**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**WASHINGTON,        D.C. 20549**

**FORM        10-QSB**

**FREEDOM        FINANCIAL GROUP, INC.**

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

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**APPLICABLE        ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**

**PROCEEDINGS        DURING THE PRECEDING FIVE YEARS**

**APPLICABLE        ONLY TO CORPORATE ISSUERS**

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**TABLE        OF CONTENTS**

| **PART                    I. FINANCIAL                    INFORMATION**   | **3**                                                                                                                                 |
|---------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|
| **ITEM                    1.**                                            | **Condensed****Consolidated** **Financial                        Statements**                                                    | **3** |
| **ITEM                    2.**                                            | **Management’s                    Discussion and Analysis of Financial Condition and Results of                    Operations** | **14** |
| **ITEM                    3.**                                            | **Controls                    and Procedures**                                                                                        | **29** |
| **PART                    II. OTHER                    INFORMATION** | **30**                                                                                                                                |
| **ITEM                    1.**                                            | **Legal                    Proceedings**                                                                                              | **30** |
| **ITEM                    2.**                                            | **Unregistered                    Sales of Equity Securities and Use of Proceeds**                                                    | **30** |
| **ITEM                    3.**                                            | **Defaults                    Upon Senior Securities**                                                                                | **30** |
| **ITEM                    4.**                                            | **Submission                    of Matters to a Vote of Security Holders**                                                            | **31** |
| **ITEM                    5.**                                            | **Other                    Information**                                                                                              | **31** |
| **ITEM                    6.**                                            | **Exhibits                    and Reports on Form 8-K**                                                                               | **32** |
| **INDEX                    TO EXHIBITS**                                  |                                                                                                                                  | **32** |
|                                                                      |                                                                                                                                  |   |

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**Report        of Independent Registered Public Accounting Firm**

**/s/        BKD,**
**        LLP **

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**FREEDOM        FINANCIAL GROUP, INC.**

**Consolidated        Balance Sheets**

|  **Assets**                             |   | **Unaudited**                 |       |                              |   |
|----------------------------------------------|--------|-------------------------------|------------|-----------------------------------|--------|
|                                         |   | **June                  30,** |       | **December                  31,** |   |
|                                         |   | **2005**                      |       | **2004**                          |   |
|                                         |   |                          |       |                              |   |
| Cash                  and cash equivalents   |   | $                             | 4,456,664  |                              | $      | 8,779,211 |   |
| Finance                  receivables, net    |   |                          | 7,579,817  |                              |   | 4,090,708 |   |
| Notes                  receivable, net       |   |                          | 61,555     |                              |   | 77,398 |   |
| Property                  and equipment, net |   |                          | 277,342    |                              |   | 294,305 |   |
| Other                  assets                |   |                          | 207,882    |                              |   | 69,303 |   |
|                                         |   |                          |       |                              |   |   |   |
| Total                  assets                |   | $                             | 12,583,260 |                              | $      | 13,310,925 |   |

**Liabilities        and Stockholders’ Equity**

| **Liabilities**                                                                                                                                           |   |   |       |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|
| Accounts                  payable                                                                                                                         |   | $      | 37,960     |   | $      | 218,954 |   |
| Accrued                  expenses                                                                                                                         |   |   | 31,226     |   |   | 18,091 |   |
| Dealer                  holdbacks                                                                                                                         |   |   | 107,090    |   |   | 90,578 |   |
| Accrued                  compensation costs                                                                                                               |   |   | 24,882     |   |   | 62,507 |   |
| Dealer                  reserves                                                                                                                          |   |   | 38,199     |   |   | 44,119 |   |
| Reorganization                  costs payable                                                                                                             |   |   | —    |   |   | 5,000 |   |
|                                                                                                                                                      |   |   |       |   |   |   |   |
|                                                                                                                                                      |   |   | 239,357    |   |   | 439,249 |   |
| **Stockholders’                  Equity**                                                                                                           |   |   |       |   |   |   |   |
| Redeemable                  convertible preferred stock, $0.0001 par value; 8,994,357 shares                  authorized, issued and outstanding          |   |   | 13,798,817 |   |   | 13,798,817 |   |
| Common                  stock, $0.0001 par value; 19,000,000 shares authorized; 9,965,759                  shares                  issued and outstanding |   |   | 997        |   |   | 997 |   |
| Retained                  earnings (deficit)                                                                                                              |   |   | (2,195,240 | )      |   | (1,731,382 | ) |
| Accumulated                  other comprehensive income                                                                                                   |   |   | 739,329    |   |   | 803,244 |   |
|                                                                                                                                                      |   |   |       |   |   |   |   |
| Total                  stockholders’ equity                                                                                                         |   |   | 12,343,903 |   |   | 12,871,676 |   |
|                                                                                                                                                      |   |   |       |   |   |   |   |
| Total                  liabilities and stockholders’ equity                                                                                         |   | $      | 12,583,260 |   | $      | 13,310,925 |   |

*See        Notes to *Condensed*Consolidated Financial Statements.*

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**FREEDOM        FINANCIAL GROUP, INC.**

**Consolidated        Statements of Operations**

**Unaudited**

|                                                                |   | **Three                  Months Ended** |     | **Six                  Months Ended** |   |
|---------------------------------------------------------------------|--------|-----------------------------------------|----------|---------------------------------------|--------|
|                                                                |   | **June                  30,**           |     | **June                  30,**         |   | **June                  30,** |   | **June                  30,** |   |
|                                                                |   | **2005**                                |     | **2004**                              |   | **2005** |   | **2004** |   |
| **Revenues**                                                        |   |                                    |     |                                  |   |   |   |   |   |
| Interest                  income                                    |   | $                                       | 538,964  |                                  | $      | 231,911 |   | $ | 990,940 |   | $ | 432,515 |   |
| Recovery                  of charged-off finance receivables        |   |                                    | 49,984   |                                  |   | 55,150 |   |   | 78,030 |   |   | 97,428 |   |
| Other                  income                                       |   |                                    | 21,852   |                                  |   | 23,682 |   |   | 50,903 |   |   | 45,507 |   |
|                                                                |   |                                    |     |                                  |   |   |   |   |   |   |   |   |   |
| Total                  revenues                                     |   |                                    | 610,800  |                                  |   | 310,743 |   |   | 1,119,873 |   |   | 575,450 |   |
|                                                                |   |                                    |     |                                  |   |   |   |   |   |   |   |   |   |
| **Provision                  for Credit Losses**                    |   |                                    | 122,671  |                                  |   | 49,234 |   |   | 198,288 |   |   | 88,541 |   |
|                                                                |   |                                    |     |                                  |   |   |   |   |   |   |   |   |   |
| **Net                  Revenues After Provision for Credit Losses** |   |                                    | 488,129  |                                  |   | 261,509 |   |   | 921,585 |   |   | 486,909 |   |
|                                                                |   |                                    |     |                                  |   |   |   |   |   |   |   |   |   |
| **Operating                  Expenses**                             |   |                                    | 663,645  |                                  |   | 488,347 |   |   | 1,386,596 |   |   | 947,920 |   |
|                                                                |   |                                    |     |                                  |   |   |   |   |   |   |   |   |   |
| **Operating                  Loss**                                 |   |                                    | (175,516 | )                                     |   | (226,838 | ) |   | (465,011 | ) |   | (461,011 | ) |
|                                                                |   |                                    |          |                                  |   |  |   |   |  |   |   |   |   |
| **Nonoperating                  Income**                            |   |                                    |     |                                  |   |   |   |   |   |   |   |   |   |
| Gain                  on disposal of fixed assets                   |   |                                    | —  |                                  |   | — |   |   | 1,153 |   |   | — |   |
|                                                                |   |                                    |     |                                  |   |   |   |   |   |   |   |   |   |
| **Loss                  Before Income Taxes**                       |   |                                    | (175,516 | )                                     |   | (226,838 | ) |   | (463,858 | ) |   | (461,011 | ) |
|                                                                |   |                                    |     |                                  |   |   |   |   |   |   |   |   |   |
| **Provision                  for Income Taxes**                     |   |                                    | —  |                                  |   | — |   |   | — |   |   | — |   |
|                                                                |   |                                    |     |                                  |   |   |   |   |   |   |   |   |   |
| **Net                  Loss**                                       |   | $                                       | (175,516 | )                                     | $      | (226,838 | ) | $ | (463,858 | ) | $ | (461,011 | ) |
|                                                                |   |                                    |     |                                  |   |   |   |   |   |   |   |   |   |
| **Basic                  and Diluted Loss Per Share**               |   | $                                       | (0.02    | )                                     | $      | (0.02 | ) | $ | (0.05 | ) | $ | (0.05 | ) |

*See        Notes to Condensed Consolidated Financial Statements.*

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**FREEDOM        FINANCIAL GROUP, INC.**

**Consolidated        Statements of Stockholders’ Equity**

**Unaudited**

|                                                        |   | **Redeemable**  |       |                              |   |         |   |              |    | **Accumulated** |   |       |   |
|-------------------------------------------------------------|--------|-----------------|------------|-----------------------------------|--------|--------------|--------|-------------------|---------|-----------------|--------|------------|--------|
|                                                        |   | **Convertible** |       |                              |   |         |   |              |    | **Other**       |   |       |   |
|                                                        |   | **Preferred**   |       | **Common                  Stock** |   | **Retained** |   | **Comprehensive** |    |            |   |
|                                                        |   | **Stock**       |       | **Shares**                        |   | **Amount**   |   | **Earnings**      |    | **Income**      |   | **Total**  |   |
|                                                        |   |            |       |                              |   |         |   |              |    |            |   |       |   |
| **Balance,                  December 31, 2004**             |   | $               | 13,798,817 |                              |   | 9,965,759    |   | $                 | 997     |            | $      | (1,731,382 | )      | $ | 803,244 |   | $ | 12,871,676 |   |
|                                                        |   |            |       |                              |   |         |   |              |    |            |   |       |   |   |   |   |   |   |   |
| Net                  loss                                   |   |            | —    |                              |   | —      |   |              | — |            |   | (463,858   | )      |   | — |   |   | (463,858 | ) |
|                                                        |   |            |       |                              |   |         |   |              |    |            |   |       |   |   |   |   |   |   |   |
| Foreign                  currency translation adjustment    |   |            | —    |                              |   | —      |   |              | — |            |   | —    |   |   | (63,915 | ) |   | (63,915 | ) |
|                                                        |   |            |       |                              |   |         |   |              |    |            |   |       |   |   |   |   |   |   |   |
| Comprehensive                  loss                         |   |            | —    |                              |   | —      |   |              | — |            |   | —    |   |   | — |   |   | (527,773 | ) |
|                                                        |   |            |       |                              |   |         |   |              |    |            |   |       |   |   |   |   |   |   |   |
| **Balance,                  June 30, 2005**                 |   | $               | 13,798,817 |                              |   | 9,965,759    |   | $                 | 997     |            | $      | (2,195,240 | )      | $ | 739,329 |   | $ | 12,343,903 |   |
|   **Balance,                  December 31, 2003** |   |            | 13,798,817 |                              |   | 9,967,485    |   |              | 997     |            |   | (1,747,658 | )      |   | 550,436 |   |   | 12,602,592 |   |
|                                                        |   |            |       |                              |   |         |   |              |    |            |   |       |   |   |   |   |   |   |   |
| Net                  loss                                   |   |            | —    |                              |   | —      |   |              | — |            |   | (461,011   | )      |   | — |   |   | (461,011 | ) |
|                                                        |   |            |       |                              |   |         |   |              |    |            |   |       |   |   |   |   |   |   |   |
| Foreign                  currency translation adjustment    |   |            | —    |                              |   | —      |   |              | — |            |   | —    |   |   | (107,611 | ) |   | (107,611 | ) |
|                                                        |   |            |       |                              |   |         |   |              |    |            |   |       |   |   |   |   |   |   |   |
| Comprehensive                  loss                         |   |            | —    |                              |   | —      |   |              | — |            |   | —    |   |   | — |   |   | (568,622 | ) |
|                                                        |   |            |       |                              |   |         |   |              |    |            |   |       |   |   |   |   |   |   |   |
| Cancellation                  of stock issued in error      |   |            | —    |                              |   | (1,726       | )      |              | — |            |   | —    |   |   | — |   |   | — |   |
|                                                        |   |            |       |                              |   |         |   |              |    |            |   |       |   |   |   |   |   |   |   |
| **Balance,                  June 30, 2004**                 |   | $               | 13,798,817 |                              |   | 9,965,759    |   | $                 | 997     |            | $      | (2,208,669 | )      | $ | 442,825 |   | $ | 12,033,970 |   |

*See        Notes to Condensed Consolidated Financial Statements.*

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**FREEDOM        FINANCIAL GROUP, INC.**

**Consolidated        Statements of Cash Flows**

**Unaudited**

|                                                                                                         |   | **For                  the Six Months Ended****June                  30,** |       |
|--------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|------------|
|                                                                                                         |   | **2005**                                                                   |       | **2004** |   |
| **Operating                  Activities**                                                                    |   |                                                                  |       |    |   |
| Net                  loss                                                                                    |   | $                                                                          | (463,858   | ) | $ | (461,011 | ) |
| Adjustments                  to reconcile net loss to net cash used in operating                  activities |   |                                                                       |       |   |   |   |   |
| Depreciation                                                                                                 |   |                                                                       | 29,820     |   |   | 27,947 |   |
| Provision                  for credit losses                                                                 |   |                                                                       | 198,288    |   |   | 88,541 |   |
| Deferred                  discount income                                                                    |   |                                                                       | (330,295   | ) |   | (177,954 | ) |
| Recovery                  of charged-off finance receivables                                                 |   |                                                                       | 74,069     |   |   | 79,237 |   |
| Gain                  on disposal of property and equipment                                                  |   |                                                                       | (1,153     | ) |   | — |   |
| Changes                  in                                                                                  |   |                                                                       |       |   |   |   |   |
| Other                  assets                                                                                |   |                                                                       | (68,903    | ) |   | (26,167 | ) |
| Accounts                  payable and accrued expenses                                                       |   |                                                                       | (205,246   | ) |   | 29,558 |   |
| Reorganization                  costs payable                                                                |   |                                                                       | (5,000     | ) |   | 10,000 |   |
| Net                  cash used in operating activities                                                       |   |                                                                       | (772,278   | ) |   | (429,849 | ) |
|                                                                                                         |   |                                                                       |       |   |   |   |   |
| **Investing                  Activities**                                                                    |   |                                                                       |       |   |   |   |   |
| Purchase                  of finance receivables                                                             |   |                                                                       | (5,952,266 | ) |   | (1,880,359 | ) |
| Principal                  collected on finance receivables                                                  |   |                                                                       | 2,514,530  |   |   | 1,441,601 |   |
| Payments                  of dealer reserves                                                                 |   |                                                                       | (11,209    | ) |   | (8,054 | ) |
| Payments                  of dealer holdbacks                                                                |   |                                                                       | (80,655    | ) |   | (65,200 | ) |
| Principal                  collected on notes receivable                                                     |   |                                                                       | 15,843     |   |   | 14,641 |   |
| Purchase                  of property and equipment                                                          |   |                                                                       | (18,184    | ) |   | (12,260 | ) |
| Proceeds                  from sale of property and equipment                                                |   |                                                                       | 2,000      |   |   | — |   |
| Net                  cash used in investing activities                                                       |   |                                                                       | (3,529,941 | ) |   | (509,631 | ) |
|                                                                                                         |   |                                                                       |       |   |   |   |   |
| **Financing                  Activities**                                                                    |   |                                                                       | —    |   |   | — |   |
|                                                                                                         |   |                                                                       |       |   |   |   |   |
| **Effect                  of Exchange Rate Changes on Cash and Cash                  Equivalents**           |   |                                                                       | (20,328    | ) |   | (37,923 | ) |
|                                                                                                         |   |                                                                       |       |   |   |   |   |
| **Net                  Decrease in Cash and Cash Equivalents**                                               |   |                                                                       | (4,322,547 | ) |   | (977,403 | ) |
|                                                                                                         |   |                                                                       |       |   |   |   |   |
| **Cash                  and Cash Equivalents, Beginning of Period**                                          |   |                                                                       | 8,779,211  |   |   | 4,280,766 |   |
|                                                                                                         |   |                                                                       |       |   |   |   |   |
| **Cash                  and Cash Equivalents, End of Period**                                                |   | $                                                                          | 4,456,664  |   | $ | 3,303,363 |   |

*See        Notes to Condensed Consolidated Financial Statements.*

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**FREEDOM        FINANCIAL GROUP, INC.**

**Notes        to **Condensed** Consolidated        Financial Statements**

**Unaudited**

| **Note                  1:  ** | **General** |
|------------------------------------------|-------------|

| **Note                2:  ** | **Basis                  of Presentation** |
|----------------------------------------|--------------------------------------------|

*Financial        Reporting by Entities in Reorganization Under the Bankruptcy        Code*

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

| Automobiles                                  |   | $      | 6,081,772 |   |
|----------------------------------------------|--------|--------|-----------|--------|
| Equipment                  leases            |   |   | 919,435   |   |
| Bulk                  food                   |   |   | 825,082   |   |
| Home                  appliances             |   |   | 291,118   |   |
| Other                                        |   |   | 418,728   |   |
| Total                  finance receivables   |   |   | 8,536,135 |   |
|                                         |   |   |      |   |
| Less                                         |   |   |      |   |
| Unearned                  discount           |   |   | 638,384   |   |
| Allowance                  for credit losses |   |   | 317,934   |   |
|                                         |   |   | 956,318   |   |
| Net                  finance receivables     |   | $      | 7,579,817 |   |

| 2005  |   | $      | 2,908,277  |   |
|-------|--------|--------|------------|--------|
| 2006  |   |   | 3,896,332  |   |
| 2007  |   |   | 2,445,743  |   |
| 2008  |   |   | 1,287,263  |   |
| 2009  |   |   | 203,764    |   |
| Total |   | $      | 10,741,379 |   |

|                                                          |   | **2005** |     | **2004** |   |
|---------------------------------------------------------------|--------|----------|----------|----------|--------|
|                                                          |   |     |     |     |   |
| Balance,                  beginning of period                 |   | $        | 319,049  |     | $      | 215,837 |   |
| Provision                  charged to expense                 |   |     | 122,671  |     |   | 49,234 |   |
| Losses                  charged off                           |   |     | (229,568 | )        |   | (28,824 | ) |
| Recoveries                  of previously charged off amounts |   |     | 107,594  |     |   | 48,949 |   |
| Effect                  of foreign currency translation       |   |     | (1,812   | )        |   | (2,964 | ) |
| Balance,                  end of period                       |   | $        | 317,934  |     | $      | 282,232 |   |

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|                                                          |   | **2005** |     | **2004** |   |
|---------------------------------------------------------------|--------|----------|----------|----------|--------|
|                                                          |   |     |     |     |   |
| Balance,                  beginning of period                 |   | $        | 296,233  |     | $      | 196,698 |   |
| Provision                  charged to expense                 |   |     | 198,288  |     |   | 88,541 |   |
| Losses                  charged off                           |   |     | (319,452 | )        |   | (77,452 | ) |
| Recoveries                  of previously charged off amounts |   |     | 145,228  |     |   | 79,954 |   |
| Effect                  of foreign currency translation       |   |     | (2,363   | )        |   | (5,509 | ) |
| Balance,                  end of period                       |   | $        | 317,934  |     | $      | 282,232 |   |

| **Note                4:  ** | **Commitments** |
|----------------------------------------|-----------------|

| **Note                5:  ** | **Loss                  Per Share** |
|----------------------------------------|-------------------------------------|

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|                                              |   |     |     | **Weighted** |   |                           |   |
|---------------------------------------------------|--------|----------|----------|--------------|--------|--------------------------------|--------|
|                                              |   |     |     | **Average**  |   | **Per                  Share** |   |
|                                              |   | **Loss** |     | **Shares**   |   | **Amount**                     |   |
|                                              |   |     |     |         |   |                           |   |
| Net                  loss                         |   | $        | (175,516 | )            |   | 9,965,759                      |   |   |   |   |
|                                              |   |     |     |         |   |                           |   |   |   |   |
| Basic                  and diluted loss per share |   |     |     |         |   |                           |   | $ | (0.02 | ) |

|                                              |   |     |     | **Weighted** |   |                           |   |
|---------------------------------------------------|--------|----------|----------|--------------|--------|--------------------------------|--------|
|                                              |   |     |     | **Average**  |   | **Per                  Share** |   |
|                                              |   | **Loss** |     | **Shares**   |   | **Amount**                     |   |
|                                              |   |     |     |         |   |                           |   |
| Net                  loss                         |   | $        | (463,858 | )            |   | 9,965,759                      |   |   |   |   |
|                                              |   |     |     |         |   |                           |   |   |   |   |
| Basic                  and diluted loss per share |   |     |     |         |   |                           |   | $ | (0.05 | ) |

|                                              |   |     |     | **Weighted ** |   |                           |   |
|---------------------------------------------------|--------|----------|----------|--------------------|--------|--------------------------------|--------|
|                                              |   |     |     | **Average**        |   | **Per                  Share** |   |
|                                              |   | **Loss** |     | **Shares**         |   | **Amount**                     |   |
| Net                  loss                         |   | $        | (226,837 | )                  |   | 9,965,759                      |   |   |   |   |
|                                              |   |     |     |               |   |                           |   |   |   |   |
| Basic                  and diluted loss per share |   |     |     |               |   |                           |   | $ | (0.02 | ) |

|                                              |   |     |     | **Weighted** |   |                           |   |
|---------------------------------------------------|--------|----------|----------|--------------|--------|--------------------------------|--------|
|                                              |   |     |     | **Average**  |   | **Per                  Share** |   |
|                                              |   | **Loss** |     | **Shares**   |   | **Amount**                     |   |
|                                              |   |     |     |         |   |                           |   |
| Net                  loss                         |   | $        | (461,011 | )            |   | 9,965,759                      |   |   |   |   |
|                                              |   |     |     |         |   |                           |   |   |   |   |
| Basic                  and diluted loss per share |   |     |     |         |   |                           |   | $ | (0.05 | ) |

----

| **Note                    6: ** | **Operating                      Expenses** |
|--------------------------------------|---------------------------------------------|

|                                               |   | **2005** |    | **2004** |   |
|----------------------------------------------------|--------|----------|---------|----------|--------|
|                                               |   |     |    |     |   |
| Salaries                  and benefits             |   | $        | 389,774 |     | $      | 263,529 |   |
| Professional                  fees                 |   |     | 116,928 |     |   | 48,676 |   |
| Pending                  claims related legal fees |   |     | — |     |   | 48,231 |   |
| Bankruptcy                  reorganization costs   |   |     | — |     |   | 11,101 |   |
| Other                                              |   |     | 156,943 |     |   | 116,810 |   |
|                                               |   |     |    |     |   |   |   |
|                                               |   | $        | 663,645 |     | $      | 488,347 |   |

|                                               |   | **2005** |      | **2004** |   |
|----------------------------------------------------|--------|----------|-----------|----------|--------|
|                                               |   |     |      |     |   |
| Salaries                  and benefits             |   | $        | 786,274   |     | $      | 541,865 |   |
| Professional                  fees                 |   |     | 288,468   |     |   | 114,946 |   |
| Pending                  claims related legal fees |   |     | —   |     |   | 57,328 |   |
| Bankruptcy                  reorganization costs   |   |     | —   |     |   | 18,877 |   |
| Other                                              |   |     | 311,854   |     |   | 214,905 |   |
|                                               |   |     |      |     |   |   |   |
|                                               |   | $        | 1,386,596 |     | $      | 947,920 |   |

----

| **Note                7: ** | **Foreign                  Operations** |
|----------------------------------|-----------------------------------------|

|                                               |   | **2005** |    | **2004** |   |
|----------------------------------------------------|--------|----------|---------|----------|--------|
|                                               |   |     |    |     |   |
| Total                  revenues                    |   | $        | 239,171 |     | $      | 195,217 |   |
|                                               |   |     |    |     |   |   |   |
| Income                  (loss) before income taxes |   |     | (7,893  | )        |   | 36,711 |   |
|                                               |   |     |    |     |   |   |   |
| Net                  income (loss)                 |   |     | (7,893  | )        |   | 36,711 |   |

|                                               |   | **2005** |    | **2004** |   |
|----------------------------------------------------|--------|----------|---------|----------|--------|
|                                               |   |     |    |     |   |
| Total                  revenues                    |   | $        | 471,632 |     | $      | 367,706 |   |
|                                               |   |     |    |     |   |   |   |
| Income                  (loss) before income taxes |   |     | (34,640 | )        |   | 46,645 |   |
|                                               |   |     |    |     |   |   |   |
| Net                  income (loss)                 |   |     | (34,640 | )        |   | 46,645 |   |

| **Note                    8: ** | **Comprehensive                        Income** |
|--------------------------------------|-------------------------------------------------|

|                                                       |   | **For                    the****Three                    Months Ended** |     | **For                    the Six Months Ended** |   |
|------------------------------------------------------------|--------|-------------------------------------------------------------------------|----------|-------------------------------------------------|--------|
|                                                       |   | **June                    30,**                                         |     | **June                    30,**                 |   |
|                                                       |   | **2005**                                                                |     | **2004**                                        |   | **2005** |   | **2004** |   |
| Net                    Loss                                |   | $                                                                       | (175,516 | )                                               | $      | (226,838 | ) | $ | (463,858 | ) | $ | (461,011 | ) |
|                                                       |   |                                                                    |     |                                            |   |   |   |   |   |   |   |   |   |
| Foreign                    currency translation adjustment |   |                                                                    | (47,253  | )                                               |   | (69,171 | ) |   | (63,915 | ) |   | (107,611 | ) |
|                                                       |   |                                                                    |     |                                            |   |   |   |   |   |   |   |   |   |
| Comprehensive                    loss                      |   | $                                                                       | (222,769 | )                                               | $      | (296,5009 | ) | $ | (527,773 | ) | $ | (568,622 | ) |

| **Note                9: ** | **Additional                  Cash Flow Information** |
|----------------------------------|-------------------------------------------------------|

----

**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 registration statement on Form 10-SB/A, filed        on        July 22, 2005, 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.*

***Overview***

----

***Reorganization        of Predecessor Under Chapter 11***

| December                    31, 2003 | 17% |
|--------------------------------------|-----|
| December                    31, 2004 | 45% |
| March                    31, 2005    | 61% |
| June                    30, 2005     | 72% |
| July                    31, 2005     | 74% |

| (1)   | Consistently                  acquiring an increasing volume of sub-prime automobile Installment                  Contracts 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. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Recent        Developments***

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

----

***Selected        Financial Data***

|                                                                                                        |   | **Three                  Months Ended June 30,** |      | **Six                  Months Ended June 30,** |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|-----------|------------------------------------------------|--------|
|                                                                                                        |   | **2005**                                         |      | **2004**                                       |   | **2005** |   | **2004** |   |
| **Consolidated                  Summary of Operations:**                                                    |   |                                             |      |                                           |   |   |   |   |   |
| Interest                  income                                                                            |   | $                                                | 538,964   |                                           | $      | 231,911 |   | $ | 990,940 |   | $ | 432,515 |   |
| Recovery                  of charged-off finance receivables                                                |   |                                             | 49,984    |                                           |   | 55,150 |   |   | 78,030 |   |   | 97,428 |   |
| Other                  income                                                                               |   |                                             | 21,852    |                                           |   | 23,682 |   |   | 50,903 |   |   | 45,507 |   |
| Total                  revenues                                                                             |   |                                             | 610,800   |                                           |   | 310,743 |   |   | 1,119,873 |   |   | 575,450 |   |
|                                                                                                        |   |                                             |      |                                           |   |   |   |   |   |   |   |   |   |
| Provision                  for credit losses                                                                |   |                                             | 122,671   |                                           |   | 49,234 |   |   | 198,288 |   |   | 88,541 |   |
|                                                                                                        |   |                                             |      |                                           |   |   |   |   |   |   |   |   |   |
| Net                  revenues after provision for credit losses                                             |   |                                             | 488,129   |                                           |   | 1,210,459 |   |   | 921,585 |   |   | 486,909 |   |
|                                                                                                        |   |                                             |      |                                           |   |   |   |   |   |   |   |   |   |
| Operating                  expenses                                                                         |   |                                             | 663,645   |                                           |   | 488,347 |   |   | 1,386,596 |   |   | 947,920 |   |
|                                                                                                        |   |                                             |      |                                           |   |   |   |   |   |   |   |   |   |
| Operating                  loss                                                                             |   |                                             | (175,516  | )                                              |   | (226,838 | ) |   | (465,011 | ) |   | (461,011 | ) |
|                                                                                                        |   |                                             |      |                                           |   |   |   |   |   |   |   |   |   |
| Non-operating                  income                                                                       |   |                                             | —   |                                           |   | — |   |   | 1,153 |   |   | — |   |
|                                                                                                        |   |                                             |      |                                           |   |   |   |   |   |   |   |   |   |
| Loss                  before income taxes                                                                   |   |                                             | (175,516  | )                                              |   | (226,838 | ) |   | (465,011 | ) |   | (461,011 | ) |
|                                                                                                        |   |                                             |      |                                           |   |   |   |   |   |   |   |   |   |
| Income                  taxes                                                                               |   |                                             | —   |                                           |   | — |   |   | — |   |   | — |   |
|                                                                                                        |   |                                             |      |                                           |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                                                   |   | $                                                | (175,516  | )                                              | $      | (226,838 | ) | $ | (465,011 | ) | $ | (461,011 | ) |
|                                                                                                        |   |                                             |      |                                           |   |   |   |   |   |   |   |   |   |
| Loss                  per share, basic and diluted                                                          |   | $                                                | (0.02     | )                                              | $      | (0.02 | ) | $ | (0.05 | ) | $ | (0.05 | ) |
|                                                                                                        |   |                                             |      |                                           |   |   |   |   |   |   |   |   |   |
| **Other                  Selected Data:**                                                                   |   |                                             |      |                                           |   |   |   |   |   |   |   |   |   |
| Installment                  Contracts acquired during the period (total principal                  amount) |   | $                                                | 3,603,289 |                                           | $      | 1,258,897 |   | $ | 6,578,929 |   | $ | 2,304,569 |   |
| Purchase                  price of Installment Contracts acquired                                           |   | $                                                | 3,359,755 |                                           | $      | 1,092,340 |   | $ | 6,067,663 |   | $ | 1,968,786 |   |
| Percentage                  of dollar amount paid to principal balance acquired                             |   |                                             | 93.2      | %                                              |   | 86.8 | % |   | 92.2 | % |   | 85.4 | % |
| Number                  of Installment Contracts acquired during the period                                 |   |                                             | 603       |                                           |   | 414 |   |   | 1,173 |   |   | 751 |   |
| Average                  principal balance acquired                                                         |   | $                                                | 5,976     |                                           | $      | 3,041 |   | $ | 5,609 |   | $ | 3,069 |   |
| Acquisition                  cost per acquired Installment Contract (including                  overhead)   |   | $                                                | 549       |                                           |   | Not                  available |   | $ | 547 |   |   | Not                  available |   |
| Monthly                  servicing cost per Installment Contract (including                  overhead)      |   | $                                                | 28.54     |                                           |   | Not                  available |   | $ | 36.35 |   |   | Not                  available |   |

----

|                                                              |   | **June                  30,****2005** |       | **December                  31, 2004** |   |
|-------------------------------------------------------------------|--------|---------------------------------------|------------|----------------------------------------|--------|
| **Consolidated                  Summary of Financial Condition:** |   |                                  |       |                                   |   |
| Installment                  Contracts receivable, net            |   | $                                     | 7,579,817  |                                   | $      | 4,090,708 |   |
| Total                  assets                                     |   | $                                     | 12,583,260 |                                   | $      | 13,310,925 |   |
|                                                              |   |                                  |       |                                   |   |   |   |
| Total                  liabilities                                |   | $                                     | 239,357    |                                   | $      | 439,249 |   |
| Total                  stockholders' equity                       |   | $                                     | 12,343,903 |                                   | $      | 12,871,676 |   |

----

***Results        of Operations***

**Interest        Income**

|                                           |   |                                                                   |       |         |   |      |   |        |        |       |         |      |      |   |   |
|------------------------------------------------|--------|------------------------------------------------------------------------|------------|--------------|--------|-----------|--------|-------------|-------------|------------|--------------|-----------|-----------|--------|--------|
|                                           |   | **For                  the Three Months Ended June 30, 2005 and 2004** |       |         |
|                                           |   |                                                                   |       |         |
|                                           |   | **2005**                                                               |       | **2004**     |
|                                           |   | **Average**                                                            |       | **Interest** |   |      |   |        | **Average** |       | **Interest** |      |      |   |   |
|                                           |   | **Balance**                                                            |       | **Income**   |   | **Yield** |   | **Balance** |        | **Income** |         | **Yield** |
|                                           |   |                                                                   |       |         |   |      |   |        |        |       |         |      |      |   |   |
| **Installment                  Contracts**     |   | $                                                                      | 6,890,142  |         | $      | 499,509   |   |        | 29.00%      |       |         | $         | 2,548,167 |   | $      | 217,282 |   |   | 34.11% |   |   |
| **Cash                  and cash equivalents** |   |                                                                   | 5,611,455  |         |   | 38,091    |   |        | 2.72%       |       |         |      | 3,558,341 |   |   | 8,927 |   |   | 1.00% |   |   |
| **Notes                  receivable**          |   |                                                                   | 63,165     |         |   | 1,364     |   |        | 8.64%       |       |         |      | 205,065   |   |   | 5,702 |   |   | 11.12% |   |   |
|                                           |   |                                                                   |       |         |   |      |   |        |        |       |         |      |      |   |   |   |   |   |   |   |   |
| **Total**                                      |   | $                                                                      | 12,564,762 |         | $      | 538,964   |   |        | 17.1%6      |       |         | $         | 6,311,573 |   | $      | 231,911 |   |   | 14.70% |   |   |
|                                           |   |                                                                   |       |         |   |      |   |        |        |       |         |      |      |   |   |   |   |   |   |   |   |

|                                           |   |                                                                 |       |         |   |      |   |        |        |       |         |      |      |   |   |
|------------------------------------------------|--------|----------------------------------------------------------------------|------------|--------------|--------|-----------|--------|-------------|-------------|------------|--------------|-----------|-----------|--------|--------|
|                                           |   | **For                  the Six Months Ended June 30, 2005 and 2004** |       |         |
|                                           |   |                                                                 |       |         |
|                                           |   | **2005**                                                             |       | **2004**     |
|                                           |   | **Average**                                                          |       | **Interest** |   |      |   |        | **Average** |       | **Interest** |      |      |   |   |
|                                           |   | **Balance**                                                          |       | **Income**   |   | **Yield** |   | **Balance** |        | **Income** |         | **Yield** |
|                                           |   |                                                                 |       |         |   |      |   |        |        |       |         |      |      |   |   |
| **Installment                  Contracts**     |   | $                                                                    | 6,029,288  |         | $      | 904,766   |   |        | 30.01%      |       |         | $         | 2,400,169 |   | $      | 401,295 |   |   | 33.44% |   |   |
| **Cash                  and cash equivalents** |   |                                                                 | 6,638,707  |         |   | 83,231    |   |        | 2.51%       |       |         |      | 3,807,779 |   |   | 19,720 |   |   | 1.04% |   |   |
| **Notes                  receivable**          |   |                                                                 | 67,475     |         |   | 2,943     |   |        | 8.73%       |       |         |      | 209,026   |   |   | 11,500 |   |   | 11.00% |   |   |
|                                           |   |                                                                 |       |         |   |      |   |        |        |       |         |      |      |   |   |   |   |   |   |   |   |
| **Total**                                      |   | $                                                                    | 12,735,470 |         | $      | 990,940   |   |        | 15.56%      |       |         | $         | 6,416,974 |   | $      | 432,515 |   |   | 13.48% |   |   |
|                                           |   |                                                                 |       |         |   |      |   |        |        |       |         |      |      |   |   |   |   |   |   |   |   |

----

|                                                     |   |                                                                                                                               |    |     |   |      |   |
|----------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|---------|----------|--------|-----------|--------|
|                                                     |   | **For                  the Three Months Ended June 30, 2005****Compared                  to the Three Months Ended June 30, 2004** |    |
|                                                     |   |                                                                                                                               |    |     |   |      |   |
|                                                     |   | **Volume**                                                                                                                         |    | **Rate** |   | **Total** |   |
| Increase                  (decrease) in interest income: |   |                                                                                                                               |    |     |   |      |   |   |   |   |
| Installment                  Contracts                   |   | $                                                                                                                                  | 309,430 |     | $      | (27,204   | )      | $ | 282,226 |   |
| Cash                  and cash equivalents               |   |                                                                                                                               | 7,372   |     |   | 21,793    |   |   | 29,165 |   |
| Notes                  receivable                        |   |                                                                                                                               | (3,278  | )        |   | (1,060    | )      |   | (4,338 | ) |
|                                                     |   |                                                                                                                               |    |     |   |      |   |   |   |   |
| Total                  Interest Income                   |   | $                                                                                                                                  | 313,524 |     | $      | (6,471    | )      | $ | 307,053 |   |

|                                                     |   |                                                                                                                           |    |     |   |      |   |
|----------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------|---------|----------|--------|-----------|--------|
|                                                     |   | **For                  the Six Months Ended June 30, 2005****Compared                  to the Six Months Ended June 30, 2004** |    |
|                                                     |   |                                                                                                                           |    |     |   |      |   |
|                                                     |   | **Volume**                                                                                                                     |    | **Rate** |   | **Total** |   |
| Increase                  (decrease) in interest income: |   |                                                                                                                           |    |     |   |      |   |   |   |   |
| Installment                  Contracts                   |   | $                                                                                                                              | 540,072 |     | $      | (36,602   | )      | $ | 503,470 |   |
| Cash                  and cash equivalents               |   |                                                                                                                           | 21,817  |     |   | 41,696    |   |   | 63,513 |   |
| Notes                  receivable                        |   |                                                                                                                           | (6,554  | )        |   | (2,004    | )      |   | (8,558 | ) |
|                                                     |   |                                                                                                                           |    |     |   |      |   |   |   |   |
| Total                  Interest Income                   |   | $                                                                                                                              | 555,335 |     | $      | 3,090     |   | $ | 558,425 |   |

----

**Provision        for Credit Losses**

**Operating        Expenses**

|                                         |   | **Three                  Months Ended June 30,** |    |
|----------------------------------------------|--------|--------------------------------------------------|---------|
|                                         |   | **2005**                                         |    | **2004** |   | **Percent                  Change** |   |
|                                         |   |                                             |    |   |   |   |   |   |
| Salaries                  and benefits       |   | $                                                | 389,774 |   | $ | 263,529 |   |   | 47.9% |   |   |
| Professional                  fees           |   |                                             | 116,928 |   |   | 48,676 |   |   | 140.2% |   |   |
| Pending                  claims - legal fees |   |                                             | — |   |   | 48,231 |   |   | -100.0% |   |   |
| Other                                        |   |                                             | 156,943 |   |   | 127,911 |   |   | 22.7% |   |   |
| Total                                        |   | $                                                | 663,645 |   | $ | 488,347 |   |   | 35.9% |   |   |

|                                         |   | **Six                  Months Ended June 30,** |      |
|----------------------------------------------|--------|------------------------------------------------|-----------|
|                                         |   | **2005**                                       |      | **2004** |   | **Percent                  Change** |   |
|                                         |   |                                           |      |   |   |   |   |   |
| Salaries                  and benefits       |   | $                                              | 786,274   |   | $ | 541,865 |   |   | 45.1% |   |   |
| Professional                  fees           |   |                                           | 288,468   |   |   | 114,946 |   |   | 151.0% |   |   |
| Pending                  claims - legal fees |   |                                           | —   |   |   | 57,328 |   |   | -100.0% |   |   |
| Other                                        |   |                                           | 311,854   |   |   | 233,781 |   |   | 33.4% |   |   |
| Total                                        |   | $                                              | 1,386,596 |   | $ | 947,920 |   |   | 46.3% |   |   |

***Emergence        From Chapter 11 Reorganization***

----

***Financial        Condition***

**Installment        Contracts Portfolio**

----

|                                         |   | **June                  30, 2005** |      | **December                  31, 2004** |   |
|----------------------------------------------|--------|------------------------------------|-----------|----------------------------------------|--------|
|                                         |   | **United****States**               |      | **Canada**                             |   | **Total** |   | **United****States** |   | **Canada** |   | **Total** |   |
| Automobiles                                  |   | $                                  | 5,393,824 |                                   | $      | 687,948 |   | $ | 6,081,772 |   | $ | 1,963,446 |   | $ | 220,064 |   | $ | 2,183,510 |   |
| Equipment                  leases            |   |                               |           |                                   |   | 919,435 |   |   | 919,435 |   |   | — |   |   | 999,724 |   |   | 999,724 |   |
| Bulk                  food                   |   |                               | —   |                                   |   | 825,082 |   |   | 825,082 |   |   | — |   |   | 962,070 |   |   | 962,070 |   |
| Home                  appliances             |   |                               | —   |                                   |   | 291,118 |   |   | 291,118 |   |   | — |   |   | 274,800 |   |   | 274,800 |   |
| Other                                        |   |                               | —   |                                   |   | 418,728 |   |   | 418,728 |   |   | — |   |   | 485,736 |   |   | 485,736 |   |
| Total                                        |   |                               | 5,393,824 |                                   |   | 3,142,311 |   |   | 8,536,135 |   |   | 1,963,446 |   |   | 2,942,394 |   |   | 4,905,840 |   |
|                                         |   |                               |      |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less                                         |   |                               |      |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unearned                  discount           |   |                               | 432,212   |                                   |   | 206,172 |   |   | 638,384 |   |   | 297,190 |   |   | 221,709 |   |   | 518,899 |   |
| Allowance                  for credit losses |   |                               | 153,954   |                                   |   | 163,980 |   |   | 317,934 |   |   | 139,921 |   |   | 156,312 |   |   | 296,233 |   |
| Net                                          |   | $                                  | 4,807,658 |                                   | $      | 2,772,159 |   | $ | 7,579,817 |   | $ | 1,526,335 |   | $ | 2,564,373 |   | $ | 4,090,708 |   |

**Asset        Quality**

----

|                                      |   | **June                    30, 2005** |       |
|-------------------------------------------|--------|--------------------------------------|------------|
|                                      |   | **United                    States** | **Canada** | **Total** |   |
|                                      |   | **Amount**                           |       | **Pct.** |   | **Amount** |   | **Pct.** |   | **Amount** |   | **Pct.** |
|                                      |   |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Installment                    Contracts  |   | $                                    | 5,393,824  |   |   | 100% |   |   | $ | 3,142,311 |   |   | 100% |   |   | $ | 8,536,135 |   |   | 100% |   |   |
|                                      |   |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Period                    of delinquency: |   |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 30                    - 59 days           |   | $                                    | 284,818    |   |   | 5.28% |   |   | $ | 23,122 |   |   | 0.74% |   |   | $ | 307,940 |   |   | 3.61% |   |   |
| 60                    - 89 days           |   |                                 | 142,847    |   |   | 2.65% |   |   |   | 49,614 |   |   | 1.58% |   |   |   | 192,460 |   |   | 2.25% |   |   |
| 90                    - 119 days          |   |                                 | 47,520     |   |   | 0.88% |   |   |   | 10,828 |   |   | 0.34% |   |   |   | 58,348 |   |   | 0.68% |   |   |
|                                      |   |                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                     |   | $                                    | 475,185    |   |   | 8.81% |   |   | $ | 83,564 |   |   | 2.66% |   |   | $ | 558,748 |   |   | 6.55% |   |   |

|                                      |   | **December                    31, 2004**  |
|-------------------------------------------|--------|------------------------------------------------|
|                                      |   | **United                    States**           | **Canada** | **Total** |
|                                      |   |                                           | **Amount**  |   |   | **Pct.** |   |   | **Amount** |   |   | **Pct.** |   |   | **Amount** |   |   | **Pct.** |
|                                      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Installment                    Contracts  |   | $                                              | 1,963,446 |   |   | 100% |   |   | $ | 2,942,394 |   |   | 100% |   |   | $ | 4,905,840 |   |   | 100% |   |   |
|                                      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Period                    of delinquency: |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 30                    - 59 days           |   | $                                              | 167,009 |   |   | 8.51% |   |   | $ | 50,547 |   |   | 1.72% |   |   | $ | 217,556 |   |   | 4.43% |   |   |
| 60                    - 89 days           |   |                                           | 60,788 |   |   | 3.10% |   |   |   | 15,660 |   |   | 0.53% |   |   |   | 76,448 |   |   | 1.56% |   |   |
| 90                    - 119 days          |   |                                           | 24,133 |   |   | 1.23% |   |   |   | 21,434 |   |   | 0.73% |   |   |   | 45,567 |   |   | 0.93% |   |   |
|                                      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                     |   | $                                              | 251,930 |   |   | 12.83% |   |   | $ | 87,641 |   |   | 2.98% |   |   | $ | 339,571 |   |   | 6.92% |   |   |

----

|                                                                                                              |   | **Three                  Months Ended June 30, 2005** |      | **Three                  Months Ended June 30, 2004** |   |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|-----------|-------------------------------------------------------|--------|
|                                                                                                              |   | **United                  States**                    |      | **Canada**                                            |   | **Total** |   | **United                  States** |   | **Canada** |   | **Total** |   |
|                                                                                                              |   |                                                  |      |                                                  |   |   |   |   |   |   |   |   |   |
| Installment                  Contracts, net of unearned discounts, end                  of period                 |   | $                                                     | 4,961,612 |                                                  | $      | 2,935,689 |   | $ | 7,897,301 |   | $ | 686,348 |   | $ | 2,082,857 |   | $ | 2,769,205 |   |
|                                                                                                              |   |                                                  |      |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Installment                  Contracts, net of unearned discounts, average during                  the period (1) |   | $                                                     | 4,196,567 |                                                  | $      | 2,693,575 |   | $ | 6,890,142 |   | $ | 523,032 |   | $ | 2,025,135 |   | $ | 2,548,167 |   |
|                                                                                                              |   |                                                  |      |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  charge-offs                                                                                |   | $                                                     | 185,910   |                                                  | $      | 43,658 |   | $ | 229,568 |   | $ | 4,310 |   | $ | 24,514 |   | $ | 28,824 |   |
| Recoveries                                                                                                        |   |                                                  | 80,165    |                                                  |   | 27,429 |   |   | 107,594 |   |   | — |   |   | 48,949 |   |   | 48,949 |   |
|                                                                                                              |   |                                                  |      |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  charge-offs                                                                                  |   | $                                                     | 105,745   |                                                  | $      | 16,229 |   | $ | 121,974 |   | $ | 4,310 |   | $ | (24,435 | ) | $ | (20,125 | ) |
|                                                                                                              |   |                                                  |      |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  charge-offs as a % of avg. contracts during                  the period, annualized          |   |                                                  | 10.08     | %                                                     |   | 2.41 | % |   | 7.08 | % |   | 3.30 | % |   | (4.83 | )% |   | (3.16 | )% |
|                                                                                                              |   |                                                  |      |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)                  - Average is based on month-end                  balances                                    |

|                                                                                                              |   | **Six                  Months Ended June 30, 2005** |      | **Six                  Months Ended June 30, 2004** |   |
|-------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|-----------|-----------------------------------------------------|--------|
|                                                                                                              |   | **United                  States**                  |      | **Canada**                                          |   | **Total** |   | **United                  States** |   | **Canada** |   | **Total** |   |
|                                                                                                              |   |                                                |      |                                                |   |   |   |   |   |   |   |   |   |
| Installment                  Contracts, net of unearned discounts, end                  of period                 |   | $                                                   | 4,961,612 |                                                | $      | 2,935,689 |   | $ | 7,897,301 |   | $ | 686,348 |   | $ | 2,082,857 |   | $ | 2,769,205 |   |
|                                                                                                              |   |                                                |      |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Installment                  Contracts, net of unearned discounts, average during                  the period (1) |   | $                                                   | 3,370,884 |                                                | $      | 2,658,404 |   | $ | 6,029,288 |   | $ | 412,848 |   | $ | 1,987,322 |   | $ | 2,400,170 |   |
|                                                                                                              |   |                                                |      |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  charge-offs                                                                                |   | $                                                   | 234,465   |                                                | $      | 85,458 |   | $ | 319,923 |   | $ | 4,310 |   | $ | 73,142 |   | $ | 77,452 |   |
| Recoveries                                                                                                        |   |                                                | 93,278    |                                                |   | 52,255 |   |   | 145,533 |   |   | — |   |   | 79,954 |   |   | 79,954 |   |
|                                                                                                              |   |                                                |      |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  charge-offs                                                                                  |   | $                                                   | 141,187   |                                                | $      | 33,203 |   | $ | 174,390 |   | $ | 4,310 |   | $ | (6,812 | ) | $ | (2,502 | ) |
|                                                                                                              |   |                                                |      |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  charge-offs as a % of avg. contracts during the period,                  annualized          |   |                                                | 8.38      | %                                                   |   | 2.49 | % |   | 5.78 | % |   | 2.09 | % |   | (0.69 | )% |   | (0.21 | )% |
|                                                                                                              |   |                                                |      |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)                  - Average is based on month-end                  balances                                    |

----

|                                                    |   | **Three                  Months Ended June 30, 2005** |     | **Three                  Months Ended June 30, 2004** |   |
|---------------------------------------------------------|--------|-------------------------------------------------------|----------|-------------------------------------------------------|--------|
|                                                    |   | **United                  States**                    |     | **Canada**                                            |   | **Total** |   | **United                  States** |   | **Canada** |   | **Total** |   |
|                                                    |   |                                                  |     |                                                  |   |   |   |   |   |   |   |   |   |
| Balance                  at beginning of period         |   | $                                                     | 144,240  |                                                  | $      | 174,809 |   | $ | 319,049 |   | $ | 89,327 |   | $ | 126,510 |   | $ | 215,837 |   |
|                                                    |   |                                                  |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Charge-offs                                             |   |                                                  | (185,910 | )                                                     |   | (43,658 | ) |   | (229,568 | ) |   | (4,310 | ) |   | (24,514 | ) |   | (28,824 | ) |
| Recoveries                                              |   |                                                  | 80,165   |                                                  |   | 27,429 |   |   | 107,594 |   |   | — |   |   | 48,949 |   |   | 48,949 |   |
|                                                    |   |                                                  |          |                                                  |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Net                  charge-offs                        |   |                                                  | (105,745 | )                                                     |   | (16,229 | ) |   | (121,974 | ) |   | (4,310 | ) |   | 24,435 |   |   | 20,125 |   |
|                                                    |   |                                                  |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision                  for credit losses            |   |                                                  | 115,459  |                                                  |   | 7,212 |   |   | 122,671 |   |   | 72,270 |   |   | (23,036 | ) |   | 49,234 |   |
|                                                    |   |                                                  |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect                  of foreign currency translation |   |                                                  | —  |                                                  |   | (1,812 | ) |   | (1,812 | ) |   | — |   |   | (2,964 | ) |   | (2,964 | ) |
|                                                    |   |                                                  |     |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                  at end of period               |   | $                                                     | 153,954  |                                                  | $      | 163,980 |   | $ | 317,934 |   | $ | 157,287 |   | $ | 124,945 |   | $ | 282,232 |   |

----

|                                                    |   | **Six                  Months Ended June 30,****2005** |     | **Six                  Months Ended June 30,****2004** |   |
|---------------------------------------------------------|--------|--------------------------------------------------------|----------|--------------------------------------------------------|--------|
|                                                    |   | **United                  States**                     |     | **Canada**                                             |   | **Total** |   | **United                  States** |   | **Canada** |   | **Total** |   |
|                                                    |   |                                                   |     |                                                   |   |   |   |   |   |   |   |   |   |
| Balance                  at beginning of period         |   | $                                                      | 139,921  |                                                   | $      | 156,312 |   | $ | 296,233 |   | $ | 32,463 |   | $ | 164,235 |   | $ | 196,698 |   |
|                                                    |   |                                                   |     |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Charge-offs                                             |   |                                                   | (234,465 | )                                                      |   | (85,458 | ) |   | (319,923 | ) |   | (4,310 | ) |   | (73,142 | ) |   | (77,452 | ) |
| Recoveries                                              |   |                                                   | 93,278   |                                                   |   | 52,255 |   |   | 145,533 |   |   | - |   |   | 79,954 |   |   | 79,954 |   |
|                                                    |   |                                                   |          |                                                   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Net                  charge-offs                        |   |                                                   | (141,187 | )                                                      |   | (33,203 | ) |   | (174,390 | ) |   | (4,310 | ) |   | 6,812 |   |   | 2,502 |   |
|                                                    |   |                                                   |     |                                                   |   |  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision                  for credit losses            |   |                                                   | 155,220  |                                                   |   | 43,068 |   |   | 198,288 |   |   | 129,134 |   |   | (40,594 | ) |   | 88,540 |   |
|                                                    |   |                                                   |     |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect                  of foreign currency translation |   |                                                   | —  |                                                   |   | (2,197 | ) |   | (2,197 | ) |   | — |   |   | (5,508 | ) |   | (5,508 | ) |
|                                                    |   |                                                   |     |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                  at end of period               |   | $                                                      | 153,954  |                                                   | $      | 163,980 |   | $ | 317,934 |   | $ | 157,287 |   | $ | 124,945 |   | $ | 282,232 |   |

***Liquidity        and Capital Resources***

----

***Off-Balance        Sheet Arrangements***

----

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

----

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

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

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

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

----

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

|   | 1. | Election                  of two directors to terms of office expiring at the Annual Meeting                  of                  Stockholders in 2008, or until their successors are elected and                  qualified. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Nominee**                           | **For**    | **Withheld** |
|---------------------------------------|------------|--------------|
|                                  |       |         |
| Stephen                  J. Gore      | 13,564,578 | 402,977      |
| Vernon                  S. Schweigert | 13,291,869 | 675,686      |

|   | 2. | Ratification                  of the appointment of BKD, LLP as the Company’s independent registered                  public accountants for the fiscal year ending December 31,                  2005. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **For**    | **Against** | **Abstain** |
|------------|-------------|-------------|
|       |        |        |
| 13,662,844 | 233,947     | 110,764     |

|   | 3. | Increase                  the number of authorized shares of common stock of the Company                  from                  19,000,000 shares to 36,000,000                  shares. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **For**    | **Against** | **Abstain** |
|------------|-------------|-------------|
|       |        |        |
| 12,921,436 | 867,548     | 160,571     |

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

----

**ITEM          6.  **
**Exhibits          and Reports on Form 8-K**

**INDEX        TO EXHIBITS**

|        |   |                                                                                                                                                                                                                 |
|-------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Exhibit** |   |                                                                                                                                                                                                                 |
| **Number**  |   | **Description**                                                                                                                                                                                                      |
|        |   |                                                                                                                                                                                                                 |
| 2.1*        |   | Corrected                  Trustee’s Amended Plan of Reorganization                                                                                                                                            |
| 2.2*        |   | Disclosure                  Statement for Trustee’s Amended Plan of Reorganization                                                                                                                             |
| 3.1*        |   | First                  Amended and Restated Certificate of Incorporation                                                                                                                                             |
| 3.1.1*      |   | Certificate                  of Amendment to Certificate of Incorporation                                                                                                                                            |
| 3.2*        |   | Bylaws                                                                                                                                                                                                               |
| 3.2.1*      |   | Amendment                  to Bylaws                                                                                                                                                                                 |
| 4.1*        |   | Amended                  and Restated Trust Agreement of Freedom Financial Group I Statutory                  Trust                                                                                                  |
| 10.1*       |   | Employment                  Agreement with Jerald L. Fenstermaker                                                                                                                                                    |
| 10.2*       |   | Investment                  Banking Agreement with Milestone Advisors, LLC                                                                                                                                           |
| 10.3*       |   | Unanimous                  Consent of the Board of Directors Adopting Executive Management                  Stock                  Bonus Plan                                                                        |
| 10.4*       |   | Office                  Lease - 3058 East Elm                                                                                                                                                                        |
| 10.5**      |   | Purchase                  and Sale Agreement, dated April 7, 2003, between Freedom Financial                  Group,                  Inc. (as Seller) and The Cadle Company (as Buyer)                              |
| 10.6**      |   | 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**      |   | 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**      |   | Application                  and Order by Bankruptcy Court Approving Employment of Biltmore                  Associates                                                                                              |
| 11.1        |   | Statement                  Re: Computation of Per Share Earnings - See Note 5 to Interim Consolidated                  Financial Statements                                                                          |
| 14.1        |   | Code                  of Ethics                                                                                                                                                                                      |
| 31.1        |   | Certification                  of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley                  Act of                  2002                                                                      |
| 31.2        |   | Certification                  of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley                  Act of                  2002                                                                      |
| 32.1        |   | Certifications                  of the Chief Executive Officer and Chief Financial Officer under                  Section                  906 of the Sarbanes-Oxley Act of                  2002                    |

----

**SIGNATURES**

|                                        |                                                          |                                             |
|---------------------------------------------|---------------------------------------------------------------|--------------------------------------------------|
|                                        | **FREEDOM                  FINANCIAL GROUP, INC.**            |
|                                   |                                                     |                                        |
| Date: August                  12, 2005 | By:                                                 | /s/ Jerald                  L. Fenstermaker |
|                                        | Jerald L. Fenstermaker, President and Chief Executive Officer |
|                                        |                                                          |

|                                        |                                               |                                       |
|---------------------------------------------|----------------------------------------------------|--------------------------------------------|
|                                        | **FREEDOM                  FINANCIAL GROUP, INC.** |
|                                   |                                          |                                  |
| Date: August                  12, 2005 | By:                                      | /s/ Daniel                  F. Graham |
|                                        | Daniel F. Graham,Chief Financial Officer           |
|                                        |                                               |

----