpretation of FASB Statement No. 109” (“FIN 48”) on January 1, 2007. FIN 48
      clarifies the accounting for uncertainty in income taxes recognized in a
      company’s financial statements in accordance with FASB Statement No. 109,
“Accounting for Income Taxes”, and prescribes a recognition threshold and
      measurement process for financial statement recognition and measurement of
      a tax
      position taken or expected to be taken in a tax return. FIN 48 also provides
      guidance on derecognition, classification, interest and penalties, accounting
      in
      interim periods, disclosure and transition.




Based
      on
      our evaluation, we have concluded that there are no significant uncertain tax
      positions requiring recognition in our consolidated financial statements. Our
      evaluation was performed for the tax years ended December 31, 2003, 2004, 2005
      and 2006, the tax years which remain subject to examination by major tax
      jurisdictions as of September 30, 2007.




We
      may
      from time to time be assessed interest or penalties by tax jurisdictions,
      although any such assessments historically have been minimal and immaterial
      to
      our financial results. In the event we have received an assessment for interest
      or penalties, it has been classified in the financial statements as provision
      for income taxes.




10




**Note
      6:** **Treasury
      Stock**




On
      August
      8, 2007, the Company received the resignation of Mr. James K. Browne. Per the
      resignation, which was effective August 1, 2007, Mr. Browne resigned as an
      officer, director and employee of the Company’s wholly-owned subsidiary, T.C.G.
      - The Credit Group Inc. (“TCG”), and as an officer of Freedom Financial Group,
      Inc. Concurrent with the Company’s receipt of the resignation, the Company
      entered into a severance agreement with Mr. Browne. The terms of the severance
      agreement called for (1) the Company to make payments to Mr. Browne totaling
      approximately $125,000; (2) the return to the Company of 139,458 shares of
      the
      Company’s common stock held by Mr. Browne; and (3) the full and final release by
      Mr. Browne of any and all claims he had or may have had against the Company.
      The
      139,458 shares of common stock were returned to the Company’s treasury at an
      allocated cost of $12,303.




**Note
      7:** **Commitments** **and Contingencies**




The
      Company had outstanding commitments to purchase finance receivables totaling
      approximately $1,337,185 as of September 30, 2007. These commitments generally
      expire between 20 and 30 days after they are issued if unused. Typically, the
      Company funds between 30% and 40% of its outstanding commitments.




On
      October 10, 2005, the Company entered into an agency agreement (the “2005 Agency
      Agreement”) with an investment banking firm to act as the Company’s exclusive
      placement agent in connection with raising debt and/or equity financing. The
      2005 Agency Agreement calls for the Company to pay cumulative transaction fees
      totaling not less than $250,000. As of September 30, 2007 the Company has paid
      transaction fees totaling $120,000 and remains committed to pay an additional
      $130,000 upon consummation of a financing transaction or cancellation of the
      agreement by the Company. On August 30, 2007, the Company modified the 2005
      Agency Agreement to give the Company the right to engage a second investment
      banking firm on a limited basis.




On
      September 25, 2007 the Company entered into an agency agreement (the “2007
      Agency Agreement”) with a second investment banking firm to act as the Company’s
      placement agent in connection with raising debt financing from a specific
      limited number of potential lenders. The Company paid a non-refundable
      engagement fee of $15,000 upon the execution of the 2007 Agency Agreement.
      The
      2007 Agency Agreement also requires the Company to pay a non-refundable $10,000
      retainer fee each month during the six-month term of the agreement. The
      engagement fee and retainer fees paid, which are recorded as deferred financing
      fees, shall be credited against any transaction fees payable to the investment
      banking firm upon the closing of certain debt financing transactions.




The
      Company is also obligated under certain noncancelable operating leases for
      premises and equipment with terms ranging up to 39 months. Future minimum
      payments under these noncancelable operating leases as of September 30, 2007
      are:




2007
            
            $
            13,4082008
            
            
            35,4932009
            
            
            10,0962010
            
            
            3,365Total
            
            $
            62,362




Certain
      officers of the Company hold a total of 1,793,035 shares of the Company’s common
      stock, all or a portion of which, the Company may be required to repurchase,
      at
      the option of the officers upon the occurrence of certain events, which the
      Company believes are not probable at this time, at a price per share ranging
      from 90% to 100% of the common stock’s fair market value. The specific terms
      concerning these options and the repurchase of the common stock are set forth
      in
      the Management Shareholders Agreement filed as an exhibit to the Company’s Form
      8-K filed on August 17, 2007.




11




As
      of
      September 30, 2007, the Company had a contingent liability to pay a former
      officer of TCG approximately $25,000 under the terms of a severance agreement
      (see *Note
      6, Treasury Stock)* payable
      upon the completion of certain acts by the former officer. The former officer
      satisfied the terms of the severance agreement in October 2007, at which time
      the Company paid the final $25,000 due under the terms of the agreement and
      recognized the expense.




The
      Company had no other commitments as of September 30, 2007.




**Note
      8:** **Loss
      Per Share**




Basic
      earnings per share is computed by dividing net loss by the weighted average
      number of common shares outstanding during the period. Diluted earnings per
      share is computed similar to basic earnings per share except the denominator
      is
      increased to include the number of additional common shares that would have
      been
      outstanding if dilutive potential common shares had been issued. Since the
      effect of converting the common stock warrants would be anti-dilutive for the
      three months and nine months ended September 30, 2007 and the effect of
      converting the redeemable preferred stock would be antidilutive for the three
      months and nine months ended September 30, 2006, basic and diluted loss per
      share amounts are based on the weighted average number of common shares
      outstanding.




Loss
      per
      share for the three months ended September 30, 2007, was computed as
      follows:




**Weighted****Average**
            
            **Per
                Share****Loss**
            
            **Shares**
            
            **Amount**Net
                loss
            
            $
            (402,664
            )
            
            19,836,050Basic
                and diluted loss per share
            
            
            
            
            
            
            
            $
            (0.02
            )




Loss
      per
      share for the three months ended September 30, 2006, was computed as
      follows:




**Weighted****Average**
            
            **Per
                Share****Loss**
            
            **Shares**
            
            **Amount**Net
                loss
            
            $
            (113,523
            )
            
            10,928,252Basic
                and diluted loss per share
            
            
            
            
            
            
            
            $
            (0.01
            )







Loss
      per
      share for the nine months ended September 30, 2007, was computed as
      follows:




**Loss**
            
            **Weighted**
              **Average**
              **Shares**
            
            **Per
                Share Amount**Net
                loss
            
            $
            (1,089,575
            )
            
            19,896,351Basic
                and diluted loss per share
            
            
            
            
            
            
            
            $
            (0.05
            )





12


Loss
      per
      share for the nine months ended September 30, 2006, was computed as
      follows:




**Weighted****Average**
            
            **Per
                Share****Loss**
            
            **Shares**
            
            **Amount**Net
                income
            
            $
            (686,907
            )
            
            10,928,252Basic
                and diluted loss per share
            
            
            
            
            
            
            
            $
            (0.06
            )




**Note
      9:** **Operating
      Expenses**




The
      components of operating expenses for the three months ended September 30, 2007
      and 2006, respectively, are as follows:




**2007**
            
            **2006**Salaries
                and benefits
            
            $
            379,820
            
            $
            353,885Professional
                fees
            
            
            52,228
            
            
            104,478Insurance
            
            
            39,847
            
            
            34,693Other
            
            
            174,472
            
            
            215,670$
            646,367
            
            $
            708,726







The
      components of operating expenses for the nine months ended September 30, 2007
      and 2006, respectively, are as follows:




**2007**
            
            **2006**Salaries
                and benefits
            
            $
            1,108,178
            
            $
            1,138,543Professional
                fees
            
            
            207,172
            
            
            419,239Insurance
            
            
            121,557
            
            
            105,900Other
            
            
            430,022
            
            
            498,694$
            1,866,929
            
            $
            2,162,376




**Note
      10:** **Stock
      Based Compensation**




On
      January 9, 2006, in anticipation of the potential conversion of the Company’s
      outstanding preferred stock into common stock and to address the anti-dilution
      rights granted to certain officers of the Company with respect to common stock
      issued to them under the terms of the February 2003 Stock Bonus Plan *(see
      Note 6, Commitments and Contingencies)* ,
      the
      Company entered into a Stock Grant Agreement (the “Agreement”) pursuant to which
      the officers were granted a total of 962,493 restricted shares of common stock
      (the “Grant Shares”). As a condition to receiving the Grant Shares under the
      Agreement, the officers agreed to waive their rights to receive bonuses of
      additional common stock resulting from any future conversion of the Company’s
      preferred stock into common stock. Additionally, the Agreement places various
      conditions and restrictions on both the Grant Shares and on all other shares
      then-owned by them (the “Existing Shares”):




1.
            The
                Grant Shares are subject to forfeiture if the Company does not raise
                at
                least $10,000,000 in debt and/or equity financing before January
                9, 2009.
                Additionally, each officer must forfeit their Grant Shares if their
                employment with the Company is terminated for any reason prior to
                the
                Company raising at least $10,000,000 in debt and/or equity
                financing.




13




2.
            The
                officers relinquish any rights to receive dividends or proceeds from
                the
                liquidation of the Company until the Company has raised debt and/or
                equity
                financing of not less than
                $10,000,000.




3.
            The
                officers may not sell any Existing Shares or Grant Shares until the
                Company has raised debt and/or equity financing of at least $10,000,000.
                No sooner than six months after raising debt and/or equity financing
                of at
                least $10,000,000 the officers may sell all of their Existing Shares
                and
                up to half of their Grant Shares. The officers may sell the remainder
                of
                their Grant Shares only if the Company has raised debt and/or equity
                financing of at least $15,000,000.




4.
            Notwithstanding
                the above restrictions, the officers’ Existing Shares and Grant Shares may
                be sold upon their death or permanent disability, or if there is
                a change
                in control of the Company.




The
      Company accounted for the Stock Grant Agreement under the provisions of FASB
      Statement No. 123(R), “Share Based Payment”, and determined the fair value of
      the Grant Shares to be $4,812 on the date they were granted. The fair value
      of
      the Grant Shares was estimated using several methods including discounted cash
      flow analysis, liquidation analysis and comparison to recent sales prices of
      the
      Company’s preferred stock and unrestricted common stock. As a result of this
      Stock Grant Agreement the Company recognized compensation expense of $4,812
      in
      its statement of operations for the nine months ended September 30,
      2006.




On
      August
      16, 2007 the Company entered into a Management Shareholders Agreement (the
“2007
      Agreement”) with two officers of the Company, Jerald L. Fenstermaker (CEO and
      Director) and Daniel F. Graham (CFO) (collectively, the “Management
      Shareholders”). The 2007 Agreement rescinds and terminates all prior agreements
      between the Company and the Management Shareholders pertaining to the shares
      of
      the Company’s common stock held by the Management Shareholders, including the
      January 9, 2006 Stock Grant Agreement, and places certain conditions and
      restrictions on said shares. A copy of the Management Shareholders Agreement
      was
      filed as an exhibit to the Company’s Form 8-K filed on August 17,
      2007.




The
      Company determined that in accordance with Financial Accounting Standards Board
      Statement No. 123(R), “Share Based Payment”, no incremental compensation cost
      resulted from the execution of the 2007 Agreement, and the Company therefore
      recognized no compensation expense as a result of entering into the 2007
      Agreement.




**Note
      11:** **Foreign
      Operations**




The
      Company’s foreign operations, all of which are in Canada, are conducted through
      its wholly owned subsidiary, T.C.G. – The Credit Group Inc. based in
      Winnipeg, Manitoba. Total assets, net of valuation allowances, associated with
      foreign operations were $3,865,765 at September 30, 2007.




Total
      revenues, loss before taxes and net loss from foreign operations for the three
      months ended September 30, 2007 and 2006, respectively, were as shown below.
      Loss before income taxes and net loss reflect interest charges on amounts due
      to
      FFG of $102,371 and $102,995 for the three months ended September 30, 2007
      and
      2006, respectively. Loss before income taxes and net loss also reflect
      management and accounting fees charged to TCG by FFG for certain administrative
      services performed by FFG on TCG’s behalf of $24,000 for each of the three month
      periods ended September 30, 2007 and 2006. These interest charges and management
      and accounting fees eliminate in consolidation.




**2007**
            
            **2006**Total
                revenues
            
            $
            204,184
            
            $
            279,119Loss
                before income taxes
            
            $
            (132,654
            )
            $
            25,846Net
                Loss
            
            $
            (132,654
            )
            $
            25,846





14




Total
      revenues, loss before taxes and net loss from foreign operations for the nine
      months ended September 30, 2007 and 2006, respectively, were as shown below.
      Loss before income taxes and net loss reflect interest charges on amounts due
      to
      FFG of $315,914 and $297,624 for the nine months ended September 30, 2007 and
      2006, respectively. Loss before income taxes and net loss also reflect
      management and accounting fees charged to TCG by FFG for certain administrative
      services performed by FFG on TCG’s behalf of $72,000 for each of the nine month
      periods ended September 30, 2007 and 2006. These interest charges and management
      and accounting fees eliminate in consolidation.




**2007**
            
            **2006**Total
                revenues
            
            $
            636,226
            
            $
            864,215Loss
                before income taxes
            
            $
            (291,590
            )
            $
            (30,733
            )Net
                loss
            
            $
            (291,590
            )
            $
            (30,733
            )




**Note
      12:** **Additional
      Cash Flow Information**




The
      Company made cash interest payments totaling $40,586 and $90,551 during the
      three month and nine month periods ended September 30, 2007, respectively,
      and
      made cash interest payments totaling $556 during the three month and nine month
      periods ended September 30, 2006.




The
      Company made no cash payments for income taxes during the three month and nine
      month periods ended September 30, 2007 and 2006.




**Note
      13:** **Recently
      Issued Accounting Pronouncements**




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
      No. 157”), which clarifies the principle that fair value should be based on the
      assumptions market participants would use when pricing an asset or liability
      and
      establishes a fair value hierarchy that prioritizes the information used to
      develop those assumptions. Under this statement, fair value measurements would
      be separately disclosed by level within the fair value hierarchy. This statement
      is effective for our fiscal year beginning January 1, 2008. We are in the
      process of evaluation this statement, but do not expect that the adoption of
      SFAS No. 157 will have a material impact on our consolidated financial
      statements.




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities, including an amendment of SFAS
      No.
      115”. This statement permits entities to choose to measure many financial
      instruments and certain other items at fair value. The objective is to improve
      financial reporting by providing entities with the opportunity to mitigate
      volatility in reported earnings caused by measuring related assets and
      liabilities differently without having to apply complex hedge accounting
      provisions. This statement is expected to expand the use of fair value
      measurement, which is consistent with the FASB’s long-term objectives for
      accounting for financial instruments. SFAS No. 159 is effective for our fiscal
      year beginning January 1, 2008. We are in the process of evaluating this
      statement, but do not expect that the adoption of SFAS No. 159 will have a
      material impact on our consolidated financial statements.


**Note
        14:** **Subsequent
        Event**


On
        October 31, 2007, the Company and one of its investment banking firms mutually
        entered into a Contract Termination Agreement and Release (the “Termination
        Agreement”), terminating the 2005 Agency Agreement ( *see
        Note 7, Commitments and Contingencies* ).
        Concurrent with the execution of the Termination Agreement, the Company paid
        a
        termination fee of $104,000 thereby fully and forever releasing the Company
        from
        any and all obligations under the 2005 Agency Agreement.


15




**ITEM
      2.** **Management’s
      Discussion and Analysis** **** **of
      Financial Condition and Results of Operations** ****





**FORWARD-LOOKING
      STATEMENTS**





*This
      Quarterly Report on Form 10-QSB contains forward-looking statements within
      the
      meaning of the Private Securities Litigation Reform Act of 1995. Words such
      as
“intend,” “anticipate,” “believe,” “estimate,” “plan,” and “expect,” and
      variations of these words and similar expressions are intended to identify
      these
      forward-looking statements. All statements other than statements of historical
      facts contained in this report, including statements regarding our future
      financial position, business strategy, budgets, projected costs and plans and
      objectives of management for future operations, are considered to be
      forward-looking statements. We express our expectations, beliefs or projections
      in good faith and believe our expectations reflected in these forward-looking
      statements are based on reasonable assumptions; however, we cannot assure you
      that these expectations, beliefs or projections will prove to have been correct.
      Risks, uncertainties and assumptions that could cause actual results to differ
      materially from the expectations reflected in the forward-looking statements
      include, among other things: (i) the risks associated with business expansion;
      (ii) the ability to obtain sufficient outside debt and/or equity financing
      on
      terms acceptable to us in order to meet our cash requirements over the coming
      12
      months; (iii) our ability to compete successfully against competitors with
      significantly greater financial, marketing and advertising resources than the
      Company; and (iv) the risk of adverse economic conditions lessening demand
      for
      our products.*





*Readers
      are referred to the caption “Risk Factors” appearing at the end of* ***ITEM
      1, Description of Business*** *in
      our annual report on Form 10-KSB, filed on March 27, 2007, for additional
      factors that may affect our forward-looking statements. In light of these risks,
      uncertainties and assumptions, the forward-looking events discussed in this
      Form
      10-QSB might not occur. We undertake no obligation to update or revise our
      forward-looking statements, whether as a result of new information, future
      events or otherwise.*





The
      following discussion and analysis should be read in conjunction with the
      Condensed Consolidated Financial Statements of the Company and the related
      notes
      thereto and other information included or incorporated by reference
      herein.





***Overview***





We
      are a
      consumer finance company specializing in the acquisition, collection and
      servicing of sub-prime automobile loans purchased primarily from independent
      used car dealers. We invest significant amounts of cash to acquire Installment
      Contracts. (As used herein, the term “Installment Contract” includes all motor
      vehicle installment contracts, consumer installment contracts and small ticket
      leases acquired by the Company.) We generate cash over the terms of those
      Installment Contracts in the form of interest and principal payments we collect.





Our
      primary source of revenue is interest income generated from our portfolio of
      Installment Contracts.





The
      Company’s predecessor, Stevens Financial Group, Inc., filed for Chapter 11
      bankruptcy on March 19, 2001. See Part I, Item 1, under the heading ***Reorganization
      of Predecessor Under Chapter 11*** in the
      Company’s registration statement on Form 10-SB/A, filed on September 28,
      2005.





16




As
      a
      result of the Company’s reorganization, the Company’s U.S. operations were
      suspended between March 19, 2001 and January 1, 2003. From January 1, 2003
      through October of 2004, the Company engaged in limited operations. Due to
      this
      lengthy period of suspended or limited operations, when the Company fully
      re-entered the U.S. marketplace in October of 2004 it was essentially as a
      “start-up” organization. We consider ourselves to be a “growth” company, in that
      our primary focus is on increasing the size of our Installment Contracts
      portfolio. Our goal is to grow our portfolio to a size such that the interest
      income generated from the portfolio is sufficient to provide consistent
      operating profits.





The
      Company’s primary focus is on acquiring sub-prime automobile loans from
      independent used car dealers. In addition, the Company’s Canadian subsidiary,
      TCG, has in the past acquired a variety of consumer Installment Contracts,
      including small ticket leases, loans secured by home appliances and other
      consumer goods, and loans for bulk food purchases. While TCG will continue
      to
      acquire these types of Installment Contracts, TCG now also acquires sub-prime
      automobile loans from independent used car dealers. On a consolidated basis,
      the
      Company’s portfolio of outstanding Installment Contracts has been increasingly
      comprised of sub-prime automobile loans. The trend in the percentage of the
      Company’s outstanding receivables from automobile-secured Installment Contracts
      is as follows:





December
                31, 2003
            
            
            17
            %December
                31, 2004
            
            
            45
            %December
                31, 2005
            
            
            79
            %December
                31, 2006
            
            
            84
            %September
                30, 2007
            
            
            87
            %




The
      Company is devoting the majority of its marketing resources and efforts to
      acquiring sub-prime automobile loans, and anticipates that this trend will
      continue over the coming twelve months.





Over
      the
      next fifteen months, in addition to closely monitoring this trend, the Company’s
      management will be focused on the following:





(1)
            Consistently
                acquiring an increasing volume of sub-prime automobile-secured Installment
                Contracts, through our point-of-sale programs, that meet the Company’s
                underwriting guidelines;





(2)
            Obtaining
                additional outside debt and/or equity financing to meet the Company’s
                future cash requirements;





(3)
            Minimizing
                the credit losses in the Installment Contracts portfolio;
                and





(4)
            Monitoring
                key performance measures, including cost per loan acquired, book-to-look
                ratio (computed as the number of contracts acquired compared to the
                number
                of credit applications received/reviewed), turnaround time for responding
                to credit applications submitted by dealers, and turnaround time
                for
                funding a loan package submitted by a
                dealer.




17




***Recent
      Developments***





On
      August
      8, 2007, the Company received the resignation of Mr. James K. Browne. Per the
      resignation, which was effective August 1, 2007, Mr. Browne resigned as an
      officer, director and employee of the Company’s wholly-owned subsidiary,
      T.C.G. – The Credit Group Inc., and as an officer of Freedom Financial
      Group, Inc. Concurrent with the Company’s receipt of the resignation, the
      Company entered into a severance agreement with Mr. Browne. The terms of the
      severance agreement call for (1) the Company to make payments to Mr. Browne
      totaling approximately $125,000; (2) the return to the Company of 139,458 shares
      of the Company’s common stock currently held by Mr. Browne; and (3) the full and
      final release by Mr. Browne of any and all claims he has or may have against
      the
      Company.





Effective
      August 1, 2007, Ms. Erin Fraser, the Manager of Credit and Administration of
      TCG
      since September 2002, was appointed to the Board of Directors of T.C.G. –
The Credit Group Inc. Effective September 16, 2007 Ms. Fraser was appointed
      Chief Operating Officer of T.C.G. – The Credit Group Inc.





On
      August
      15, 2007 the Company executed an amendment to its $3,000,000 Revolving Credit
      Loan and Security Agreement (the “Loan Agreement”) with Heartland Bank. The
      amendment extended the maturity date of the Loan Agreement from August 18,
      2007
      to February 1, 2008. In connection with the extension the Company incurred
      fees
      of $10,950 which were recorded as deferred financing fees and are being
      amortized over the term of the extension.





On
      August
      16, 2007 the Company entered into a Management Shareholders Agreement (the
“2007
      Agreement”) with two officers of the Company, Jerald L. Fenstermaker (CEO and
      Director) and Daniel F. Graham (CFO) (collectively, the “Management
      Shareholders”). The 2007 Agreement rescinds and terminates all prior agreements
      between the Company and the Management Shareholders pertaining to the shares
      of
      the Company’s common stock held by the Management Shareholders, including the
      January 9, 2006 Stock Grant Agreement, and places certain conditions and
      restrictions on said shares. The Company determined that in accordance with
      Financial Accounting Standards Board Statement No. 123(R), “Share Based
      Payment”, no incremental cost resulted from the execution of the 2007 Agreement,
      and the Company therefore recognized no compensation expense as a result of
      entering into the 2007 Agreement. A copy of the Management Shareholders
      Agreement was filed as an exhibit to the Company’s Form 8-K filed on August 17,
      2007.





Concurrent
      with the execution of the Management Shareholders Agreement, the Company entered
      into an Employment Agreement (the “Employment Agreement”) with Jerald L.
      Fenstermaker, the Company’s President and Chief Executive Officer. The
      Employment Agreement, which terminates on January 9, 2009, provides for an
      annual base salary of $185,000, normal and customary fringe benefits and nominal
      severance benefits in the event of termination without cause. A copy of the
      Employment Agreement was filed as an exhibit to the Company’s Form 8-K filed on
      August 17, 2007.





On
      August
      17, 2007, BKD, LLP resigned as the Company’s independent registered public
      accounting firm (auditor). On August 21, 2007, the Company, upon the
      recommendation of the Audit Committee of the Company’s Board of Directors,
      appointed Weaver & Martin, LLC of Kansas City, Missouri as the Company’s
      independent registered public accounting firm (auditor) for the remainder of
      the
      fiscal year ending December 31, 2007.





18




On
      August
      30, 2007, the Company modified the October 10, 2005 agency agreement (the "2005
      Agency Agreement") with its investment banking firm to give the Company the
      right to engage a second investment banking firm on a limited basis. On
      September 25, 2007 the Company entered into an agency agreement (the “2007
      Agency Agreement”) with a second investment banking firm to act as the Company’s
      placement agent in connection with raising debt financing from a specific
      limited number of potential lenders. The Company paid a non-refundable
      engagement fee of $15,000 upon the execution of the 2007 Agency Agreement.
      The
      2007 Agency Agreement also requires the Company to pay a non-refundable $10,000
      retainer fee each month during the six-month term of the agreement. The
      engagement fee and retainer fees paid, which are recorded as deferred financing
      fees, shall be credited against any transaction fees payable to the investment
      banking firm upon the closing of certain debt financing
      transactions.




On
        October 31, 2007, the Company and one of its investment banking firms mutually
        entered into a Contract Termination Agreement and Release (the “Termination
        Agreement”), terminating the 2005 Agency Agreement. Concurrent with the
        execution of the Termination Agreement, the Company paid a termination fee
        of
        $104,000 thereby fully and forever releasing the Company from any and all
        obligations under the 2005 Agency Agreement.




***Critical
      Accounting Policies, Judgments and Estimates***





The
      accounting and reporting policies of the Company conform to U.S. generally
      accepted accounting principles (“GAAP”). The preparation of financial statements
      in conformity with GAAP requires management to make estimates and assumptions
      that affect the amounts reported in the consolidated financial statements and
      the accompanying notes. Actual results could differ from those
      estimates.





The
      Company considers the determination of the allowance for credit losses to
      involve a higher degree of judgment and complexity than its other significant
      accounting policies. The allowance for credit losses is calculated with the
      objective of maintaining an allowance for credit losses that management believes
      is adequate to absorb reasonably estimable probable losses in the Company’s
      portfolio of Installment Contracts. Management’s determination of the adequacy
      of the allowance for credit losses is based on periodic evaluations of the
      Company’s portfolio of Installment Contracts and other relevant factors.
      However, this evaluation is inherently subjective as it requires material
      estimates, including, among others, expected default probabilities, value of
      collateral, the amount and timing of expected future cash flows on delinquent
      loans, estimated losses and general amounts for historical loss experience.
      The
      process also considers prevailing and expected future economic conditions,
      uncertainties in estimating losses and inherent risks in the Installment
      Contracts portfolio. All of these factors may be subject to significant change.
      To the extent actual outcomes differ from management estimates, additional
      provisions for credit losses may be required that would adversely impact our
      earnings in future periods.





The
      Company’s management evaluates the adequacy of the allowance for credit losses
      on a regular basis. This evaluation is based on a review of various quantitative
      and qualitative analyses. Quantitative analyses include the review of all loans
      charged-off by asset class, static pool analysis by month of acquisition and
      by
      dealer, review of delinquency trends, and analysis of the historical cumulative
      losses in the portfolio. Other quantitative analyses include a review of the
      current delinquency ratios and an analysis of the relative size of each asset
      class in relation to historical amounts. Qualitative analyses include an
      assessment of prevailing and anticipated economic conditions, trends in
      deficiency balance collections, trends in the number of loan modifications
      and
      extensions, trends in average borrower credit scores and trends in the
      percentage of balances recovered through sale of collateral. The analysis of
      the
      adequacy of the allowance for credit losses is dependent upon effective
      quantitative and qualitative analyses, some of which are inherently subjective
      as they require estimates that are susceptible to significant revision as more
      information becomes available.




19




***Selected
      Financial Data***





The
      following table presents selected unaudited summary information for the three
      months and nine months ended September 30, 2007 and 2006. This table should
      be
      read in conjunction with the Condensed Consolidated Financial Statements and
      the
      notes thereto, included herein.





**Three
                Months Ended**
              **September
                30,**
            
            **Nine
                Months Ended**
              **September
                30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Installment
                Contracts acquired during the period (total principal
                amount)
            
            $
            1,970,256
            
            $
            1,636,268
            
            $
            6,190,400
            
            $
            6,138,863Purchase
                price of Installment Contracts acquired
            
            $
            1,876,172
            
            $
            1,558,765
            
            $
            5,855,701
            
            $
            5,811,995Percentage
                of dollar amount paid to principal balance acquired
            
            
            95.2
            %
            
            95.3
            %
            
            94.6
            %
            
            94.7
            %Number
                of Installment Contracts acquired during the period
            
            
            228
            
            
            246
            
            
            786
            
            
            966Average
                principal balance acquired
            
            $
            8,641
            
            $
            6,652
            
            $
            7,876
            
            $
            6,355Acquisition
                cost per acquired Installment Contract (including
                overhead)
            
            $
            575
            
            $
            887
            
            $
            604
            
            $
            814Monthly
                servicing cost per Installment Contract (including
                overhead)
            
            $
            16.29
            
            $
            20.75
            
            $
            19.29
            
            $
            21.42




***Results
      of Operations***





**Interest
      Income**





Our
      interest income totaled $679,924 and $2,006,125 for the three months and nine
      months ended September 30, 2007, respectively, compared to $685,385 and
      $2,032,608 for the three months and nine months ended September 30,
      2006.





The
      following tables present information relative to the average balances and
      interest rates of our interest earning assets for the three months and nine
      months ended September 30, 2007 and 2006, respectively:





**For
                the Three Months Ended September 30, 2007 and
                2006****2007**
            
            **2006****Average**
            
            **Interest**
            
            
            
            **Average**
            
            **Interest****Balance**
            
            **Income**
            
            **Yield**
            
            **Balance**
            
            **Income**
            
            **Yield****Installment
                Contracts**
            
            $
            10,976,506
            
            $
            665,434
            
            
            24.25%
            
            $
            10,903,219
            
            $
            675,353
            
            
            24.78%**Cash
                and cash equivalents**
            
            
            1,542,192
            
            
            14,286
            
            
            3.71%
            
            
            1,053,189
            
            
            9,647
            
            
            3.66%**Notes
                receivable**
            
            
            6,212
            
            
            204
            
            
            13.14%
            
            
            11,725
            
            
            385
            
            
            13.13%**Total**
            
            $
            12,524,910
            
            $
            679,924
            
            
            21.71%
            
            $
            11,968,133
            
            $
            685,385
            
            
            22.91%




20







**For the Nine Months Ended September 30, 2007 and 2006****2007**
            
            **2006****Average**
            
            **Interest**
            
            
            
            **Average**
            
            **Interest****Balance**
            
            **Income**
            
            **Yield**
            
            **Balance**
            
            **Income**
            
            **Yield****Installment
                Contracts**
            
            $
            10,780,469
            
            $
            1,966,438
            
            
            24.32%
            
            $
            10,633,303
            
            $
            1,990,409
            
            
            24.89%**Cash
                and cash equivalents**
            
            
            1,491,600
            
            
            39,093
            
            
            3.49%
            
            
            1,435,853
            
            
            41,079
            
            
            3.81%**Notes
                receivable**
            
            
            6,212
            
            
            594
            
            
            12.75%
            
            
            11,725
            
            
            1,120
            
            
            12.74%**Total**
            
            $
            12,278,281
            
            $
            2,006,125
            
            
            21.79%
            
            $
            12,110,881
            
            $
            2,032,608
            
            
            22.38%





The
      decrease in yield on our Installment Contracts is primarily the result of
      changes in the mix of our portfolio. Throughout 2006 and the first nine months
      of 2007 our portfolio of Installment Contracts has been increasingly comprised
      of contracts acquired through our point-of-sale automobile financing programs.
      These contracts typically have lower yields than the other types of contracts
      in
      our portfolio, among them, automobile contracts acquired in bulk purchase
      transactions, small ticket leases, loans secured by home appliances and other
      consumer goods and loans for bulk food purchases.





The
      following table sets forth the changes in interest income attributable to
      changes in volume (change in average balance multiplied by the prior period
      yield) and changes in rate (change in yield multiplied by the prior period
      average balance). Changes due to the rate/volume variance (the combined effect
      of change in yield and change in average balance) have been allocated
      proportionately based on the absolute value of the rate and volume
      variances.





**For the Three Months Ended September 30, 2007 Compared**
              **to the Three Months Ended September 30, 2006****Volume**
            
            **Rate**
            
            **Total**Increase
                (decrease) in interest income:Installment
                Contracts
            
            $
            4,585
            
            $
            (14,504
            )
            $
            (9,919
            )Cash
                and cash equivalents
            
            
            4,529
            
            
            110
            
            
            4,639Notes
                receivable
            
            
            (181
            )
            
            —
            
            
            (181
            )Total
                Interest Income
            
            $
            8,933
            
            $
            (14,394
            )
            $
            (5,461
            )


21




**For the Nine Months Ended September 30, 2007 Compared**
              **to the Nine Months Ended September 30, 2006****Volume**
            
            **Rate**
            
            **Total**Increase
                (decrease) in interest income:Installment
                Contracts
            
            $
            22,334
            
            $
            (46,305
            )
            $
            (23,971
            )Cash
                and cash equivalents
            
            
            1,711
            
            
            (3,697
            )
            
            (1,986
            )Notes
                receivable
            
            
            (527
            )
            
            1
            
            
            (526
            )Total
                Interest Income
            
            $
            23,518
            
            $
            (50,001
            )
            $
            (26,483
            )





**Interest
      Expense**





We
      incurred interest expense of $65,604, including amortization of deferred
      financing fees of $25,375, and $24,505, including amortization of deferred
      financing fees of $22,458, during the three months ended September 30, 2007
      and
      2006, respectively. We incurred interest expense of $215,799, including
      amortization of deferred financing fees of $115,207, and $24,505, including
      amortization of deferred financing fees of $22,458, during the nine months
      ended
      September 30, 2007 and 2006, respectively. Our interest expense increased in
      2007 over 2006 as a result of the outstanding balance on our line of credit
      increasing from 2006 to 2007.





**Provision
      for Credit Losses**





Our
      consolidated provision for credit losses totaled $420,623 and $1,161,837 for
      the
      three months and nine months ended September 30, 2007, respectively, compared
      to
      $166,178 and $708,338 for the three months and nine months ended September
      30,
      2006, respectively. The increase in the provision for the three months and
      nine
      months ended September 30, 2007 compared to 2006 is a result of an increase
      in
      net charge-offs as a percent of net contracts to 12.91% and 12.53% for the
      three
      months and nine months ended September 30, 2007, respectively, from 6.53% and
      8.66% for the three months and nine months ended September 30, 2006,
      respectively. As the Company continues to acquire Installment Contracts, and
      our
      average contracts receivable outstanding increases, we expect the charge to
      our
      earnings for credit losses will likewise increase.


22


**Operating
      Expenses**





Our
      operating expenses totaled $646,367 and $1,866,929 for the three months and
      nine
      months ended September 30, 2007, respectively, compared to $708,726 and
      $2,162,376 for the three months and nine months ended September 30, 2006,
      respectively. A summary of these expenses follows:





**Three Months Ended September 30,****2007**
            
            **2006**
            
            **Percent**
              **Change**Salaries
                and benefits
            
            $
            379,820
            
            $
            353,885
            
            
            7.33%Professional
                fees
            
            
            52,228
            
            
            104,478
            
            
            -50.01%Insurance
            
            
            39,847
            
            
            34,693
            
            
            14.86%Other
            
            
            174,472
            
            
            215,670
            
            
            -19.10%Total
            
            $
            646,367
            
            $
            708,726
            
            
            -8.80%




**Nine Months Ended September 30,****2007**
            
            **2006**
            
            **Percent**
              **Change**Salaries
                and benefits
            
            $
            1,108,178
            
            $
            1,138,543
            
            
            -2.67%Professional
                fees
            
            
            207,172
            
            
            419,239
            
            
            -50.58%Insurance
            
            
            121,557
            
            
            105,900
            
            
            14.78%Other
            
            
            430,022
            
            
            498,694
            
            
            -13.77%Total
            
            $
            1,866,929
            
            $
            2,162,376
            
            
            -13.66%





Salaries
      and benefits increased for the three months ended September 30, 2007 as compared
      to 2006 as a result of severance payments made to the former President of TCG
      offset by a decrease in the number of salaried individuals employed by the
      Company and a reduction in the amount of sales commissions paid during 2007.
      Salaries and benefits decreased for the nine months ended September 30, 2007
      as
      compared to 2006 as a result of a decrease in the number of individuals employed
      by the Company and a reduction in sales commissions paid in 2007. As the Company
      continues to grow we expect our salaries and benefits costs to increase, but
      anticipate that as a percentage of total revenues these costs will decrease.
      Professional fees decreased during the three months and nine months ended
      September 30, 2007 compared to the three months and nine months ended September
      30, 2006 as a result of significant non-recurring legal fees incurred during
      2006 associated with the conversion of the Company’s outstanding preferred stock
      into common stock. Insurance expense increased due to higher premiums
      experienced in 2007, the result of an increase in coverage limits of our
      directors and officers liability insurance policy. Other operating costs
      includes, among other items, occupancy costs, licenses and taxes, depreciation,
      postage, supplies, communications, travel and stockholder relations. Other
      operating expenses decreased primarily as a result of a decrease in stockholder
      relations expenses in 2007 as compared to 2006. The Company recognized certain
      credits in 2007 against professional fees related to the conversion of the
      Company’s preferred stock that were charged to operations during the three
      months ended September 30, 2006, which reduced stockholder relations expenses
      for the three and nine months ended September 30, 2007 as compared to
      2006.




Our
      growth plan, if achieved, will cause our operating costs to increase over
      time.


23


The
      Company’s average cost to acquire an Installment Contract (which includes all
      direct marketing, business development and underwriting expenses and an
      allocation of certain overhead costs) during the three month and nine month
      periods ended September 30, 2007 was approximately $575 and $604, respectively,
      per contract as compared to $887 and $814 for the three month and nine month
      periods ended September 30, 2006, respectively. This decrease in average
      acquisition cost is a result of reduced sales and marketing staff employed
      by
      the Company during the three months and nine months ended September 30, 2007
      as
      compared to the three months and nine months ended September 30, 2006, partially
      offset by a decrease in the Company’s book-to-look ratio. For the three month
      and nine month periods ended September 30, 2007, the Company’s book-to-look
      ratio was 5.30% and 6.30%, respectively, compared to 6.09% and 7.33% for the
      three month and nine month periods ended September 30, 2006. Management is
      attempting to increase this ratio, and thereby reduce our average acquisition
      cost, by training our customers to send the Company only those credit
      applications that have a high probability of being approved and purchased by
      us.





The
      Company’s average monthly cost to service an Installment Contract (which
      includes all direct collections and servicing expenses and an allocation of
      certain overhead costs) during the three month and nine month periods ended
      September 30, 2007 was $16.29 and $19.29, respectively, per serviced contract,
      as compared to $20.75 and $21.42 during the three month and nine month periods
      ended September 30, 2006, respectively. Management anticipates that this average
      servicing cost per contract will decrease as the size of the portfolio of
      Installment Contracts increases due to efficiency gains and economies of scale.
      The Company does not pay affiliates to engage in collection
      efforts.





While
      we
      do not formally track our response time for responding to credit applications
      submitted by dealers or our response time for funding a loan package submitted
      by a dealer, we monitor these on a daily basis. Our goal is to reduce these
      response times to better serve the needs of our customers. We believe that
      reducing these response times will also reduce our overall costs of underwriting
      and funding. The Company is evaluating certain monitoring mechanisms that will
      allow us to precisely document and better monitor these times. We anticipate
      installing such mechanisms sometime during 2008.


24


***Financial
      Condition***





**Installment
      Contracts Portfolio**





The
      Company acquired Installment Contracts with outstanding principal balances
      totaling $1,970,256 and $6,190,400, respectively, during the three months and
      nine months ended September 30, 2007.  We invested cash of approximately
      $1,886,597 and $5,882,208, respectively, (including payments of dealer reserves
      and dealer holdbacks) to acquire these contracts.  As a result of these
      acquisitions, our portfolio of Installment Contracts increased from $9,676,164,
      net of an allowance for credit losses of $720,967, at December 31, 2006 to
      $10,202,286, net of an allowance for credit losses of $902,691, at September
      30,
      2007.





All
      of
      the Company’s Installment Contracts are held for investment and are recorded at
      their outstanding principal balances adjusted for unamortized purchase discounts
      and an allowance for credit losses. Discounts on purchased Installment Contracts
      are recognized as income over the respective contractual terms using methods
      that approximate the interest method. A summary of our Installment Contracts
      portfolio as of September 30, 2007 and December 31, 2006 follows:





**September 30, 2007**
            
            **December 31, 2006****United**
              **States**
            
            **Canada**
            
            **Total**
            
            **United**
              **States**
            
            **Canada**
            
            **Total**Automobiles
            
            $
            8,739,652
            
            $
            1,283,425
            
            $
            10,023,077
            
            $
            7,692,121
            
            $
            1,418,247
            
            $
            9,110,368Other
            
            
            -
            
            
            1,489,198
            
            
            1,489,198
            
            
            -
            
            
            1,674,956
            
            
            1,674,956Total
            
            
            8,739,652
            
            
            2,772,623
            
            
            11,512,275
            
            
            7,692,121
            
            
            3,093,203
            
            
            10,785,324LessUnearned
                discount
            
            
            323,409
            
            
            83,889
            
            
            407,298
            
            
            273,457
            
            
            114,736
            
            
            388,193Allowance
                for credit losses
            
            
            749,433
            
            
            153,258
            
            
            902,691
            
            
            551,192
            
            
            169,775
            
            
            720,967Net
            
            $
            7,666,810
            
            $
            2,535,476
            
            $
            10,202,286
            
            $
            6,867,472
            
            $
            2,808,692
            
            $
            9,676,164




25


**Asset
      Quality**





Substantially
      all of the Installment Contracts we acquire are considered sub-prime and are
      subject to a high degree of risk of default by the obligors.





Charge-offs
      directly impact our earnings and cash flows. To minimize the amount of credit
      losses we incur, we monitor delinquent accounts, promptly repossess and remarket
      collateral, attempt to collect deficiency balances, and employ other servicing
      and collection techniques as we deem appropriate.





We
      calculate delinquency based on the number of days payments are contractually
      past due. The following table sets forth information with respect to the
      delinquency of our portfolio of Installment Contracts as of September 30, 2007
      and December 31, 2006, respectively:





**September 30, 2007****United States**
            
            **Canada**
            
            **Total****Amount**
            
            **Pct.**
            
            **Amount**
            
            **Pct.**
            
            **Amount**
            
            **Pct.**Installment
                Contracts
            
            $
            8,739,652
            
            
            100%
            
            $
            2,772,622
            
            
            100%
            
            $
            11,512,274
            
            
            100%Period
                of delinquency:30
                - 59 days
            
            $
            933,955
            
            
            10.69%
            
            $
            68,805
            
            
            2.48%
            
            $
            1,002,760
            
            
            8.71%60
                - 89 days
            
            
            501,910
            
            
            5.74%
            
            
            9,833
            
            
            .35%
            
            
            511,743
            
            
            4.45%90 –
                119
                days
            
            
            277,415
            
            
            3.17%
            
            
            27,413
            
            
            .99%
            
            
            304,828
            
            
            2.65%Total
            
            $
            1,713,280
            
            
            19.60%
            
            $
            106,051
            
            
            3.82%
            
            $
            1,819,331
            
            
            15.80%





**December 31, 2006****United States**
            
            **Canada**
            
            **Total****Amount**
            
            **Pct.**
            
            **Amount**
            
            **Pct.**
            
            **Amount**
            
            **Pct.**Installment
                Contracts
            
            $
            7,692,121
            
            
            100%
            
            $
            3,093,203
            
            
            100%
            
            $
            10,785,324
            
            
            100%Period
                of delinquency:30 –
                59 days
            
            $
            748,375
            
            
            9.73%
            
            $
            109,720
            
            
            3.55%
            
            $
            858,095
            
            
            7.96%60 –
                89 days
            
            
            462,508
            
            
            6.01%
            
            
            76,418
            
            
            2.47%
            
            
            538,926
            
            
            5.00%90
                - 119 days
            
            
            266,282
            
            
            3.46%
            
            
            61,657
            
            
            1.99%
            
            
            327,939
            
            
            3.04%Total
            
            $
            1,477,165
            
            
            19.20%
            
            $
            247,795
            
            
            8.01%
            
            $
            1,724,960
            
            
            15.99%




26


The
      following tables set forth information with respect to actual credit loss
      experience in our portfolio of Installment Contracts for the three months and
      nine months ended September 30, 2007 and 2006, respectively:





**Three Months Ended**
              **September 30, 2007**
            
            **Three Months Ended**
              **September 30, 2006****United**
              **States**
            
            **Canada**
            
            **Total**
            
            **United**
              **States**
            
            **Canada**
            
            **Total**Installment
                Contracts, net of unearned discounts, end of period
            
            $
            8,416,243
            
            $
            2,688,734
            
            $
            11,104,977
            
            $
            7,420,731
            
            $
            3,413,494
            
            $
            10,834,225Installment
                Contracts, net of unearned discounts, average during the period
                (1)
            
            $
            8,309,170
            
            $
            2,667,336
            
            $
            10,976,506
            
            $
            7,363,929
            
            $
            3,539,289
            
            $
            10,903,218Gross
                charge-offs
            
            $
            472,168
            
            $
            53,146
            
            $
            525,314
            
            $
            295,687
            
            $
            60,054
            
            $
            355,741Recoveries
            
            
            155,195
            
            
            15,728
            
            
            170,923
            
            
            137,583
            
            
            40,186
            
            
            177,769Net
                charge-offs
            
            $
            316,973
            
            $
            37,418
            
            $
            354,391
            
            $
            158,104
            
            $
            19,868
            
            $
            177,972Net
                charge-offs as a % of avg. contracts during the period,
                annualized
            
            
            15.26%
            
            
            5.61%
            
            
            12.91%
            
            
            8.59%
            
            
            2.25%
            
            
            6.53%





(1)
      -
      Average is based on month-end balances





**Nine Months Ended**
              **September 30, 2007**
            
            **Nine Months Ended**
              **September 30, 2006****United**
              **States**
            
            **Canada**
            
            **Total**
            
            **United**
              **States**
            
            **Canada**
            
            **Total**Installment
                Contracts, net of unearned discounts, end of period
            
            $
            8,416,243
            
            $
            2,688,734
            
            $
            11,104,977
            
            $
            7,420,731
            
            $
            3,413,494
            
            $
            10,834,225Installment
                Contracts, net of unearned discounts, average during the period
                (1)
            
            $
            8,002,691
            
            $
            2,777,779
            
            $
            10,780,470
            
            $
            6,993,974
            
            $
            3,669,329
            
            $
            10,663,303Gross
                charge-offs
            
            $
            1,172,726
            
            $
            202,364
            
            $
            1,375,090
            
            $
            801,429
            
            $
            241,790
            
            $
            1,043,219Recoveries
            
            
            298,296
            
            
            66,053
            
            
            364,349
            
            
            274,810
            
            
            75,966
            
            
            350,776Net
                charge-offs
            
            $
            874,430
            
            $
            136,311
            
            $
            1,010,741
            
            $
            526,619
            
            $
            165,824
            
            $
            692,443Net
                charge-offs as a % of avg. contracts during the period,
                annualized
            
            
            14.57%
            
            
            6.54%
            
            
            12.50%
            
            
            10.04%
            
            
            6.03%
            
            
            8.66%





(1)
      -
      Average is based on month-end balances


27





The
      Company maintains an allowance for credit losses at an amount it believes is
      adequate to absorb reasonably estimable probable losses in its portfolio of
      Installment Contracts. The Company’s management evaluates the adequacy of the
      allowance for credit losses on a regular basis. In performing these periodic
      evaluations, management follows an appropriately-documented methodology. This
      methodology requires management to evaluate the adequacy of the allowance for
      credit losses based on a review of various quantitative and qualitative analyses
      as described in **Item
      2, MANAGEMENT’S DISCUSSION AND ANALYSIS** ,
      under
      the heading ***Critical
      Accounting Policies, Judgments and Estimates*** .





Our
      allowance for credit losses was $902,691 at September 30, 2007 compared to
      $720,967 at December 31, 2006. As a percentage of our outstanding net
      Installment Contracts, our allowance for credit losses was 8.13% at September
      30, 2007 and 6.93% at December 31, 2006.





During
      the nine months ended September 30, 2007, our net Installment Contracts
      increased $707,846. This increase was the result of an $865,322 increase in
      automobile-secured contracts offset by a $157,476 decrease in all other
      Installment Contracts. The $865,322 increase in automobile-secured Installment
      Contracts was comprised of a $1,115,226 increase in Installment Contracts
      acquired through our U.S. point-of-sale program offset by a $132,254 decrease
      in
      Installment Contracts acquired through our Canadian point-of-sale program,
      and
      an $117,650 decrease in Installment Contracts acquired through bulk purchases.





As
      a
      result of the increases in automobile-secured Installment Contracts in our
      U.S.
      portfolio from December 31, 2006 to September 30, 2007, we provided for a
      specific increase to our allowance for credit losses through a charge to
      earnings.





As
      of
      December 31, 2006, delinquent accounts, defined as accounts 30 or more days
      contractually past due, totaled 15.99% of our outstanding Installment Contracts.
      As of September 30, 2007, delinquent accounts totaled 15.80% of our outstanding
      Installment Contracts.





The
      Company’s loss history in its U.S. portfolio of Installment Contracts and in its
      Canadian portfolio of automobile-secured Installment Contracts is limited.
      Due
      to this limited operating history, using historical loss ratios to predict
      future probable losses is of limited usefulness. Additionally, uncertainty
      exists with respect to the accuracy of our estimates of amounts we will recover
      through the sale of repossessed collateral and with respect to anticipated
      future economic conditions, both in the U.S. and Canada, and their effect on
      the
      performance of our portfolio of Installment Contracts.





During
      the nine months ended September 30, 2007, we experienced net charge-offs of
      $1,010,741, which represented 12.50% of our average outstanding Installment
      Contracts during the period. During the year ended December 31, 2006, we
      experienced net charge-offs of $1,015,798, which represented 9.57% of our
      average outstanding Installment Contracts during the year. To account for this
      increase in charge-offs, we provided for a specific increase to our allowance
      for credit losses.





The
      various increases to our allowance for credit losses described in the preceding
      paragraphs were substantially offset by net charge-offs during the nine months
      ended September 30, 2007 totaling $1,010,741, resulting in an allowance for
      credit losses as of September 30, 2007 of $902,691 or 8.13% of our outstanding
      net Installment Contracts.


Based
      on
      the analyses we performed related to our allowance for credit losses as
      described above and as described in **Item
      2, MANAGEMENT’S DISCUSSION AND ANALYSIS** ,
      under
      the heading ***Critical
      Accounting Policies and Judgments*** ,
      we
      believe that our allowance for credit losses is adequate to cover probable
      losses that can be reasonably estimated as of September 30, 2007.




28




The
      following tables set forth the activity in the allowance for credit losses
      for
      the three months and nine months ended September 30, 2007 and 2006,
      respectively:





**Three Months Ended**
              **September 30, 2007**
            
            **Three Months Ended**
              **September 30, 2006****United**
              **States**
            
            **Canada**
            
            **Total**
            
            **United**
              **States**
            
            **Canada**
            
            **Total**Balance
                at beginning of period
            
            $
            665,837
            
            $
            157,167
            
            $
            823,004
            
            $
            236,147
            
            $
            211,804
            
            $
            447,951Charge-offs
            
            
            (472,168
            )
            
            (53,146
            )
            
            (525,314
            )
            
            (295,687
            )
            
            (60,054
            )
            
            (355,741
            )Recoveries
            
            
            155,195
            
            
            15,728
            
            
            170,923
            
            
            137,583
            
            
            40,186
            
            
            177,769Net
                charge-offs
            
            
            (316,973
            )
            
            (37,418
            )
            
            (354,391
            )
            
            (158,104
            )
            
            (19,868
            )
            
            (177,972
            )Provision
                for credit losses
            
            
            400,569
            
            
            20,054
            
            
            420,623
            
            
            163,130
            
            
            3,048
            
            
            166,178Effect
                of foreign currency translation
            
            
            -
            
            
            13,455
            
            
            13,455
            
            
            -
            
            
            (413
            )
            
            (413
            )Balance
                at end of period
            
            $
            749,433
            
            $
            153,258
            
            $
            902,691
            
            $
            241,173
            
            $
            194,571
            
            $
            435,744




**Nine Months Ended**
              **September 30, 2007**
            
            **Nine Months Ended**
              **September 30, 2006****United**
              **States**
            
            **Canada**
            
            **Total**
            
            **United**
              **States**
            
            **Canada**
            
            **Total**Balance
                at beginning of period
            
            $
            551,192
            
            $
            169,775
            
            $
            720,967
            
            $
            199,558
            
            $
            212,670
            
            $
            412,228Charge-offs
            
            
            (1,172,726
            )
            
            (202,364
            )
            
            (1,375,090
            )
            
            (801,429
            )
            
            (241,790
            )
            
            (1,043,219
            )Recoveries
            
            
            298,296
            
            
            66,053
            
            
            364,349
            
            
            274,810
            
            
            75,966
            
            
            350,776Net
                charge-offs
            
            
            (874,430
            )
            
            (136,311
            )
            
            (1,010,741
            )
            
            (526,619
            )
            
            (165,824
            )
            
            (692,443
            )Provision
                for credit losses
            
            
            1,072,671
            
            
            89,166
            
            
            1,161,837
            
            
            568,234
            
            
            140,104
            
            
            708,338Effect
                of foreign currency translation
            
            
            -
            
            
            30,628
            
            
            30,628
            
            
            -
            
            
            7,621
            
            
            7,621Balance
                at end of period
            
            $
            749,433
            
            $
            153,258
            
            $
            902,691
            
            $
            241,173
            
            $
            194,571
            
            $
            435,744




29


***Liquidity
      and Capital Resources***





We
      require substantial capital resources and cash to support our business
      strategy.





The
      Company’s growth strategy requires the Company to increase its acquisitions of
      Installment Contracts. We intend to acquire Installment Contracts with principal
      balances totaling approximately $17,500,000 (roughly 1,700 Installment
      Contracts) over the coming 15 months. We expect to pay between 94% and 95%
      of
      the outstanding principal balance for these Installment Contracts, or a total
      of
      approximately $16,500,000. We expect to fund these acquisitions from a
      combination of internally generated cash flow and additional debt or equity
      financing. We can give no assurance that we will be able to secure such
      additional financing on terms acceptable to us. If we are unable to secure
      such
      additional financing, we will be unable to meet our objective of acquiring
      Installment Contracts with principal balances totaling approximately $17,500,000
      over the coming 15 months.





The
      Company began 2007 with $1,276,994 cash on hand and had cash on hand of
      $1,549,917 at September 30, 2007. Operating activities provided cash of $107,169
      and $325,157 during the three month and nine month periods ended September
      30,
      2007, respectively.





We
      invested cash of approximately $1,887,000 and $5,882,000, respectively,
      (including payments of dealer reserves and dealer holdbacks) to acquire
      Installment Contracts during the three month and nine month periods ended
      September 30, 2007. We collected principal payments on our Installment Contracts
      of approximately $1,481,000 and $4,490,000, respectively, during the three
      month
      and nine month periods ended September 30, 2007.





During
      the three months and nine months ended September 30, 2007 the Company received
      net advances on its bank line of credit totaling $28,013 and $1,180,887,
      respectively, to partially fund the acquisition of Installment Contracts. Total
      advances outstanding under the line of credit agreement at September 30, 2007
      totaled approximately $1,600,000.





We
      paid
      financing fees totaling $37,336 during both the three and nine months ended
      September 30, 2007 in connection with fund raising activities performed by
      our
      investment banking firms.





Our
      bank
      line of credit agreement contains covenants, among others, that 1) require
      the
      Company to maintain a minimum net worth of $10,000,000 as of the end of each
      fiscal quarter, 2) restrict the Company’s ability to declare or pay dividends,
      and 3) limit the amount of capital expenditures the Company can incur in any
      fiscal year. The Company was in compliance with all covenants as of September
      30, 2007. On August 15, 2007 the Company extended the maturity date of the
      revolving credit loan and security agreement to February 1, 2008.





During
      the three months ended September 30, 2007, pursuant to the terms of the
      severance between the Company and Mr. James K. Browne, described above under
      the
      heading “Recent Developments,” the Company made severance payments to Mr. Browne
      totaling approximately $100,000. $12,303 of the $100,000 was allocated to the
      139,458 shares of the Company’s common stock the Company received from Mr.
      Browne as part of the severance agreement. The 139,458 shares of common stock
      were returned to the Company’s treasury.


30


The
      Company had no material commitments for capital expenditures as of September
      30,
      2007. The
      Company expects to spend approximately $300,000 upgrading its underwriting
      and
      loan servicing systems over the coming twelve months. We believe these
      investments will serve to strengthen our internal controls, allow us to quicken
      our response time to our customers, provide management with improved reporting
      tools and fulfill our software needs for the foreseeable future.





The
      Company and its investment adviser are seeking to obtain additional debt or
      equity financing in an amount up to $15,000,000. We can give no assurance that
      we will be able to secure such additional equity financing or other forms of
      additional financing (either debt or equity) on terms acceptable to
      us.





As
      the
      Company continues to grow, we will need to recruit and hire additional sales,
      operating and administrative personnel. We expect to be able to fund the costs
      of these activities from operating cash flows.


31


***Off-Balance
      Sheet Arrangements***





The
      Company, in its ordinary course of business, commits to purchase certain
      Installment Contracts from its customers. Each commitment is essentially an
      “offer” by the Company to purchase a specific Installment Contract that the
      Company has pre-approved, and customers generally have between 20 and 30 days
      to
“accept” the offer by selling to the Company the pre-approved Installment
      Contract. The Company had outstanding commitments to acquire Installment
      Contracts totaling approximately $1,337,000 as of September 30, 2007. Typically,
      the Company funds between 30% and 40% of its outstanding
      commitments.





The
      Company is also obligated under certain noncancelable operating leases for
      premises and equipment with terms ranging up to 39 months. Future minimum
      payments under these noncancelable operating leases as of September
      30, 2007 are:




2007
            
            $
            13,4082008
            
            
            35,4932009
            
            
            10,0962010
            
            
            3,365Total
            
            $
            62,362





On
      October 10, 2005, the Company’s entered into an agency agreement (the “2005
      Agency Agreement”) with an investment banking firm to act as the Company’s
      exclusive placement agent in connection with raising debt and/or equity
      financing. The 2005 Agency Agreement calls for the Company to pay cumulative
      transaction fees totaling not less than $250,000. As of September 30, 2007
      the
      Company has paid transaction fees totaling $120,000 and remains committed to
      pay
      an additional $130,000 upon consummation of a financing transaction or
      cancellation of the agreement by the Company. On August 30, 2007, the Company
      modified the 2005 Agency Agreement to give the Company the right to engage
      a
      second investment banking firm on a limited basis.




On
        October 31, 2007, the Company entered into a Contract Termination Agreement
        and
        Release (the “Termination Agreement”), terminating the 2005 Agency Agreement.
        Concurrent with the execution of the Termination Agreement, the Company paid
        a
        termination fee of $104,000 thereby fully and forever releasing the Company
        from
        any and all obligations under the 2005 Agency Agreement.




On
      September 30, 2007 the Company entered into an agency agreement (the “2007
      Agency Agreement”) with a second investment banking firm to act as the Company’s
      placement agent in connection with raising debt financing from a specific
      limited number of potential lenders. The Company paid a non-refundable
      engagement fee of $15,000 upon the execution of the 2007 Agency Agreement.
      The
      2007 Agency Agreement also requires the Company to pay a non-refundable $10,000
      retainer fee each month during the six-month term of the agreement. The
      engagement fee and retainer fees paid, which are recorded as deferred financing
      fees, shall be credited against any transaction fees payable to the investment
      banking firm upon the closing of certain debt financing
      transactions.




Certain
      officers of the Company hold a total of 1,793,035 shares of the Company’s common
      stock, all or a portion of which, the Company may be required to repurchase,
      at
      the option of the officers upon the occurrence of certain events, which the
      Company believes are not probable at this time, at a price per share ranging
      from 90% to 100% of the common stock’s fair market value. The specific terms
      concerning these options and the repurchase of the common stock are set forth
      in
      the Management Shareholders Agreement filed as an exhibit to the Company’s Form
      8-K filed on August 17, 2007.


32


As
      of
      September 30, 2007, the Company had a contingent liability to pay a former
      officer of TCG approximately $25,000 under the terms of a severance agreement
      (see above under the heading “Recent Developments”) payable upon the completion
      of certain acts by the former officer. The former officer satisfied the terms
      of
      the severance agreement in October 2007, at which time the Company paid the
      final $25,000 due under the terms of the agreement and recognized the expense.




The
      Company had no other off-balance sheet arrangements as of September 30,
      2007.





**ITEM
        3.** **Controls
        and Procedures** ****





The
      Company maintains disclosure controls and procedures (as defined in Rule
      13a-15(e) of the Securities and Exchange Act of 1934 (the “Exchange Act”)) that
      are designed to ensure that information required to be disclosed in the
      Company’s Exchange Act reports is recorded, processed, summarized and reported
      within the time periods specified in the Securities and Exchange Commission’s
      rules and forms, and that such information is accumulated and communicated
      to
      the Company’s management, including its Chief Executive Officer and Chief
      Financial Officer, as appropriate, to allow timely decisions regarding required
      disclosure.





The
      Company carried out an evaluation, under the supervision and with the
      participation of the Company’s management, including the Company’s Chief
      Executive Officer and the Company’s Chief Financial Officer, of the
      effectiveness of the design and operation of the Company’s disclosure controls
      and procedures. Based on the foregoing, the Company’s Chief Executive Officer
      and Chief Financial Officer concluded that the Company’s disclosure controls and
      procedures were effective as of September 30, 2007.





There
      have been no changes in the Company’s internal control over financial reporting
      during the quarter ended September 30, 2007 that have materially affected,
      or
      are reasonably likely to materially affect, the Company’s internal control over
      financial reporting.


33


**PART
      II.** **-
      OTHER INFORMATION**




**ITEM
              1.**
            **Legal
                Proceedings******




The
      Company is not currently a party to any pending legal proceeding other than
      routine litigation that is incidental to the Company’s business.





As
      a
      consumer finance company, the Company can be subject to various consumer claims
      and litigation seeking damages and statutory penalties based upon, among other
      things, usury, disclosure inaccuracies, wrongful repossession, violations of
      bankruptcy stay provisions, fraud, breach of contract and discriminatory
      treatment of credit applicants. Some litigation against the Company could take
      the form of class action complaints by consumers. The Company, as assignee
      of
      Installment Contracts originated by dealers, may also be named as a co-defendant
      in lawsuits filed by consumers principally against dealers. The Company is
      also
      subject to other litigation common to the automobile finance industry and
      businesses in general. The damages and penalties claimed by consumers and others
      in these types of matters can be substantial. The relief typically requested
      by
      the plaintiffs varies but can include requests for compensatory, statutory
      and
      punitive damages.





Management
      believes that the Company has taken prudent steps to address the litigation
      risks associated with the Company’s business. However, there can be no assurance
      that the Company will be able to successfully defend against all such claims
      or
      that the determination of any such claim in a manner adverse to the Company
      would not have a material adverse effect on the Company’s automobile finance
      business.





**ITEM
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds**





None.




**ITEM
      3.**  **Defaults
      Upon Senior Securities**





Not
      applicable.





**ITEM
      4.**  **Submission
      of Matters to a Vote of Security Holders**





The
      following matters were submitted to a vote of the Company’s stockholders at the
      Company’s Annual Meeting of Stockholders held on August 10, 2007:





1.
            The
                re-election of Robert T. Chancellor and Troy A. Compton to the Company’s
                Board of Directors, each for a three-year
                term.





Robert
                T. Chancellor:
            For –
                8,559,711
            Withheld –
                1,412,001Troy
                A. Compton
            For –
                8,866,990
            Withheld –
                1,404,722





2.
            The
                ratification of the appointment of BKD, LLP to serve as the Company’s
                independent accountants for the first three quarters of the fiscal
                year
                ending December 31, 2007:





For –
                9,178,046
            Against –
                552,469
            Abstain –
                541,197




34


3.
            The
                ratification of the future appointment by the Board of Directors
                of the
                independent public accounting firm to be recommended by the Audit
                Committee to audit the Company’s annual consolidated financial statements
                for the fiscal year ending December 31,
                2007:





For –
                8,497,211
            Against –
                982,678
            Abstain –
                502,361
            Broker Non-Votes – 289,462





**ITEM
      5.**  **Other
      Information**





None.


35


**ITEM
      6.**  **Exhibits**





**INDEX
      TO EXHIBITS**


**Exhibit****Number**
            
            **Description**2.1
                (a)
            
            Corrected
                Trustee’s Amended Plan of Reorganization2.2
                (a)
            
            Disclosure
                Statement for Trustee’s Amended Plan of Reorganization3.1
                (a)
            
            First
                Amended and Restated Certificate of Incorporation3.1.1
                (a)
            
            Certificate
                of Amendment to Certificate of Incorporation3.2
                (a)
            
            Bylaws3.2.1
                (a)
            
            Amendment
                to Bylaws4.1
                (a)
            
            Amended
                and Restated Trust Agreement of Freedom Financial Group I Statutory
                Trust10.1
                (a)
            
            Employment
                Agreement with Jerald L. Fenstermaker10.1.1
                (e)
            
            Addendum
                to Employment Agreement with Jerald L. Fenstermaker10.1.2
                (g)
            
            Extension
                of Employment Agreement with Jerald L. Fenstermaker10.2
                (a)
            
            Investment
                Banking Agreement with Milestone Advisors, LLC10.3
                (a)
            
            Unanimous
                Consent of the Board of Directors Adopting Executive Management Stock
                Bonus Plan10.4
                (a)
            
            Office
                Lease - 3058 East Elm10.5
                (b)
            
            Purchase
                and Sale Agreement, dated April 7, 2003, between Freedom Financial
                Group,
                Inc. (as Seller) and The Cadle Company (as Buyer)10.6
                (b)
            
            Commercial
                Real Estate Purchase Contract, dated May 9, 2003, between Freedom
                Financial Group, Inc. (as Seller) and New Life Church of God (as
                Buyer)10.7
                (b)
            
            Real
                Estate Sale Contract, dated June 4, 2003, between Donald D. Bass
                and Don
                W. Bass (as Buyers) and Freedom Financial Group, Inc. (as
                Seller)10.8
                (b)
            
            Application
                and Order by Bankruptcy Court Approving Employment of Biltmore
                Associates10.9
                (d)
            
            Stock
                Grant Agreement dated January 9, 200610.10
                (f)
            
            Revolving
                Credit Loan and Security Agreement10.11
                (f)
            
            Promissory
                Note10.12
                (f)
            
            Stock
                Pledge Agreement10.13
                (f)
            
            Warrant
                for 300,000 shares of common stock10.14
                (f)
            
            Warrant
                for 200,000 shares of common stock10.15
                (f)
            
            Warrant
                for 136,778 shares of common stock10.16
                (f)
            
            Warrant
                for 91,185 shares of common stock10.17
                (h)
            
            First
                Amendment to Revolving Credit Loan and Security
                Agreement10.18
                (h)
            
            Amended
                and Restated Promissory Note10.19
                (h)
            
            Management
                Shareholders Agreement10.20
                (h)
            
            Employment
                Agreement with Jerald L. Fenstermaker11.1
            
            Statement
                Re: Computation of Per Share Earnings - See Note 8 to Condensed
                Consolidated Financial Statements14.1
                (c)
            
            Code
                of Ethics21.1
                (a)
            
            Subsidiaries31.1
            
            Certification
                of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley
                Act of
                200231.2
            
            Certification
                of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley
                Act of
                200232.1
            
            Certifications
                of the Chief Executive Officer and Chief Financial Officer under
                Section
                906 of the Sarbanes-Oxley Act of
                2002





(a)
      Incorporated by reference to the Company’s registration statement filed on Form
      10-SB on May 2, 2005 (File Number 000-51286).


36





(b)
      Incorporated by reference to the Company’s first amended registration statement
      filed on Form 10-SB/A on July 22, 2005 (File Number 000-51286).





(c)
      Incorporated by reference to the Company’s quarterly report filed on Form 10-QSB
      on August 15, 2005 (File Number 000-51286).





(d)
      Incorporated by reference to the Company’s Current Report filed on Form 8-K on
      January 9, 2006 (File Number 000-51286).





(e)
      Incorporated by reference to the Company’s Current Report filed on Form 8-K on
      May 2, 2006 (File Number 000-51286).





(f)
      Incorporated by reference to the Company’s Current Report filed on Form 8-K on
      August 24, 2006 (File Number 000-51286).





(g)
      Incorporated by reference to the Company’s Current Report filed on Form 8-K on
      October 10, 2006 (File Number 000-51286).





(h)
      Incorporated by reference to the Company’s Current Report filed on Form 8-K on
      August 17, 2007 (File Number 000-51286)


37


**SIGNATURES**





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




**FREEDOM
                  FINANCIAL GROUP, INC.**Date:
              November 13, 2007
              By:
              /s/ Jerald L. FenstermakerJerald
                  L. Fenstermaker, President and Chief
                Executive
                  OfficerDate:
              November 13, 2007
              By:
              /s/ Daniel F. GrahamDaniel
                  F. Graham, Chief Financial Officer
  38