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

                                   FORM 10-KSB

[X]    ANNUAL REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES AND EXCHANGE ACT
       OF 1934

                  For the fiscal year ended September 30, 2003

[ ]    TRANSITION  REPORT  UNDER  SECTION 13 OR 15(d) OF THE  SECURITIES  AND
       EXCHANGE ACT OF 1934

                  For the transition period from _____ to_____

                           Commission File No. 0-23450

                            CAPITOL FIRST CORPORATION
          (Name of Small Business Issuer as specified in its charter)

        Nevada                                         88-0361144
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                       Identification No.)


7100 Camino Real Boulevard
Suite 402
Boca Raton, FL                                                  33433
(Address of principal executive offices)                      (Zip Code)


Issuer's telephone number: (561) 417-7115

Securities to be registered under Section 12(b) of the Act: None

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

                          Common Stock ($.01 Par Value)
                                (Title of Class)


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


         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained,  to the best of  registrant's  knowledge,  in definitive  proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]



<PAGE>




         State the issuer's revenues for its most recent fiscal year. $2,721,933

         State  the  aggregate   market  value  of  the  voting  stock  held  by
non-affiliates  computed by  reference to the price at which the stock was sold,
or the average bid and asked  price of such,  as of a specified  date within the
past 60 days. $1,528,493 based on the average of the bid and asked obtained from
the National Quotation Bureau, Inc. ("NQB") on December 31, 2003.

         State the number of shares  outstanding of each of the Issuer's classes
of common equity,  as of the latest  practicable  date.  26,750,361 common stock
shares, as of December 10, 2003.


                       DOCUMENTS INCORPORATED BY REFERENCE
NONE

         Transitional Small Business Disclosure Format YES [ ] NO [X}




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TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS ..............................................  4
--------------------------

PART I
ITEM 1.       DESCRIPTION OF BUSINESS....................................  4

ITEM 2.       DESCRIPTION OF PROPERTY.................................... 11

ITEM 3.       LEGAL PROCEEDINGS.......................................... 17

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF
              SECURITY HOLDERS........................................... 17

PART II.

ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED
              STOCKHOLDER MATTERS........................................ 17

ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR
              PLAN OF OPERATION.......................................... 19

ITEM 7.       FINANCIAL STATEMENTS....................................... 27

ITEM 8.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
              ON ACCOUNTING AND FINANCIAL DISCLOSURE..................... 27

PART III

ITEM 9.       DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
              AND CONTROL PERSONS; COMPLIANCE WITH
              SECTION 16(a)OF THE EXCHANGE ACT........................... 27

ITEM 10.      EXECUTIVE COMPENSATION..................................... 29

ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
              OWNERS AND MANAGEMENT...................................... 31

ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED
              TRANSACTIONS............................................... 32

ITEM 13.      EXHIBITS AND REPORTS ON FORM 8-K........................... 33

ITEM 14.      CONTROLS AND PROCEDURES ................................... 34



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FORWARD-LOOKING STATEMENTS

         In   addition  to   historical   information,   this  Report   contains
forward-looking   statements.  Such  forward-looking  statements  are  generally
accompanied by words such as "intends,"  "projects,"  "strategies,"  "believes,"
"anticipates,"  "plans," and similar terms that convey the uncertainty of future
events or outcomes. The forward-looking  statements contained herein are subject
to certain  risks and  uncertainties  that could cause actual  results to differ
materially from those reflected in the forward-looking statements.  Factors that
might cause such a difference  include,  but are not limited to, those discussed
in ITEM 6 of this Report,  the section  entitled  "MANAGEMENT'S  DISCUSSION  AND
ANALYSIS  OR PLAN OF  OPERATION  --Factors  That May Affect  Future  Results and
Market Price of Stock."  Readers are  cautioned  not to place undue  reliance on
these forward-looking statements, which reflect management's analysis only as of
the date hereof and are in all cases  subject to the  Company's  ability to cure
its current liquidity  problems.  There is no assurance that the Company will be
able to generate sufficient revenues from its current business activities to met
day-to-day operation  liabilities or to pursue the business objectives discussed
herein.

         The  forward-looking  statements  contained  in this Report also may be
impacted by future economic  conditions.  Any adverse effect on general economic
conditions  and consumer  confidence  may  adversely  affect the business of the
Company.

         Capitol First  Corporation  undertakes no obligation to publicly revise
these  forward-looking  statements to reflect events or circumstances that arise
after  the date  hereof.  Readers  should  carefully  review  the  risk  factors
described  in other  documents  the  Company  files  from  time to time with the
Securities  and  Exchange   Commission,   including  without   limitation  those
identified in the "Risk Factors" section of the Company's Registration Statement
filed with the Securities and Exchange  Commission (the "SEC")in  September 1996
on Form 10-SB.

PART I.

ITEM 1.  DESCRIPTION OF BUSINESS.

BUSINESS DEVELOPMENT

         Capitol First Corporation,  a Nevada  corporation (the "Company"),  was
formed on August 21, 1995. On October 15, 2003, the Company filed an Certificate
of  Amendment  with the  Secretary  of State of Nevada  to change  its name from
Capitol  Communities  Corporation  to  Capitol  First  Corporation.  It  is  the
successor-by-merger  to  AWEC  Resources,  Inc.,  a New  York  corporation.  The
Predecessor  Corporation  was  incorporated  in the State of New York as Century
Cinema Corporation in November 1968 (the "Predecessor Corporation").  Unless the
context  otherwise  requires,  all  references  to the  "Company" in this Report
include  the  Predecessor  Corporation,  and  all  references  to the  Company's
business and  properties  include the business and  properties  of Capitol First
Corporation and its wholly-owned subsidiaries discussed in more detail below.

         The Company controls and owns the following wholly-owned subsidiaries:

         Capitol  Development  of Arkansas,  Inc. (the  "Operating  Subsidiary")
formerly AWEC  Resources,  Inc.,  was formed on February 11, 1994. The Operating
Subsidiary  holds title to the  Company's  real  property  located in  Maumelle,
Arkansas.

         Capitol Homes, Inc., an Arkansas  corporation (the  "Home  Construction
Subsidiary"), was formed in May 1994 (formerly AWEC Homes, Inc.) for the purpose
of building  single family homes in Maumelle,  Arkansas.  As of the date of this
Report, the Home Construction  Subsidiary has had no construction operations and
accordingly, the Company is presently in the process of dissolving it.




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         On January 24, 2003, the Operating Subsidiary entered into an Agreement
Dissolving Limited Liability Company ("Agreement") with Trade Partners,  Inc., a
Michigan  corporation.  Under the terms of the Agreement,  the Company and Trade
Partners,  Inc., the two members of TradeArk  Properties,  LLC  ("TradeArk"),  a
Michigan  limited  liability  company,  agreed to dissolve  TradeArk,  effective
immediately.  For its 35.16 percent  membership  interest,  the Company received
approximately  251 acres of real property  located in the City of Maumelle,  the
County of Pulaski,  Arkansas. The Company also assumed approximately  $3,500,000
in debt held by New Era Life Insurance Inc. ("New Era"), and secured by the real
property.  Approximately 258 acres of real property were originally  contributed
to TradeArk by the Company in June 1999, when the limited  liability company was
formed  by  the  two  members.   Since  the  real   property  was   contributed,
approximately  six and  one-half (6 1/2) acres have been sold by  TradeArk.  The
remaining  real  property  is  comprised  of  single  family,  multi-family  and
commercial land.

         Under the Agreement,  Trade  Partners,  Inc.,  received life settlement
contracts,  which  were  originally  contributed  by Trade  Partners,  Inc.,  to
TradeArk for its 64.84 percent membership interest.

SUBSEQUENT EVENTS

         On  October 8,  2003,  the  Company  formed a  wholly-owned  subsidiary
Interfund Mortgage Corp., a Florida corporation, (the "Mortgage Subsidiary") for
the purpose of administering the Company's financial lending activities.

         On October 20,  3003,  the Company  formed a  wholly-owned  subsidiary,
Capitol Development,  Inc., a Nevada corporation (the "Development Subsidiary").
The  Development  Subsidiary was formed for the purpose of holding title to real
property or development projects, except the Maumelle Property.

         On November 28, 2003,  the Company  formed a  wholly-owned  subsidiary,
Capitol Management,  LLC, ("Management  Subsidiary") a Florida limited liability
company for the purpose of managing the  Company's  property,  including but not
limited to its loan portfolio.

         On November 28, 2003,  the Mortgage  Subsidiary  formed a  wholly-owned
subsidiary,  Interfund  Investment  Fund I,  LLC,  a Florida  limited  liability
company  ("Investment Fund I"). The Investment Fund I was formed for the purpose
of  raising a minimum  of  $1,000,000  and a maximum  of  $8,000,000  in secured
subordinated  promissory  note  debt to be  utilized  to  expand  the  Company's
financing lending program.


         BUSINESS OF THE COMPANY

         The following discussion of the "BUSINESS OF THE COMPANY," is qualified
in its  entirely  by  events  subsequent  to the  Company's  fiscal  year  ended
September 30, 2003. During the fiscal year, the Board of Directors (the "Board")
determined  that it was in the  best  interest  of the  Company  to  expand  its
operations  into the real estate  development  area,  especially in fast-growing
geographic  areas such as Florida and into the financial  lending area.  However
significant operations had not commenced prior to the fiscal year-end. See, ITEM
2, "DESCRIPTION OF PROPERTY."

         The Company is primarily in the business of real estate development and
financial  lending for its own  portfolio.  The Company  also  continues to sell
property from its  inventory of 734 acres of real property  located in Maumelle,
Arkansas (the "Maumelle Property") that it deems not appropriate for development
and in an effort to utilize  these core assets to acquire or develop real estate
projects in fast growing areas,  such as Florida,  and/or develop other business
opportunities that will generate progressive revenues for the Company. There can
be no  assurance,  however,  that  the  Company  will be able to  liquidate  its
Maumelle  Property at a fair market  price or at all,  or acquire  projects  and
finance  loans that  generate  revenues.  See  above,  ITEM 1,  "DESCRIPTION  OF
BUSINESS," and ITEM 2, "DESCRIPTION OF PROPERTY."



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<PAGE>



         GENERAL.  During fiscal year ended  September 30, 2003, the Company has
expanded  its  primarily   business  into  financial  lending  and  real  estate
development  with emphasis on development in fast-growing  geographic areas such
as Florida.  It has also focused on selling portions of real property located in
the City of Maumelle,  Arkansas,  a 5,000 acre planned  community located on the
Arkansas River,  across from the western Little Rock area and fifteen miles from
downtown Little Rock, Arkansas.

         During the fiscal year ended  September 30, 2003,  the Company  retired
$3,691,611 in secured and unsecured debt.

         Although the Company's  current lack of liquidity  prevents the Company
from  meeting its  day-to-day  obligations  except from funds raised in loan and
other debt instruments, the Company intends to commence meaningful operations in
the real estate development area and the financial lending area with assets from
the sale of all or  portions  of the  Maumelle  Property  and/or  from the money
received from the Boca First Capital LLLP line of credit and from the $3,000,000
raised in secured  debt.  There can be no assurance,  however,  that the Company
will be able to raise  sufficient  capital to cure its  liquidity  problems  and
pursue the business  objectives,  strategies or transactions  discussed  herein.
See,  ITEM 6,  "MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OR PLAN OF OPERATION - -
Certain Capital Raising Transactions and Liquidity."

         The Company's  real estate as of September  30, 2003,  consisted of the
remaining unsold portion of the Maumelle Property comprised of approximately 736
acres,  of  which  290  acres  are  developable.  See  ITEM 2,  "DESCRIPTION  OF
PROPERTY," ITEM 6, "MANAGEMENT'S  DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -
- Certain Capital Raising Transactions," and ITEM 7, "FINANCIAL STATEMENTS."

         The Maumelle  Property and any other property  and/or loan portfolio is
managed by the Company.  The Company  expects that the Company will  continue to
manage its  property.  The Company  intends to use  affiliate  and  unaffiliated
brokers, and banks to sell its property and affiliated and unaffiliated mortgage
brokers for its lending  opportunities.  See ITEM 12, CERTAIN  RELATIONSHIPS AND
RELATED TRANSACTIONS."

         PRINCIPAL PRODUCTS AND MARKETS.

         REAL  PROPERTY.  The Company is  primarily in the business of acquiring
and developing  real estate  property in fast growing  geographic  areas such as
Florida, especially South Florida and South-West Florida and North Carolina.  In
the  Maumelle,  Arkansas  area,  where a large  portion  of the  Company's  real
property  is  located,  the Company is  currently  offering  for sale all of the
property  in an effort to use these  assets to acquire or  develop  real  estate
projects  in faster  growing  areas,  and to enhance the  Mortgage  Subsidiary's
ability to generate  revenues  from  financial  lending  collateralized  by real
property. The Company anticipates that the developable Maumelle Property will be
sold to developers,  apartment building  operators and/or commercial  developers
There can be no assurance,  however, that the sale of the Maumelle Property will
generate  increased  revenues  from  investing in other real estate  projects or
loans. See above, ITEM 1, "DESCRIPTION OF BUSINESS," and ITEM 2, "DESCRIPTION OF
PROPERTY."

         The Company's  immediate focus is in developing  real estate  projects,
obtaining a loan portfolio and selling land from its Maumelle Property inventory
to  satisfy  day-to-day  operations,  reduce  the  Company's  debt  and  enhance
stockholder value.

         During the fiscal year ended  September 30, 2003,  the Company sold 211
acres of its real property for a total gross sales price of $2,716,882. See ITEM
6  "MANAGEMENT'S  DISCUSSION AND ANALYSIS OR PLAN OF  OPERATION---LIQUIDITY  AND
CAPITAL  RESOURCES."  Management  expects that any future Maumelle Property sold
probably will be purchased by other real estate developers.

         Based on current sales trends as evidenced by building  permits issued,
recent  improvement  bond  refinancing  and renewed efforts of the Maumelle City
staff to attract industrial development, Management of the Company believes that


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<PAGE>

there is substantial unmet demand in the Maumelle area for  single-family  lots,
as well as for the  multi-family and commercial land. There can be no assurance,
however,  as to how long such demand will continue,  especially with the current
economic  uncertainties  or that the Company  will be able to sell any or all of
its inventory of Maumelle Property. See "- - GROWTH STRATEGIES," below.

DEVELOPMENT   ACTIVITIES.   The  Development  Subsidiary  intends  to  focus  on
developing relationships with Preferred Development Partners (PDP's),  qualified
developers with whom the Company may enter joint  ventures.  The Company intends
to acquire and develop its own property.  The  Development  Subsidiary will also
oversee any  development  of  Maumelle  Property.  See "- - GROWTH  STRATEGIES,"
below.

FINANCIAL  LENDING  ACTIVITIES.  The Mortgage  Subsidiary  intends to initiate a
high-yield   secured   lending   program  for  its  own  portfolio  by  offering
high-interest   financing   generally  not  financed  by   traditional   lending
institutions  due to various factors such as time  constraints,  borrower credit
issues,   higher  than  normal  loan-to-value  ratios  or  situations  requiring
additional  and/or  cross  collateral.  Additionally,  the  Mortgage  Subsidiary
intends to locate and acquire  portfolios of mortgages that will be purchased at
a  discount,  thus  increasing  the yield.  The  Company  intends to conduct due
diligence on all lending in order to determine  the  underlying  collateral  has
enough value to warrant the loan.

The Company intends to offer loans in the following categories,  however, it may
deviate  from  these loan  categories  as it may deem  appropriate,  in its sole
discretion,  depending on specific circumstances but may from time to time amend
or deviate from these categories, at its sole discretion:  raw land. acquisition
and development of real estate, construction,  real estate held for sale, bridge
loans,    commercial   loans,   mortgages   held   for   investment   and   note
hypothecations/participations.

 UNDERWRITING  CRITERIA.  Management has developed loan underwriting  procedures
and guidelines. The Board of Directors has approved a loan commitment consisting
of management for loans under  $1,000,000.00.  Loans greater than  $1,000,000.00
require board approval.
The Company  will  evaluate  prospective  mortgage  loan  investments  upon this
underwriting criteria, which the Company may amend from time to time in its sole
discretion.  The Company may deviate  from the  underwriting  criteria set forth
herein as it may deem appropriate, in its sole discretion, depending on specific
circumstances.  Some of the  factors  the  Company  may include as a part of its
underwriting criteria are as follows:

1.   Assessment  of loan to value  ratios,  meaning we will review the amount of
     the loan to the  value of the  property  being  secured.  Our loan to value
     guidelines  may range from  50%-80% of the  anticipated  "as if"  developed
     value.  We may  deviate  from these loan to value  guidelines  from time to
     time, in the sole discretion of the Company.
2.   Review Financial statements and condition of borrower and any guarantors as
     may be applicable
3.   Review credit history of borrower and any guarantors as may be applicable.
4.   Review of third  party  independent  appraisal  reports  not older  that 12
     months prior to the date of loan origination.
5.   Potential  for  equity  appreciation  in the  value of the  property  being
     secured.
6.   Geographic location of the property to be secured.
7.   If the property to be secured is rental property,  rental rates,  occupancy
     rates, and potential for rental increases may be considered.
8.   Condition of record title of the property being secured.

         The Company  anticipates  that the Mortgage  Subsidiary will be able to
maximize  the  opportunities  provided  by  the  Development   Subsidiary's  PDP
relationships by offering construction and/or development  financing.  There can
be no assurance,  however, that the Company will be able to obtain quality loans
or that such loans will  perform as  anticipated.  See "- - GROWTH  STRATEGIES,"
below and ITEM 6, "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION ."




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LEVERAGE.  The Company  intends to leverage  the money it raises,  through  debt
and/or  equity,  by  expanding  its  credit  lines  with  commercial  banks  and
generating  additional  cash  flow  from  financing  arbitrage.  There can be no
assurance, however, that the Company will be able to originate loans at a higher
rate than the rate it borrows funds, or at all.

         MARKETING AND ADVERTISING.

         The Company has listed the Maumelle  Property  with  unaffiliated  real
estate brokers,  mortgage  brokers and banks who are responsible for advertising
and  marketing  the  property  or  assisting  with   acquisitons.   The  Company
anticipates that any future development  projects will be listed with affiliated
and  unaffiliated  real estate brokers.  See ITEM 12, "CERTAIN  RELATIONSHIP AND
RELATED TRANSACTIONS."

         GROWTH STRATEGIES.

         The Company's primary business objective is to increase long-term total
returns to shareholders  through  appreciation in value of the Common Stock. The
Company intends to achieve this objective by implementing  the long- term growth
strategies summarized below. The Company ability to implement and achieve any of
these strategies may be adversely effected by its present illiquidity and/or its
ability to acquire revenue generating  development  projects and loan portfolio.
See ITEM 6, "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION."

         The Company's growth strategy with respect to the Maumelle  Property is
to focus on its sale to  developers  in the real  estate  industry.  There is no
assurance,  however,  that the firms who recently purchased large tracks of land
from the Company will not compete with the Company for the sale of lots to other
developers/builders or that the demand for such development will continue at its
present growth rate.

         PRODUCT  DIVERSIFICATION.  The  Company's  primary focus will be on the
development of properties in fast-growing  geographic  areas such as Florida and
North Carolina,  the  improvement and sale of portions of its Maumelle  Property
inventory and on the acquisition of a balanced loan portfolio.

         COMPETITION.

REAL  ESTATE  DEVELOPMENT.  The  real  estate  development  industry  is  highly
competitive.  In Arkansas,  as well as in Florida and North  Carolina  where the
Company has or anticipates  developing real estate projects,  there are numerous
large  national and regional  firms with  significantly  greater  experience and
financial  resources  than the  Company  currently  possesses.  The  Company may
compete with such firms in the sale of the Maumelle Property and other projects.
Such  developers may be more  experienced and have greater  financial  resources
then the Company and will compete with the Company in the  acquisition  of land,
the hiring of sub-contractors,  experienced  management personnel,  construction
workers and other employees, and the sale of product.

         The  Company  currently  has no  material  presence  or  reputation  in
Arkansas,  Florida,  North  Carolina  or  any  other  area  in the  real  estate
development  industry.  Due to the Company's lack of revenue from  operations it
may have to sell portions of its Maumelle Property at less than market value. As
a result,  there may be reduced  profit  margins from the  Company's  operations
which  may  make it more  difficult  for  the  Company  to  achieve  the  growth
strategies discussed herein.

FINANCIAL LENDING. A large number of financial  commercial  institutions,  other
entities and individuals  compete for the opportunity to make the kinds of loans
made by the Company.  Many of these institutions,  entities and individuals have
greater financial resources than the  resources of the Company.  As a  result of



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<PAGE>


this  competition,  the Company may from time to time be  precluded  from making
loans on  projects  or loans on the terms  that the  Company  is willing to make
under its underwriting  guidelines.  In addition, no particular financial lender
dominates  the  market  and as a result  there is  substantial  competition  for
investments  in mortgages  secured by  commercial  properties,  which may create
pressure on lenders to lower interest rates. Accordingly, the Company may not be
able to  obtain  as high  interest  rates on  mortgage  investments  as it would
otherwise obtain, which could affect revenues.

         The Company  currently  has no material  presence or  reputation in the
lending industry and may not be able to attract high quality loans.

         GOVERNMENTAL REGULATIONS.

         The   development   industry  is  subject  to  extensive   and  complex
regulations.  In the sale of its Maumelle Property,  or any other property owned
by the Company,  or property held with any joint venture  partners,  must comply
with various federal,  state and local laws,  ordinances,  rules and regulations
regarding  zoning,  architectural  design,  construction,  population,  density,
availability and installation of utility services,  such as water,  electricity,
gas, and waste  disposal,  the  preservation of the natural  terrain,  and other
related  matters,  which requires  resources and expertise  which,  for the most
part, the Company  currently lacks. The Company intends to obtain such resources
and expertise, when required.

         The  Company's  Maumelle  Property is subject to the City of Maumelle's
Master  Land  Use  Plan.  Under  this  Plan,  approximately  184  acres  of  the
approximately 290 acres of the Maumelle Property that was developable land as of
September 30, 2003, was zoned for single-family homes. The current zoning allows
the Company to develop and offer for sale approximately 200 to 300 single-family
home sites located on this acreage.  Although much of the Company's  property is
currently zoned for single-family homes, none of the developable land acreage is
subdivided and the Company will be required to incur significant additional cost
to subdivide  the property into  individual  lots.  The Company  believes it can
satisfy all anticipated  governmental  requirements  involved in the subdivision
process, should Management decide to subdivide the property, assuming it obtains
adequate funding and expertise.

         The Company may be required to mitigate any environmental impact on its
446 acres of wetlands in Maumelle that may be caused by the  Company's  proposed
development activities in Maumelle.  Although the Company is not currently aware
of any such  mitigation  requirements,  the  Company  will be required to obtain
approval from the Army Corp of Engineers of any required mitigation efforts. The
Company may incur  additional  costs and delays in seeking  such  approvals  and
performing such mitigation. See "--ENVIRONMENTAL LAWS," below.

         Delays in obtaining  governmental  permits and  approvals  may increase
development  costs to the Company.  Zoning  requirements and restrictions  could
become more  restrictive in the future,  resulting in additional  time and money
being spent to obtain approvals for development of the Company's properties.

         The Company  also may be subject to periodic  delays or may be deterred
from  selling the  Maumelle  Property to  potential  developers  due to building
moratoriums or slow-growth or no-growth initiatives that could be implemented in
the  future in the  areas  which it does  business.  In  addition,  governmental
authorities could change the zoning of all or some of the Company's  properties,
which could result in a decrease in property values.

         The Company  believes that, with adequate  funding,  it can comply with
all  applicable  laws  regarding  its real  estate  operations.  There can be no
assurance,  however, that the Company will be able to comply with all such laws,
or that the enactment of new laws or regulations may not have a material adverse
effect on the Company.

         ENVIRONMENTAL LAWS.

         The  Company  is  subject to  various  federal,  state and local  laws,
ordinances and regulations regarding  environmental matters. Under these laws, a
current or  previous  owner or  operator  of real  property  may be  required to
investigate  and clean up hazardous  or toxic  substances  or petroleum  product
releases at such property, and may be held liable to a governmental entity or to
third parties for property  damage and the costs of  investigation,  removal and



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<PAGE>

decontamination  incurred by such parties in connection with contamination.  The
penalty  is  imposed  whether  or not the  owner or  operator  was  aware of, or
responsible for the hazardous or toxic substances,  and the liability under such
laws has been  interpreted  to be joint and several unless the harm is divisible
and there is a reasonable basis for allocation or responsibility.

         The  costs  of  investigation,   removal  or  decontamination  of  such
substances  could be substantial.  If such substances are found on real property
or there is a failure to properly remove or decontaminate the area, the property
could be  difficult  to sell,  rent,  develop or use to secure  debt  financing.
Persons  who  arrange  for the  disposal  or  treatment  of  hazardous  or toxic
substances at a disposal or treatment  facility also may be liable for the costs
of removal or remediation of a release of hazardous or toxic  substances at such
disposal  or  treatment  facility,  whether  or not  such  facility  is owned or
operated by such person. In addition,  some  environmental laws create a lien on
the contaminated site in favor of the government for damages and costs it incurs
in  connection  with  the  contamination.  Finally,  the  owner of a site may be
subject  to  common  law  claims by third  parties  based on  damages  and costs
resulting form environmental  contamination emanating from a site. In connection
with its ownership and operation of real property,  the Company  potentially may
be liable for the foregoing costs.

         In addition,  recent studies have linked radon,  a  naturally-occurring
substance, to increased risks of lung cancer. While there are currently no state
or federal  requirements  regarding the monitoring for, presence of, or exposure
to,  radon in indoor air,  the EPA and the  Surgeon  General  recommend  testing
residences  for the  presence  of  radon  in  indoor  air,  and the EPA  further
recommends that  concentrations of radon in indoor air be limited to less than 4
picocuries  per liter of air  (Pci/L)  (the  "Recommended  Action  Level").  The
presence of radon in  concentrations  equal to or greater  than the  Recommended
Action Level in one or more of the Company's properties may adversely affect the
market value of such property and the Company's ability to sell it.

         Electric  transmission  lines  are  located  in  the  vicinity  of  the
Company's  properties.  Electric  transmission  lines are one of many sources of
electro-magnetic  fields ("EMFs") to which people may be exposed.  Research into
potential  health  impacts   associated  with  exposure  to  EMFs  has  produced
inconclusive   results.   Notwithstanding  the  lack  of  conclusive  scientific
evidence,  some states now regulate the strength of electric and magnetic fields
emanating  from  electric   transmission   lines,  while  others  have  required
transmission  facilities to measure for levels of EMFs. In addition, the Company
understands  that lawsuits  have,  on occasion,  been filed  (primarily  against
electric  utilities)  alleging personal injuries resulting from exposure as well
as fear of adverse effects from transmission  lines has been a factor considered
in  determining  property  values in  obtaining  financing  and in  condemnation
proceedings in eminent domain  brought by power  companies  seeking to construct
transmission lines. Therefore,  there is a potential for the value of a property
to be adversely affected as a result of its proximity to a transmission line and
for the Company to be exposed to damage claims by person exposed to EMFs.

         The Company has had a Phase I  investigation  conducted on the Maumelle
Property,  excluding the approximately 446 acres of wetlands.  The investigation
found no evidence of soil or ground water  contamination on the studied property
and recommended that a Phase II study was not warranted. This Phase I assessment
was carried out in accordance with accepted industry  practices and consisted of
non-invasive  investigations  of  environmental  conditions  at the  properties,
including  a  preliminary  investigation  of the  sites  and  identification  of
publicly known  conditions  concerning  properties in the vicinity of the sites,
physical  site   inspections,   review  of  aerial   photographs   and  relevant
governmental  records  where  readily  available,  interviews  of  knowledgeable
parties,  investigation for the presence of above ground and underground storage
tanks  presently  or formerly at the sites,  a visual  inspection  of  potential
lead-based paint and suspect friable ACMs where appropriate, a radon survey, and
the  preparation  and issuance of a written  report.  In 1986, an  Environmental
Protection Agency ("EPA")  representative stated in a letter to a previous owner
of the Maumelle  Property,  that although part of the Maumelle Property had been
used by the United States government during World War II as a munitions ordnance
facility  until  1950,  the  entire  site  had been  decontaminated  by the U.S.
government prior to its sale in 1961. In the letter,  the EPA  characterized the
property as not having any further environmental concerns.

         The Company is not aware of any environmental liability with respect to
any of its real property that the Company believes would have a material adverse
effect  on  the  Company's   business,   assets,   or  results  of   operations.


                                       10

<PAGE>

Nevertheless,  there can be no assurance,  that the Company's real property does
not contain  hazardous or toxic  substances,  particularly on the property which
has not been subjected to a Phase I investigation,  or that the Company will not
incur  costs  associated  with the  decontamination  of any such  substances  or
liability  arising from any such  contamination.  No assurance can be given that
the  environmental  studies  conducted on the property reveal all  environmental
liabilities or that no prior owner created any material environmental  condition
not known to the Company.  The Company  believes that compliance with applicable
environmental  laws and  regulations  may have a material  adverse effect on the
Company, its financial condition and its results of operations.

         The Company  believes  that its  properties  are in  compliance  in all
material  respects  with all  federal,  state and  local  laws,  ordinances  and
regulations  regarding  hazardous or toxic substances.  The Company has not been
notified by any governmental  authority or any third party, and is not otherwise
aware, of any material  noncompliance,  liability or claim relating to hazardous
or toxic substances or petroleum  products in connection with any of its present
properties.

FINANCIAL LENDING.  The financing of real estate projects and development may be
affected by factors beyond the Company's control.  These factors include but are
not limited to, the general  economic  conditions,  interest rates, the rate and
timing of  delinquencies  and  defaults on any loans,  the quality of  mortgaged
properties, including the possible deterioration of the area where such mortgage
property  is  situated,  limited  recourse  on loans since the loans will not be
insured or guaranteed by any government  entity or private  mortgage insurer and
environmental issues.

         NUMBER OF EMPLOYEES.  As of the Company's fiscal  year-ended  September
30, 2003, the Company and its subsidiaries had one full-time employee.

ITEM 2. DESCRIPTION OF PROPERTY.

GENERAL

         The  Company's  principal  asset is the Maumelle  Property,  located in
Maumelle,  Arkansas, title to which is held by the Operating Subsidiary.  At the
Company's  fiscal  year-end,  the Maumelle  Property  consisted of the following
property (sizes are  approximate and rounded up to the nearest acre):  186 acres
of single-family sites, 47 acres of multi- family sites,  approximately 57 acres
of commercial property, and 446 acres of miscellaneous  undevelopable  property.
The Maumelle  Property is currently zoned under the City of Maumelle Master Land
Use Plan for  various  development  uses,  including  single-family  residences,
multi-family units and commercial uses.

         The  Maumelle  Property can be divided  into four  categories:  (1) the
Singe-Family  Tract, (2) the Multi-Family Lots, (3) the Commercial Lots and (4 )
the Miscellaneous Tract and Property. Each category of Maumelle Property will be
discussed separately below after the following overview of the City of Maumelle.

         Except as otherwise  noted, the Company believes that its real property
assets  are in good  condition  and  are  suitable  and  adequate  for the  uses
indicated.  Although  there  are no  insurable  improvements  on  the  Company's
properties,  the Company maintains a general liability insurance coverage on its
real property assets.

 MAUMELLE PROPERTY
         THE CITY OF  MAUMELLE.  The City of  Maumelle  is a 5,000 acre  planned
community  located off Interstate 40 on the Arkansas  River.  Fifteen miles from
downtown Little Rock, the capital of Arkansas, Maumelle is patterned after other
"new town" communities such as Reston, Virginia,  Irvine Ranch in Orange County,
California and Columbia, Maryland.

         Maumelle is a master  planned city with about 13,000  residents.  Under
the Master Plan,  Maumelle  cannot add new property to the city for  residential
development without public hearings regarding any proposed annexation of land by
the City  and the  subsequent  approval  by the City  Board of  Directors.  From
Maumelle's inception in 1966 to 1996,  approximately $120 million has been spent
on infrastructure, including sewer and water capacity for a city of up to 25,000
residents and a system of designated common areas,  including  pathways,  parks,
lakes,  a golf course and other  recreational  areas.  The City of Maumelle  was
incorporated  as a city in 1985.  It is governed by a mayor and city council and
has police, fire, and emergency services.



                                       11

<PAGE>


         Almost  all of the  cities  within the  four-county  Little  Rock-North
Little Rock region gained  population  from 1990 through 2000. The population of
Maumelle  has  grown at a faster  rate  than that of  neighboring  Little  Rock,
Arkansas  with a growth rate of 57.2% in increased  population,  whereas  Little
Rock had a 4% increase from 1990 to 2000.  The community of Maumelle  appears to
be attracting  more highly  educated  residents  than does Little Rock. The U.S.
Department  of Commerce  and the Little Rock  Metropolitan  Planning  Commission
("Metroplan"),  a government  planning agency,  stated that the figures from the
2000 Census  Supplementary  Survey,  showed  Maumelle and Little Rock  residents
exceeded  the  national  average  in  education  attainment  in every  category,
particularly  in graduate  and  professional  degrees.  Maumelle has the highest
median household income in the State of Arkansas.

         Since  1979,  Maumelle  has  attracted  some  major  companies  to  its
industrial areas,  including Molex Inc., Target  Distribution  Center,  Kimberly
Clark  (a  manufacturing   facility),  Ace  Hardware  Distribution  Center,  and
Scholastic Distribution Services.

         In 2002 the  average new home permit  value in Maumelle  was  $182,356,
according to a Metroplan  report.  The number of single-family  building permits
issued by Maumelle has increased by 1,811 units between 1990 and 2000, according
to Metroplan.  A total of 247 were issued in the 12-month period ended 2001, 256
in 2002, and 164 for the six- month period ended June, 2003.

         SINGLE-FAMILY  TRACT.  As of the Company's  fiscal year ended September
30, 2003, the  Single-Family  Tract was comprised of approximately  184 acres of
undeveloped residential land. Under current zoning for residential  development,
the Company believes this land can be subdivided into  approximately  200 to 300
single-family lots.

         During  fiscal  year  ended   September  30,  2003,  the  Company  sold
approximately  192  acres of  single-family  land,  for a total  sales  price of
$2,016,000.  With the sale of the 192 acres in July,  2003, the Company paid New
Era Life Insurance Inc..  ("New Era"),  $1,384,492 to release the property.  See
below, "- - Pine Ridge Residential Tract."

         The  Operating  Subsidiary  has fee title to the remaining 186 acres of
Single-Family Tract, all of which are subject to a first-priority mortgage, made
effective September 11, 2003 ("Noble Mortgage"), in favor of Noble International
Investments,  Inc.  ("Noble "), as  collateral  agent for  noteholders  securing
$3,000,000 in promissory notes ("Secured  Notes").  The  Single-Family  Tract is
also secured by a second-priority  mortgage in favor of Boca First Capital, LLLP
("Boca First"), the controlling shareholder of the Company. The mortgage secures
a $4,000,000  line of credit from Boca First (the "Boca Credit  Line"),  and was
senior until Boca First  subordinated  the mortgage to the Noble Mortgage.  See,
ITEM 12, "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

         The Secured  Notes bear  interest at a rate of eight  percent per annum
and are payable  monthly  with the  principal  and any accrued  interest  due 36
months from  September 11, 2003. As of September 30, 2003,  and the date of this
Report, the outstanding amount of the Secured Notes was $3,000,000.

         The Boca  Credit Line has an initial  interest  rate of ten percent per
 annum and will,  on a quarterly  basis,  adjust to a rate which is equal to the
 greater  of ten  percent  per annum or one  percent  above the prime  rate,  as
 published in The Wall Street  Journal,  in effect on that date. The Boca Credit
 Line is due in monthly installments of interest only. It was first entered into
 between the Company and Boca First on April 26, 2002, and subsequently modified
 on  May  15,  2002,  to  increase  the  credit  line  from   $3,000,000.00   to
 $4,000,000.00 and extend the maturity date from November 1, 2003 to November 1,
 2004. The Boca Credit Line is evidenced by a promissory  note (the "Boca Note")
 which  is  secured  by  substantially  all  of  the  assets  of  the  Operating
 Subsidiary.  The Boca Note is secured by a mortgage on the  remaining  Maumelle
 Property,  including the Single Family Tract (the "Boca  Mortgage").  As of the
 fiscal year-end,  the Company has drawn  $1,255,000 on the line of credit,  and
 $1,245,000 as of the date of this Report. (See ITEM 6, "MANAGEMENT'S DISCUSSION
 AND ANALYSIS OR PLAN OF OPERATION-Liquidity and Capital Resources."


         All property taxes are current and have been paid on a timely basis.



                                       12

<PAGE>



         The  Company  has  listed  the  Single  Family  Tract  for sale with an
unaffiliated real estate agency.

         PINE  RIDGE  RESIDENTIAL   TRACT.  The  Pine  Ridge  Residential  Tract
consisted of  approximately  192 acres zoned for single family  residences.  The
Company  received  fee title to the Pine Ridge Tract on January 24,  2003,  when
TradeArk,  was dissolved and the Operating  Subsidiary  exchanged its membership
interest for the real property originally  contributed to TradeArk.  The Company
also assumed approximately  $3,500,000 in debt held by New Era, which is secured
by the real property,  including the Pine Ridge  Residential  Tract.  See, above
ITEM 1, " DESCRIPTION OF BUSINESS."

         On July 1,  2003,  the  Company  sold the 192  acres of the Pine  Ridge
Residential  Tract  to  unaffiliated  third  party  for a gross  sales  price of
$2,016,000,  with net proceeds of $491,781.83  after closing costs and a partial
payoff to New Era in the amount of $1,384,592.

         MULTI-FAMILY LOTS. As of the Company's fiscal year-ended  September 30,
2003,  there  are   approximately  47  acres  of  Multi-Family  Lots  zoned  for
multi-family use. The Operating  Subsidiary has fee title to these lots, subject
to a first  priority  mortgage by Secured  Note  Holders  and a second  priority
mortgage by Boca First.  See  discussion  above, "  --Single-Family  Tract," for
principal  amounts due on each loan securing the Multi-Family  lots and ITEM 12,
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

         On January  24,  2003,  the Company  received  fee title to 19 acres of
multi-family land from TradeArk from the dissolution of the company. The Company
also assumed approximately $3,500,000 in debt held by New Era and secured by the
real property, including the 19 acres of multi-family land. See, above ITEM 1, "
DESCRIPTION OF BUSINESS."

         On May 28,  2003,  the  Company  completed  the sale of the 19 acres of
multi-family  land to  unaffiliated  third  party  for a gross  sales  price  of
$700,882.20,  with  proceeds of  $38,673.07  after  closing  costs and a partial
payoff to New Era in the amount of $606,674.56.

         The  Company  has  listed  the  Multi-Family  Lots  for  sale  with  an
unaffiliated real estate agency.

         The property taxes and ad valorem taxes on the 47 acres of Multi-Family
Lots have been paid on a timely basis.

         COMMERCIAL LOTS

RE-DESIGNATED COMMERCIAL LOTS

         Subsequent to the Company's  fiscal year ended  September 30, 2003, the
City of Maumelle  re-designated 19 acres of the Maumelle  Property Single Family
Tract as  commercial  C-1 zoning on the municipal  land use maps.  The Operating
Subsidiary  has fee title to the  Commercial  Lots,  subject to a first priority
mortgage by the Secured  Note  Holders  and a second  priority  mortgage by Boca
First  Capital used to secure the Boca Credit Line.  See  discussion  above,  "-
-Single  Family  Tract," for  principal  amounts due on each loan  securing  the
Commercial  Lots,  and  See,  ITEM  12,  "CERTAIN   RELATIONSHIPS   AND  RELATED
TRANSACTIONS."

         The property  taxes and ad valorem  taxes on the 19 acres of Commercial
Lots have been paid on a timely basis.

         The Company has listed the 19 acres of Commercial  Lots for sale with a
unaffiliated real estate agency.

TRACT D

         Tract D consists of  approximately  38.5 acres of  Commercial  Lots. On
January 24, 2003, the Company exchanged its membership  interest in TradeArk for
the Maumelle Property contributed to TradeArk, including Tract D.  The Operating
Subsidiary received fee title to Tract D and assumed approximately $3,500,000 in



                                       13

<PAGE>

debt  held by New  Era,  which  is  secured  by  Tract  D with a first  priority
mortgage, and a second-priority  mortgage held by Boca First. See, above ITEM 1,
"  DESCRIPTION  OF BUSINESS,"  "- Single  Family  Tract," and ITEM 12,  "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."

         As of  September  30,  2003 and the date of this Report  $1,665,856  in
principal  was due on the loan.  The loan has a fixed  interest  rate of 13% per
annum and matured on June 12, 2002,  but has been  extended  verbally by New Era
until November 2003,  when it was extended again while the negotiates a new loan
with New  Era..  Under the terms of the loan,  interest  only  payments  are due
quarterly.

         As of the date of this Report, Management has not determined whether it
will  development a site plan for the property and/or develop it or offer it for
sale.

         The property  taxes in the amount of  $55,898.06  are due and owing for
the calendar year of 2003..

         MISCELLANEOUS TRACT AND PROPERTY.  The Miscellaneous Tract and Property
consists of approximately  446 acres of wetlands.  The Operating  Subsidiary has
fee title to the  Miscellaneous  Tract and Property,  subject to the Boca Credit
Line. The wetlands property is located in the Arkansas River and, therefore,  is
unsuitable for development.  Accordingly,  the Company has no development  plans
for  the  property.   See,   ITEM  12,   "CERTAIN   RELATIONSHIPS   AND  RELATED
TRANSACTIONS."

         The  property  taxes and ad valorem  taxes on the 446 acres of wetlands
owned by the Company have been paid on a timely basis.

PROGRAM OF DEVELOPMENT.

         During the Company's  fiscal year ended September 30, 2003, the Company
changed its primary focus from the emphasis on solely  liquidating  its Maumelle
Property  inventory to the  objective of acquiring  and  developing  real estate
projects in fast-growing areas such as Florida, especially concentrated in South
Florida and South West Florida,  and North  Carolina and  initiating a financial
lending program for its own portfolio through its Mortgage Subsidiary.  Although
development and lending operations had not significantly commenced by the end of
the Company's fiscal year, several  acquisitions and/or loans have been targeted
and  initiated  subsequent  to the  Company's  fiscal  year-end.  See,  ITEM  6,
"MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR PLAN OF  OPERATION  - -  Subsequent
Events."

         The  Company   anticipates  that  these  real  estate  development  and
financing opportunities will generate cash flow from the following:  development
and sale of  properties  by the  Company  with  preferred  development  partners
("PDPs"), interest on investments, financing arbitrage, hypothecation arbitrage,
prepayment penalties and exit fees, and development fees.

         The Company  believes it will be able to capitalize  on  value-oriented
projects in these high growth areas,  while  ensuring  quality of its product by
using PDPs.  The Company  anticipates  that the Mortgage  Subsidiary may provide
construction  and/or  development  financing for its own projects,  PDP's and to
unaffiliated third party developers.

         The  Mortgage  Subsidiary  believes it will be  competitive  with other
financial  institutions because of its relationship with PDPs and because of its
high-yield  secured  lending  program.  The  Company is  offering  high-interest
financing  generally not financed by  traditional  lending  institutions  due to
various factors such as time  constraints,  borrower credit issues,  higher than
normal  loan-to-value  ratios or situations  requiring  additional  and/or cross
collateral.  Additionally,  the Company intends to locate and acquire portfolios
of mortgages  that will be purchased at a discount,  thus  increasing the yield.
The Company intends to conduct due diligence on all prospective lending in order
to determine  the  underlying  collateral  has enough value to warrant the loan.
See, ITEM 6, "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION."



                                       14
<PAGE>

         There can be no  assurance,  though,  that the Company  will be able to
generate income from such  development and financing  opportunities  or that the
quality of the loans will not deteriorate or have delinquencies or defaults.

         DEVELOPMENT OF PROPERTY IN MAUMELLE.  The Company  intends to offer for
sale all or portions of the Maumelle Property for sale during fiscal year 2004.

         There  are  no  current  plans  for  the  sale  or  development  of the
Miscellaneous   Tracts   since  such   properties   are  wetlands  and  as  such
undevelopable.  However,  the Company  intends to deed the property  over to the
Home Subsidiary from the Operating Subsidiary or to a subsidiary formed for this
purpose.

POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

         GENERAL.   The  following  is  a  discussion  of  investment  policies,
financing policies,  conflict of interest policies, and policies with respect to
certain  other  activities  of the Company.  The policies  with respect to these
activities  have been  determined by the Company's Board of Directors and may be
amended or revised from time to time at the  discretion  of the Board  without a
vote of the shareholders of the Company, except that changes in certain policies
with  respect to  conflicts  of  interest  must be approved by a majority of the
independent directors and otherwise be consistent with legal requirements.

         INVESTMENT POLICIES.

         Investments  in Real Estate or Interests  in Real  Estate.  The Company
generally  conducted  all of its  investment  activities  through the  Operating
Subsidiary  during  fiscal  year ended  2003.  The  Company  intends  for future
investments in real estate,  especially outside of Maumelle,  Arkansas,  will be
conducted  through the Development  Subsidiary;  except financial  lending which
will be conducted by the Mortgage Subsidiary.

         The  Company's  investment  objective  is to increase  long-term  total
returns to shareholders  through  appreciation in the value of the Common Stock.
The Company's  policy is to acquire or develop assets where the Company believes
that favorable investment  opportunities exist based on market conditions at the
time of the investment.

         The  Company  expects to pursue  its  investment  objectives  primarily
through the direct  ownership of properties  by the Operating  Subsidiary or the
Development  Subsidiary or through indirect  property  ownership  opportunities,
with PDPs and/or joint venture partners. The Company believes it will be able to
capitalize on value-oriented projects in high growth areas.

         Future development or investment  activities will not be limited by the
governing  documents of the Company or its  subsidiaries to any geographic area,
product  type  or  specified  percentage  of  the  Company's  assets.  It is the
Company's policy to acquire assets primarily for possible capital gain.

         Securities of or Interests in Persons  Primarily Engaged in Real Estate
Activities and Other Issuers. The Company also may invest in securities of other
entities  engaged in real estate  activities  or invest in  securities  of other
issuers,  including  investments  by the Company  for the purpose of  exercising
control over such entities.  No such investments will be made,  however,  unless
the Board of Directors  determines the proposed  investment  would not cause the
Company  to be an  "investment  company"  within the  meaning of the  Investment
Company  Act  of  1940,  as  amended  (the  "Investment  Company  Act").  Should
management  recommend  prospective  acquisitions  in such  companies,  it is the
Company's policy to enumerate a correlation between the strategic  objectives of
the Company and the prospective  acquisition,  or a plan to enhance  shareholder
value as measured by future book value or earnings per share.

         Investments  in  Mortgages.  The  Company  intends  to  acquire  and/or
originate mortgages for its own portfolio through its Mortgage  Subsidiary.  The
Mortgage Subsidiary,  subsequent to the Company's fiscal year-end,  has invested
in  certain  mortgages  and  intends  to  continue  a program  of  investing  in
high-yield financial lending.



                                       15
<PAGE>


         FINANCING POLICIES. The organizational documents of the Company and its
subsidiaries  impose no limits on the amount of indebtedness they may incur. The
Company  will from time to time  determine  its  borrowing  policies in light of
then-current  economic  conditions,  relative costs of debt and equity  capital,
market  value of the  Company's  real  estate  assets,  growth  and  acquisition
opportunities, and other factors.

         The  Company  intends  to  raise  additional   capital  through  equity
offerings,  debt financing,  or a combination thereof,  although there can be no
assurance that the Company will be able to raise such capital on favorable terms
or at all.

         The  Company has not  established  any limit on the number or amount of
mortgages  that  may  be  placed  on any  single  property  or on the  Company's
portfolio as a whole.

         CONFLICTS  OF INTEREST  POLICIES.  The Board of Directors is subject to
certain  provisions  of Nevada law that are  designed to  eliminate  or minimize
certain potential  conflicts of interest.  There can be no assurances,  however,
that these policies  always will be successful in  eliminating  the influence of
such  conflicts,  and if they are not  successful,  decisions could be made that
might fail to  reflect  fully the  interest  of all  shareholders.  See ITEM 12,
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

         Under  Nevada  law,  each  director is subject to  restrictions  on the
misappropriation  of corporate  opportunities  to himself or his  affiliates  of
which he becomes  aware  solely as a result of his  service as a  director.  The
Company may transact business with one or more of its directors or officers or a
corporation,  firm or  association  in  which  one or more of its  directors  or
officers are directors, officers or are financially interested,  provided any of
the following requirements are satisfied:

         (a)      The interested  directors or officers must disclose the common
                  directorship,  office or  financial  interest  to the board of
                  directors, have it noted in the minutes, and a majority of the
                  disinterested directors must approve or ratify the contract or
                  transaction; or

         (b)      The interested  directors or officers must disclose the common
                  directorship,    office   or   financial   interest   to   the
                  shareholders,  and the shareholders must approve by a majority
                  vote the contract or transaction.  The votes of the interested
                  director  or  officer  must be counted in any such vote of the
                  shareholders; or

         (C))     The common directorship or office or financial interest is not
                  known to the director and officer at the time the  transaction
                  is brought  before the board of directors and therefore is not
                  disclosed; or

         (d)      The contract or  transaction  is fair as to the Company at the
                  time it is authorized or approved.

         CERTAIN POLICIES WITH RESPECT TO OTHER ACTIVITIES.  The Company and its
subsidiaries  have  authority to offer their  securities  and to repurchase  and
otherwise  acquire  their  securities,  and they are  likely  to  engage in such
activities.  In the future,  the Company and its  subsidiaries may make loans to
joint ventures in which they participate in order to meet working capital needs.
The Company  and its  subsidiaries  have not  engaged in trading,  underwriting,
agency distribution, or sale of securities of other issuers and do not intend to
do so. The Company and its  subsidiaries  intend to make investments in a manner
such that they will not be treated as an investment company under the Investment
Company Act.


         COMPETITIVE  CONDITIONS.  The Company's real property is subject to the
highly  competitive   conditions  of  real  estate  development  and  sales.  In
Arkansas--the  geographic  area in which the Company holds  majority of its real
property and offers such inventory for  development and sale--there are numerous
large  national and regional  firms with  significantly  greater  experience and
financial resources than the Company currently possesses. Such firms will likely
compete with the Company in the marketing and sale of land for development.



                                       16
<PAGE>


         Because of the restrictive  zoning in Maumelle,  Arkansas,  the Company
 believes that its ownership of 290 acres of developable  land for single family
 homes,  multi-family and commercial units will give the Company an advantage in
 selling its Maumelle Property to developers

         Subsequent to the Company's fiscal year-end,  the Company acquired land
in Toxaway  Falls,  North  Carolina  and  interest in  projects in Florida.  The
Company  will  compete  with other  development  firms for any  project  that it
develops in these areas. Such firms may have greater experience in that area and
will compete  directly with the Company for the  acquisition of land, the hiring
of sub-contractors,  experienced management personnel,  construction workers and
other employees, and the sale of product.

         Although the Company  currently has no material  presence or reputation
in Arkansas or North Carolina, Management of the Company does have experience in
the development  industry in Florida,  as well as other geographic  areas.  Even
with Management's  experience,  and other reasons discussed herein,  the Company
may experience difficulties in competing with established developers.

COMPETITION IN LENDING  INDUSTRY.  The financial lending industry that is highly
competitive.  Lenders include better financed publicly traded funds and national
or  international  commercial  banks  that  are  substantially  larger  than the
Company,  are more  mature  and  possess  substantially  greater  financial  and
marketing resources and experience than the Company. These companies may be able
to adopt a more  aggressive  pricing  policy to  customers  than the Company and
accordingly,  the Company's  operating  results and cash flow could be adversely
affected.

ITEM 3. LEGAL PROCEEDINGS.

         The Company is not involved in any other  litigation,  other than those
actions  arising from the normal  course of business,  and for which  Management
does not believe will have a material effect on the Company's operations.


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

         No matters were submitted  during the fourth quarter of the fiscal year
covered by this Report to a vote of security  holders,  through the solicitation
of proxies or otherwise.

PART II.

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

         The Common Stock is listed for trading in the  over-the-counter  market
on the NASDAQ  electronic  bulletin board under the symbol "CFRC," however,  the
market for  shares of the Common  Stock is  extremely  limited.  There can be no
assurance that the present  limited  market for the Company's  common stock will
become more active or even be  sustained.  In  addition,  any future sale of the
Company's  stock by any of the controlling  shareholders  may have a substantial
adverse impact on any such public market.

         The high and low bid prices for shares of common  stock of the  Company
for each quarter within the last two fiscal years are as follows:

                                                            BID

 Quarter Ending                                      High           Low
 --------------
 September 30, 2001                                  .320           .012

 December 30, 2001                                   .87            .13






                                       17

<PAGE>


 March 31, 2002                                      .37            .037

 June 30, 2002                                       .20            .04

 September 30, 2002                                  .14            .065

 December 30, 2002                                   .08            .04

 March 31, 2003                                      .11            .04

 June 30, 2003                                       .07            .055

 September 30, 2003                                  .08            .06

         These bid prices were obtained from the National Quotation Bureau, Inc.
("NQB"), and reflect  inter-dealer prices,  without retail mark up, mark down or
commission and may not reflect actual transactions.

HOLDERS

         The number of record holders of the Company's  common stock was 652, as
of September 30, 2003.

DIVIDENDS

         During the fiscal  year ended  September  30,  2003 and the fiscal year
ended  September 30, 2002,  the Company did not declare any cash  dividends with
respect to its Common Stock. The Company does not expect to declare dividends on
its common stock in the  foreseeable  future.  The future dividend policy of the
Company cannot be ascertained with any certainty, particularly since the Company
has  decided to focus on  liquidating  its  present  inventory  of the  Maumelle
Property  due to its  present  inability  to  meet  its  day-to-day  operational
liabilities  except through borrowed funds.  There are no material  restrictions
limiting, or restrictions that are likely to limit, the Company's ability to pay
dividends  on its  Common  Stock in the  future,  except  that the  articles  of
incorporation  of the  Company  permit the board of  directors  to  approve  the
issuance of preferred stock having such rights as may be designated by the board
without shareholder approval.

         As of September  30, 2003 and the date of this Report,  the Company has
4,137,591 issued and outstanding shares of Preferred Stock,  Series A ("Series A
Preferred"),  that bears a cumulative  dividend of 5 1/4%.  As of September  30,
2003, the Company paid  dividends on the 4,137,591  shares of Series A Preferred
for the fiscal year in the amount of $108,303. The Company, through its board of
directors,  has the right to issue other series of preferred stock.  Such rights
may  include  preferences  with  respect to  dividends  as well as  prohibitions
against  the   declaration   of  dividends   on  Common   Stock  under   certain
circumstances.

         Each share of Series A Preferred Stock bears a cumulative dividend rate
of 5.25% per annum. Commencing 60 days from the date of issuance, but not sooner
than  August 15,  2002,  each  Series A  Preferred  Stock shall have a mandatory
conversion,  at the Company's  sole option,  to convert into one share of Common
Stock for each share of Series A Preferred  Share held by  Investor,  predicated
upon certain events ("Triggered Events").  The Triggered Event shall occur, when
and if, the Company's stock,  based on the average of the high and low prices of
the Common Shares for a consecutive period of ten (10) trading days, as reported
by the National Quotation Bureau, Inc. ("NQB"),  and reflect inter-dealer prices
as reported on the NASDAQ  electronic  bulletin board,  reaches a price of $1.50
per share of Common Stock. However, in the event the Company elects such option,
it will use its best efforts to register  such common  shares for resale  within
180 days from the date of  conversion.  Commencing  90 days after  issuance (the
"Conversion  Date"),  and  any  time  thereafter,  the  Series  A  Preferred  is
convertible, at the option of the holder, into one share of the Company's Common
Stock.  All or any number of Series A Preferred  Stock may be  converted  by the
holder thereof from time to time on or after the Conversion Date. However,  such
optional  conversion is limited by the Triggered Events.  The Series A Preferred
Stock is restricted stock.


                                       18
<PAGE>


         Series A Preferred is  non-voting,  except as otherwise  provided under
Nevada  law.  Series  A  Preferred  Stock,  in the  event  of  any  liquidation,
dissolution  or winding up of the  Company,  is senior to the  holders of Common
Stock.  Series A Preferred  Stockholders  are entitled to receive a  liquidation
preference of $1.00 per share,  plus accrued and unpaid dividends to the payment
date.  See ITEM 6,  "MANAGEMENT'S  DISCUSSION  AND ANALYSIS OR PLAN OF OPERATION
-Liquidity and Capital Resources-Debt Reduction-Issuance of Preferred Stock."


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

OVERVIEW

         The  following  discussion  should  be read  in  conjunction  with  the
financial  statements  and the notes thereto  appearing in Item 7 of this Report
(the "Financial  Statements").  As noted below and elsewhere in this Report, the
Company is in the process of  diversifying  its  portfolio  in order to generate
revenues.  Even  though  the  Company  has  enough  borrowed  money  to meet its
day-to-day  operations,   such  revenues  are  necessary  to  cure  its  current
illiquidity  position.  There is no  assurance  that the Company will be able to
generate  sufficient  revenues  from its  current  business  activities  to meet
day-to-day  operational   liabilities  or  to  pursue  the  business  objectives
discussed herein.

         In  addition  to  the  historical  information  contained  herein,  the
following discussion contains forward-looking  statements that involve risks and
uncertainties.  Economic  circumstances,  the  operations of the Company and its
actual  results  could  differ   significantly   from  those  discussed  in  the
forward-looking  statements.  Some of the factors that could cause or contribute
to such  differences  are  discussed  herein,  but also  include  changes in the
economy and changes in interest  rates in the nation and the  Company's  primary
market areas.

         Management  believes the following critical  accounting policies affect
our more  significant  judgments and estimates  used in the  preparation  of our
consolidated financial statements:

Real estate inventories and cost of sales. Real estate investments are stated at
the lower of cost or  market.  Acquisition  costs are  allocated  to  respective
properties  based  on  appraisals  of the  various  properties  acquired  in the
acquisition.

Impairment of long-lived assets and long-lived assets to be disposed of.    Real
estate inventories,  including  capitalized  interest and real estate taxes, are
carried  at the  lower  of  cost or  fair  value  determined  by  evaluation  of
individual   projects.   Property  and  equipment  are  recorded  at  cost  less
accumulated depreciation and depreciated on the straight- line method over their
estimated  useful  lives.  Whenever  events or  circumstances  indicate that the
carrying value of our long-lived  assets may not be recoverable,  we compare the
carrying amount of the asset to the un-discounted expected future cash flows. If
this  comparison  indicates  that  the  asset is  impaired,  the  amount  of the
impairment is calculated  using  discounted  expected  future cash flows. If our
estimate of the future cash flows is  significantly  different  from actual cash
flows,  the  Company  may  prematurely  impair  the value of the  asset,  we may
underestimate the value of the calculated impairment or we may fail to record an
impairment.

Interest Rates.  If interest rates continue to rise from the recent levels,  the
Mortgage Subsidiary's net interest income may be negatively affected.  Moreover,
rising  interest  rates may  negatively  affect the  Company's  earnings  due to
diminished  loan  demand,  or  increased  development  cost for the  Development
Subsidiary.

Inflation.  Any  inflation  in the  economy  may impact the  Company's  costs of
operations  both in the Company's  development  sector as such  inflation  would
place a upward  pressure on cost of labor and  materials,  and may impact  other
developers seeking loans from the Mortgage Subsidiary.

NEW ACCOUNTING PRONOUNCEMENTS

In November 2002, Financial Accounting Standards Board Interpretation ("FIN") NO
45,  "Guarantor's   Accounting  and  Disclosure   Requirements  for  Guarantors,
Including  Guarantees of Indebtedness of Others" was issued.  FIN NO 45 requires
recognition  of an  initial  liability  for the fair  value  of the  guarantor's
obligation  upon  issuance  of certain  guarantees.  We adopted  the  disclosure
requirements  of FIN NO 45 as of  December  31,  2002.  On January  1, 2003,  we



                                       19
<PAGE>

adopted the initial recognition and measurement  provisions which were effective
on a prospective  basis for  guarantees  issued or modified  after  December 31,
2002. The implementation of FIN NO 45 had no impact on our results of operations
or financial  position at adoption or during the fiscal year ended September 30,
2003.

In May 2003, Statement of Financial Accounting Standards NO 150 ("SFAS NO 150"),
Accounting  for  Certain  Financial  Instruments  with  Characteristics  of both
Liabilities and Equity," was issued.  This Statement improves the accounting for
certain  financial  instruments  that,  under previous  guidance,  issuers could
account  for as  equity.  This  Statement  requires  that those  instruments  be
classified as liabilities in the statement of financial position. This statement
is effective for financial  instruments  entered into or modified  after May 31,
2003,  and otherwise is effective at the  beginning of the first interim  period
beginning  after June 15,  2003,  except for  mandatorily  redeemable  financial
instruments  of nonpublic  entities.  It is to be  implemented  by reporting the
cumulative  effect  of  a  change  in  an  accounting  principle  for  financial
instruments created before the issuance date of the statement and still existing
at the beginning of the interim period of adoption. SFAS NO 150 had no impact on
our  results of  operations  or  financial  condition  at adoption or during the
fiscal year ended September 30, 2003.

RESULTS OF OPERATIONS

COMPARISON OF YEAR ENDED  SEPTEMBER  30, 2003 TO YEAR ENDED  SEPTEMBER 30, 2002.
For the year ended  September  30, 2003,  the Company  experienced a net loss of
$911,957  compared with a net income of $4,345,703 for the year ended  September
30, 2002. The difference in  performance  resulted  primarily from a decrease in
revenues  due to less real  property  sales  from  $8,500,000  in the year ended
September  30,  2002,  to $2,721,933  for the year ended  September  30, 2003, a
decrease  of $5,778,067.  The  revenues  for the year ended  September  30, 2003
decreased  by $5,778,067  because  gross volume of acres sold was lower than the
prior year. The cost of sales for the year ended September 30, 2003, amounted to
$3,024,559, resulting in a gross loss of $302,626. Gross profits as a percentage
of revenues  decreased to minus 11.1% in the year ended  September 30, 2003 from
48.6% in the year ended  September 30, 2002.  The company  experienced  negative
gross  profit in 2003  because the basis of land  reacquired  from  TradeArk was
greater than its original basis.  This increased basis, combined with additional
costs related to the property  sales  transactions,  resulted in negative  gross
profit in 2003.

         During the year ended September 30, 2003,  operating expenses decreased
to $616,880 from  $2,635,246 in the year ended September 30, 2002, a decrease of
$2,018,366  or  76.6%.  The  primary  cause of the  decrease  was a  significant
decrease  in  stock-based   compensation  and  management's  efforts  to  reduce
operating  expenses.  Officers'  salaries  decreased  to $0 for the  year  ended
September  30, 2003 from  $190,000  for the year ended  September  30,  2002,  a
decrease of $190,000.  Consulting  fees decreased to $113,785 for the year ended
September  30, 2003 from  $847,358  for the year ended  September  30,  2002,  a
decrease of $733,573. Legal fees and audit fees decreased by $14,485 to $170,631
for the year ended September 20, 2003 from $185,116 for the year ended September
30,  2002.  Miscellaneous  charges  decreased by $28,323 to $75,844 for the year
ended  September 30, 2003 from  $104,167 for the year ended  September 30, 2002.
Operating  expenses-related  parties decreased to $99,500 from $1,185,173 in the
year ended  September 30, 2003, a decrease of  $1,085,673 or 91.6%.  The expense
recognized  for stock based  compensation  to an  officer/directors  and various
consultants  decreased  to $0 for  the  year  ended  September  30,  2003,  from
$1,099,500 for the year ended September 30, 2002, a decrease of $1,099,500.  For
fiscal year ended  September 30, 2003,  and for the fiscal year ended  September
30,  2002,  accrued  expense  fees due to  Maumelle  Enterprises  were at $0 and
$66,329 respectively.

         Interest  expenses  increased by $523,588 from $616,193 during the year
ended  September  30, 2002, to  $1,139,821  during the year ended  September 30,
2003, an increase of 85%.


                                       20
<PAGE>


         The operating loss recorded for unconsolidated  subsidiaries  accounted
for  under  the  equity  method  totaled a loss of  $75,000  for the year  ended
September 30, 2003,  compared to a loss of $325,791 for the year ended September
30, 2002.

         The Company recognized a deferred income tax benefit of $0 for the year
ended  September 30, 2003,  compared to $1,203,000 for the year ended  September
30,  2002.  In 2003 the  Company  recorded a  valuation  allowance  equal to its
deferred tax benefit. As a result of sales and gain from retirement of debt at a
discount  during the year ended  September  30,  2002,  the  Company  utilized a
substantial  amount of the net operating loss ("NOL") and subsequently  examined
its ability to utilize more of its remaining NOL and recognized a benefit from a
portion of its remaining NOL.

         The Company  paid  $29,897 to Maumelle  Enterprises,  a related  party,
during  the year.  As of March 31,  2003,  the  Company no longer  utilized  the
services  of  Maumelle  Enterprises  to manage  its  Maumelle  Property,  but is
managing the property directly. During fiscal year ended September 30, 2003, the
president of the Company  received $0 compensation for his services and none was
accrued,  a decrease of $105,000 or 100% decrease from  September 30, 2002.  The
president was paid $7,800 in expenses and accrued $0 in expenses,  a decrease of
$11,310 or 59.2% over the  payment of  expenses  of $19,110 in fiscal year ended
September 30, 2002. He also received a $10,000  management fees for the sales of
certain of the Maumelle  Property  during fiscal year ended  September 30, 2003.
The  president  has agreed not to take or accrue any salary until the Company is
in a  financial  position  to pay  such  compensation.  See  ITEM  12,  "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS-Maumelle Enterprises Inc., Agreement."

         The Company  believes that its results of operations  will improve with
the  implementation of its real estate  development and lending programs,  which
had not significantly  commenced as of the Company's fiscal year ended September
30, 2003.

         The Company does not foresee any significant elements of income or loss
that would arise  outside of the  ordinary  course of  business,  except for the
losses that would  likely  arise if the Company  becomes  unable to (i) commence
significant operations in financial lending (ii) commence significant operations
in real estate  development or (iii) has to liquidate the Maumelle  Property for
less than fair market value.

         Even if the Company can overcome its present liquidity issues, there is
no  assurance  the  Company  will be able to  successfully  develop  real estate
projects or obtain revenue generating loans.

         FACTORS THAT MAY AFFECT FUTURE  RESULTS AND MARKET PRICE OF STOCK.  The
factors  identified  below  are  believed  to  be  important  factors  (but  not
necessarily  all of the important  factors)  that could cause actual  results to
differ  materially from those expressed in any forward looking statement made by
or on behalf of the Company, whether in this section or elsewhere in this Report
or in any other  written or verbal  statement  of the Company or its officers or
directors. Unpredictable or unknown factors not discussed herein could also have
material  adverse effects on forward looking  projections.  The Company does not
intend to update these cautionary  statements.  The principal factors that could
cause the Company's  actual results to differ  material from the forward looking
statements include, but are not limited to the following:

          o    the ability to overcome its present liquidity issues and generate
               sufficient revenues to fund day-to- day operations;
          o    the  ability  to  compete  in the  Florida,  Arkansas  and  North
               Carolina  real  estate  markets  and in other  markets  where the
               Company intends to acquire real property;
          o    the ability to obtain  necessary  permits and  approvals  for the
               development of our land;
          o    the  ability  to obtain  high-yield  loans  that are  secured  by
               adequate collateral;
          o    the ability to compete in the high-yield lending industry;
          o    adverse legislation or regulation;



                                       21
<PAGE>


          o    availability  of labor or material costs or significant  increase
               in their costs;
          o    increase in interest  rates  causing a decreases  in sales in the
               real estate  development  industry  and  conversely a decrease in
               borrowers in the high-yield lending area;
          o    the level of consumer confidence;
          o    the  availability and cost of land in desirable areas and ability
               to expand successfully into these area;
          o    natural disasters;
          o    the  availability and cost of land in desirable areas and ability
               to expand successfully into these area;
          o    the  concentration  of development  and/or loans in South Florida
               and South West Florida;
          o    unanticipated litigation or legal proceedings;
          o    conditions in the capital, credit and development markets;
          o    risks associated with increased insurance costs or unavailability
               of  adequate  coverage,  perceived  risk of travel and changes in
               economic conditions to due to recent events;
          o    the  continuation  of  current  trends and the  general  economic
               conditions;
          o    the risk of defaults on loans made by the Mortgage Subsidiary;
          o    the lack of security value of the collateral  securing loans made
               by the Company;
          o    the rapid  growth of the Company may make it  difficult to manage
               our growth effectively and could therefore have an adverse effect
               on business and financial results;
          o    the  Company's  underwriting  standards  and  procedures  may not
               effectively  reveal risks of bad  performing  loans or loans that
               may go into default;
          o    the  Company  has  limited  access to capital and there can be no
               assurance  that the Company will be able to acquire the necessary
               capital to operate its business;
          o    the Company may pay up-front fees to mortgage brokers, management
               fees,  and real estate fees if it  purchases  property  which may
               reduce the amount of monies earned by the Company; and
          o    the  Company  may  become  liable  for  unforeseen  environmental
               obligations.

     If  one or  more  of  these  risks  or  uncertainties  materializes,  or if
underlying  assumptions prove incorrect,  our actual results may vary materially
from those expected, estimated or projected.

LIQUIDITY AND CAPITAL RESOURCES

     INDEBTEDNESS AND OTHER LIQUIDITY REQUIREMENTS.  The principal amount of the
Company's total debt at September 30, 2003,  included,  without limitation,  the
following (See also ITEM 2,  "DESCRIPTION  OF  PROPERTY--MAUMELLE  PROPERTY" for
descriptions of encumbered properties referenced below):

          o    As of September 30, 2003 and the date of this Report, the Company
               had  $189,278  in  non-recourse  promissory  notes  ("Non-secured
               Notes")  that had matured and was due and owing.  The Company has
               been trying to settle these  Non-secured  Notes,  but either were
               not able to  contact  the note  holder  or the  note  holder  was
               non-responsive.  During the year ended  September  30, 2003,  the
               Company negotiated  settlement agreements with certain promissory
               note holders to exchange  $1,700,445 in debt and accrued interest
               for  $333,583 in cash and  notes and  293,893  shares of Series A
               Preferred  Stock.  No preferred  stock was issued or  settlements
               made subsequent to the fiscal year ended September 30, 2003.

               The Non-Secured  short-term debt was financed by private sources.
               The  Non-Secured  Notes generally bear interest at a rate ranging
               from  10.9% to 14% per annum,  with a weighted  average as of the
               Company's  year end of 11.03% per annum,  and matured nine months
               from the date of issuance of each note

          o    $1,255,000 has been drawn on a $4,000,000 Boca Credit Line, as of
               September 30, 2003, and $1,245,000 as of the date of this Report.
               The Boca Credit  Line is  evidenced  by the Boca Note  secured by
               substantially  all of the assets of the  Operating  Subsidiary an
               the Mortgage  Subsidiary  and the assets of any of the  Company's
               wholly-owned  subsidiaries,  now  owned  or to be  acquired.  The
               collateral  securing  the Boca Note,  includes a second  priority



                                       22
<PAGE>

               mortgage on  approximately  736 acres of the  Maumelle  Property,
               1,000 shares of common stock of the Operating Subsidiary owned by
               the Company,  representing  one hundred percent of the issued and
               outstanding  shares and one note receivable  payable on March 26,
               2005 with a face value of  $1,000,000.00,  and an annual  rate of
               interest of 6.25%.  The Boca  Credit Line  matures on November 1,
               2004,  and has an initial  interest rate of ten percent (10%) per
               annum  which,  on a  quarterly  basis,  adjust to a rate which is
               equal to the greater of ten percent per annum or one percent (1%)
               above the prime rate, as published in The Wall Street Journal, in
               effect on that date.

          o    On January 24, 2003, the Company assumed 3,500,000 in a loan from
               New Era Life  Insurance  Inc. ("New Era Loan") when it reacquired
               251  acres  of  real  property  in  Maumelle,  Arkansas  for  its
               membership interest in TradeArk  Properties.  The loan is secured
               by the 251 acres of real property and carries an interest rate of
               13% per annum and matured on November 2003,  when it was extended
               verbally by New Era.  The  Company is  currently  negotiating  to
               renew the loan.  Payments of interest only are due quarterly.  As
               of the Company's fiscal year-end and the date of this Report, the
               loan had a balance of $1,665,856.

          o    Secured  Promissory  Notes.  On September  11, 2003,  the Company
               borrowed  $3,000,000  evidenced by secured  promissory notes from
               individual  investors . The notes have a per annum  interest rate
               of 8% and are payable monthly,  interest only, with the principal
               and interest due three years from September 11, 2003. The Secured
               Notes are secured by a first priority  mortgage on  approximately
               250 acres of the Maumelle  Property  and a  Collateral  Pledge on
               $2,100,000   cash   proceeds   and  any   substitute   collateral
               thereafter.

         CERTAIN  RECENT  EVENTS  RELATING  TO THE  COMPANY'S  INDEBTEDNESS  AND
LIQUIDITY REQUIREMENTS

Debt Reduction - Issuance of Preferred Stock
--------------------------------------------

         During the fiscal year-ended  September 30, 2003, the Company exchanged
$1,700,445  in  debt,  including  principal  and  interest,   with  a  group  of
Non-Secured  Promissory Note Holders for 293,893 shares of Convertible Preferred
Stock, Series A (the "Series A Preferred Stock"), par value $0.01 per share. See
ITEM  5,  "MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDERS  MATTERS  - -
Dividends."

         During  the  fiscal  year,  the  Company  reduced  the New Era  loan by
$1,991,166.56 in principal and interest from the sale of approximately 211 acres
of the Maumelle Property, including 192 acres of single family land and 19 acres
of  multi-family  lots See ITEM 2,  "DESCRIPTION  OF  PROPERTY,"  and below "- -
Certain Capital Raising Transactions."

         The  Company's  current  illiquidity   prevents  it  from  meeting  its
day-to-day  operational  liabilities,   except  with  borrowed  funds.  Although
management  anticipates  that  the  sale  of all  or  portions  of the  Maumelle
Property,  its development projects and loan portfolio will generate progressive
revenues for the Company,  there can be no assurance the Company will be able to
generate  enough revenues to meet its financial  obligations,  much less profits
from such activities See ITEM 6,  "MANAGEMENT'S  DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION - - Certain Capital Raising Transactions."

         CERTAIN  CAPITAL  RAISING  TRANSACTIONS.  During the fiscal  year ended
September  30,  2003,  the  Company   obtained  capital  through  the  following
transactions:

          On January 10, 2003, West Maumelle L.P., retired one of the debts owed
 to the Operating Subsidiary,  comprised of a promissory note in the face amount



                                       23
<PAGE>

of $1,070,000  ("Note 1").  In satisfaction of Note 1, West Maumelle paid a cash
payment  of  $500,000.00  and  assigned a  $640,000  promissory  note made by an
unaffiliated third party made payable to West Maumelle L.P. The $640,000 note is
secured by a mortgage to certain real  property  located in Maumelle,  Arkansas,
and pays interest at a rate of 5.75% per annum with interest paid monthly,  with
a maturity  date of July 10, 2004.  On June 30, 2003,  the Company  assigned the
$640,000 note,  for the  discounted  amount of $570,000 to a group of investors,
one of whom is an entity controlled by an officer and a controlling  shareholder
of the Company.

         The  Company  renewed a second owed by West  Maumelle to the  Operating
Subsidiary in the face amount of $1,030,000.00. The new note has a face value of
$1,000,000.00  and bears interest at a rate of 5.75% per annum with interest due
annually,  with a maturity date of January 10, 2006. The Renewal Note is secured
by a mortgage to certain real  property  located in Maumelle,  Arkansas,  and is
junior to a senior mortgage from an unaffiliated  commercial bank. West Maumelle
also made an unsecured note payable to the Operating Subsidiary in the amount of
$46,170.00, with unpaid principal due and payable on April 10, 2003.

         On January 24, 2003, Capitol Development of Arkansas, Inc. entered into
an  Agreement  with Trade  Partners,  Inc., a Michigan  corporation  to dissolve
TradeArk Properties. Under the terms of the Agreement, the Company exchanged its
35.16%  membership  interest  for  approximately  251  acres  of  real  property
originally contributed to TradeArk by the Company. The land, comprised of single
family,  multi-family  and commercial  land, is located in the City of Maumelle,
the County of Pulaski, Arkansas. The Company assumed approximately three million
five  hundred  thousand  dollars  ($3,500,000  00) in debt held by New Era Life,
secured by the real property and a $580,000  liability to Trade Partners,  which
Trade Partners assigned to unaffiliated third party.

         The real property received from TradeArk has been pledged as collateral
to New Era for a loan  with a first  priority  mortgage  and a  second  priority
mortgage  to Boca First to secure  $4,000,000.00  line of credit.  See ITEM 2, "
DESCRIPTION OF PROPERTY."

         On May 28, 2003,  the Company  completed the sale of  approximately  19
acres of multi-family land of the Maumelle Property.  The multi-family tract was
used to  partially  secure the senior  loan from New Era and a junior  loan from
Boca First.  From the sale, the Company  received gross proceeds of $700,882.20,
and net proceeds of $38,673.07  after closing costs and a partial  payoff in the
amount  of  $606,674  to New Era.  See ITEM 2, "  DESCRIPTION  OF  PROPERTY.-  -
Multi-Family Lots."

         On July 1, 2003, the Company  completed the sale of  approximately  192
acres of single-family  land of the TradeArk  Property,  known as the Pine Ridge
Tract. The Pine Ridge tract was used to partially secure a loan from New Era and
a loan from Boca First,  junior to the New Era loan.  From the sale, the Company
received gross proceeds of $2,016,000 and net proceeds of $491,781 after closing
costs and a partial payoff in the amount of $1,384,492 to New Era.

         The Company  sold  $3,000,000  in secured  debt  securities  to private
investors ("Secured Notes") in a private placement offering pursuant to Rule 506
of Regulation D. The Secured Notes bear interest at a rate of 8% per annum, with
interest payable monthly  commencing the month subsequent to the closing date of
September 11, 2003.  The entire  principal  and any accrued  interest is due and
payable three years after the closing date.  The Secured Notes are be secured by
a first  priority  mortgage on  approximately  250 acres of the  Company's  real
property located in Maumelle,  Arkansas,  known as the Single-Family Tract. Boca
First has a second priority  mortgage on the same property  securing its line of
credit. See ITEM 2, "DESCRIPTION OF PROPERTY."

         The Company  utilized the services of an investment  banker to sell the
Secured Notes The investment  banking firm was paid 2% of the aggregate offering
price for such services and 2% for expenses.  The proceeds from the offering are
being  used   primarily   for   acquisitions,   real  estate   development   and
collateralized  lending.  Approximately  $700,000  is being  used for  operating
capital.

         The Company also has signed a six month  consulting  agreement with the
investment  banking firm to assist the Company in  structuring  and  determining



                                       24
<PAGE>

potential  acquisitions.  For such  services  the  Company has agreed to pay the
investment  banking  firm a fee of  $10,000  a month  and  1,000,000  shares  of
restricted common stock with registration rights. See ITEM 5, "MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS."

           SUBSEQUENT EVENTS

         On October 1, 2003, the Company issued  1,000,000  shares of restricted
common  stock  to  Noble  Financial  International  Inc.,  in  consideration  of
consulting  services to be performed over a six-month period. The stock provides
registration  rights  to  Noble if and when  the  Company  registers  additional
securities with the Securities and Exchange Commission.

         On October 15, 2003, the Mortgage  Subsidiary made a commercial loan in
the amount of $525,000 to a group that owns and operates hotels in Arkansas. The
loan has an interest  rate of 18% per annum,  payable  monthly,  interest  only,
until it matures October 15, 2004 when all accrued interest and principal is due
and payable.  The loan is secured by real property located in Arkansas which the
Company holds second and third priority mortgages.

         On October 31, 2003, the Mortgage  Subsidiary made a commercial loan in
the amount of $553,000 to a developer for construction  purposes. The loan bears
interest at 12.50% per annum , payable monthly  interest only,  until it matures
on November 1, 2004, when all principal and accrued interest is due and payable.
The loan is secured  by a  mortgage  on  certain  real  property  located in Lee
County,  Florida.  In order to leverage the Company's  lending power and enhance
its revenues from financial arbitrage, the Mortgage Subsidiary borrowed $430,000
from a commercial bank at 8% for a portion of the loan.

         On  November  19,  2003,  the  Development  Subsidiary  purchased  real
property in Toxaway Falls, North Carolina for a purchase price of $120,000.  The
Company  has begun  construction  of 12  townhouse  units  with a joint  venture
partner with building experience in this type of construction in North Carolina.
It is the intention of the Company that the construction will be financed by the
Mortgage Subsidiary, which has already made a loan commitment for the project in
the amount of  $1,600,000.  The  Company  has also  entered  into a contract  to
purchase  the lot  adjacent  to the  Toxaway  Falls Lot for a purchase  price of
$120,000 to construct additional units. The Company intends to transfer the real
property into a subsidiary  formed for the purpose of holding and developing the
property.

         On  November  20,  2003,  the  Mortgage  Subsidiary  participated  in a
commercial  loan  in  the  amount  of  250,000  to  a  developer  of  high-ended
single-family residences.  The total amount of the loan is $1,250,000 and has an
interest rate of 12% per annum,  payable  interest only monthly until it matures
on November 19, 2005,  when all  principal  and any accrued  interest is due and
payable. The loan is secured by a mortgage on the property located in Lighthouse
Point, Florida. The Development  Subsidiary entered into a joint venture, with a
Florida  builder  to  construct  the  residential  unit.  Under the terms of the
Operating  Agreement,  the Development  Subsidiary receives a monthly management
fee equal to 4% per annum interest on any remaining  balance of the construction
loan. Upon  complection and sale of the residential  unit, the developer has the
right to purchase  the  Development  Subsidiary's  membership  interest  for set
purchase price of $150,000.

         The Mortgage  Subsidiary  currently  has  approximately  $8,900,000  in
requested commercial loans to developers being considered by the loan committee.

         Subsequent to the fiscal year-end,  in November,  the Company moved its
principal  place of  business  to its own  offices  located in Boca  Raton.  The
Company has a 30 month lease for 2,200 square feet at  approximately  $4,000 per
month, including CAM..

         PROSPECTIVE  SOURCES OF LIQUIDITY.  Current operating cash flows do not
service the Company's existing debt or the Company's day-to-day operations.



                                       25
<PAGE>


         The Company has listed, with an unaffiliated real estate broker, all of
the Maumelle  Property for sale during the fiscal year ended September 30, 2003,
in order to reduce its current debt and for working  capital and intents to keep
the property listed for sale during the fiscal year 2004.

         With  respect to  prospective  long-term  liquidity,  the  Company  has
identified several real estate acquisition and financing opportunities as a part
of its  strategic  business  plan that will allow it to generate  cash flow from
real estate  development,  interest  on its  investments,  financing  arbitrage,
hypothecation arbitrage,  development fees, and equity participations from joint
ventures.  The Company has  acquired  and intends to continue to acquire  and/or
develop real estate and loans for its own portfolio in fast growing markets such
as Florida and North Carolina.

         The Company is  currently  in the process of raising  additional  funds
through a private placement  offering,  pursuant to Rule 506 of Regulation D, of
debt securities with a minium offering of $1,000,00 and a maximum of $8,000,000,
from private investors to assist the Company in implementing its business plans.
There can be no assurance,  however,  that the Company will successfully be able
to raise all or some of the additional funds or if it does, that its development
and investment plans will generate  revenues or net profits to the Company.  See
ITEM 1, "DESCRIPTION OF BUSINESS--BUSINESS OF THE COMPANY--GROWTH STRATEGIES."

         The  Company  expects  to  pay   commissions  to  Noble   International
Investments,  Inc. ("Noble"), a registered  broker/dealer firm, equal to two and
one quarter  percent  (2.25%) of the gross proceeds of the Offering or $180,000,
whichever is greater, and subject to raising a least $3,000,000 in the Offering.
In addition,  Noble, or its designee,  shall be provided with restricted  common
stock of 2,500,000  shares of the Company upon the  completion of the offering..
Management of the Company  anticipates  that it will raise at least a portion of
the Secured  Promissory Note offering.  No commissions  will be paid on portions
raised by management.

         COMPARISON OF YEAR ENDED SEPTEMBER 30, 2003 TO YEAR ENDED SEPTEMBER 30,
2002.  At September  30, 2003,  the Company had total assets of  $9,479,037,  an
increase of $2,506,859 or 35.9% from the Company's total assets as of the fiscal
year ended  September 30, 2002.  The Company had cash of $2,661,998 at September
30, 2003,  compared to $16,981 on September 30, 2002, an increase of $2,645,017.
This increase was a result of $3,000,000 in borrowed funds  evidenced by secured
promissory notes during the fiscal year ended September 30, 2003. See "LIQUIDITY
AND CAPITAL RESOURCES" above.

         Accrued interest receivable  increased to $41,431 on September 30, 2003
from $5,463 on  September  30,  2002,  an increase  of  $35,968.  Current  notes
receivable  decreased to  $1,000,000  on September  30, 2003 from  $2,070,000 on
September  30, 2002.  This and  noncurrent  decrease was a result of payments of
notes receivable.  Non-current  interest receivable  decreased to 0 on September
30, 2003 from  $78,434 on  September  30,  2002.  Non-current  notes  receivable
decreased to $0 on September 30, 2003,  from $1,570,000 on September 30, 2002, a
decrease of $1,570,000.  See discussion below.

         The carrying value of the Company's real estate  holdings  increased by
$3,082,368  during the year,  from $1,300,140 in fiscal year ended September 30,
2002 to $4,382,508 in fiscal year ended September 30, 2003. The net increase was
a result  of the  reacquisition of 251 acres of single family,  multifamily  and
commercial  land in Maumelle,  Arkansas in connection  with the  dissolution  of
TradeArk Properties.

         The  deferred  tax  benefit of  $1,203,000  recorded  in the year ended
September 30, 2002, did not require an adjustment as of September 30, 2003.

         The Company's  investment in Trade Ark decreased to $0 from $2,291,089,
in  the  period  reflecting  the  dissolution  of  TradeArk  and  the  Company's
reacquisition  of TradeArk  land assets  which are now included in land and real
estate.

         Total  liabilities  of the  Company  as of  September  30,  2003,  were
$9,479,037  an  increase  of  $2,506,858  from the  September  30, 2002 total of
$6,972,179.  The current  liability  for notes  payable  decreased by $1,120,445
during the fiscal year ended September 30, 2003, from 2,029,168 to $908,723. The



                                       26
<PAGE>

decrease was the result of settlement of unsecured  promissory  note debt.  Long
term  liabilities  increase to $4,665,857 in the fiscal year ended September 30,
2003 from $0 for the fiscal year ended 2002.  The increase was a result of funds
received from secured promissory notes and the assumption of a loan securing the
reacquisition of real property from TradeArk.

         Accounts  payable  and  accrued  expenses   decreased  by  $708,007  to
$287,038, as of September 30, 2003, from $995,045, as of September 30, 2002.

         Accrued interest decreased by $345,193 to $96,537,  as of September 30,
2003, from $441,730, as of September 30, 2002. The major portion of the decrease
was due to the settlement of various unsecured notes payables.

         Shareholders'  Equity  decreased  by  $328,806.  The  net  decrease  is
comprised of a net loss  recorded for the fiscal year of $911,957,  the issuance
of 293,893 new shares of the Company's  preferred  stock at a value of $1.00 per
share for loan  settlements,  the  issuance of 200,000  shares of the  Company's
common  stock at an  approximate  value of  $0.07  per  share  for  services,  a
reduction of $300,000 related party notes receivable for common stock, dividends
paid or accrued totaling $123,732, and the reversal of a 2002 tax accrual in the
amount of $98,990.

ITEM 7. FINANCIAL STATEMENTS.

         The audited  financial  statements  of the Company are included in this
Annual Report on Form 10-KSB starting at page F1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE.

         The  Company  has not  changed  accountants  during the last two fiscal
years;  nor has the Company had any  disagreements  with the  accountants on any
matter of accounting principles or practices,  financial statement  disclosures,
or auditing scope or procedures.

         PART III

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


         DIRECTORS AND EXECUTIVE OFFICERS

                                                     Date of    Expiration of
        Name                 Age   Position          Election   Director Term
        ----                 ---   --------          --------   --------------

        Michael G. Todd      54    Chairman,           7/95      2003 or until
                                   and President                 Successor
                                                                 elected

        Thomas Blake*        69    Director            3/97      10/1/03

        David R. Paes **     48    Vice President,     7/95      N/A
                                   Treasurer and
                                   Assistant Secretary

        Raymond Baptista     61    Director            5/01      2003 or until
                                   Vice President     10/97      successor
                                   Of Finance and                elected
                                   Secretary


                                    27

<PAGE>



        Ashley Bloom         29    Vice President      7/02      2003 or until
                                   Treasurer, Asst.              successor
                                   Secretary                     elected

        Donald R. LeGault*** 64    Director           10/03      2003 or until
                                                                 successor
                                                                 elected

         * On October 1, 2003,  Thomas Blake,  director of the Company  resigned
for personal  reasons.  The Board of Directors  elected to appoint  Donald R. Le
Gault , director to serve until the next annual shareholders  meeting or until a
successor is appointed.

         ** On April 2, 2003,  David Paes,  vice  president and treasurer of the
Company  and  assistant  secretary  of the  Operating  Subsidiary  resigned  for
personal  reasons.  Ashley Bloom, vice president of the Company was appointed by
the Board of Directors as treasurer  and  assistant  secretary of the  Operating
Subsidiary to success Mr. Paes.

         *** Effective October 15, 2003, the Board of Directors appointed Donald
R.  LeGault to serve as director  until a successor  is elected,  for board seat
vacated by Thomas Blake.

         The  following  is a  biographical  summary  of the  experience  of the
directors and executive officers of the Company:

         MICHAEL G. TODD.  Chairman of the Board,  President and Chief Executive
Officer of the  Company.  Todd also is the sole  Director  and  President of the
Operating  Subsidiary.  Todd has extensive  experience in the banking  industry,
having been the President and Chief Executive Officer of two Southern California
banks,  Orange City Bank and Bay Cities  National Bank.  Todd also serves on the
board of directors of eRADLINK, a privately held medicial-film-to- digital-image
conversion company.

         THOMAS  BLAKE.  Director.  Blake  is  director,  business/finance,   of
Glenwood L. Garvey Associates,  an urban planning and consulting firm. He is the
founder and former principal of Thomas C. Blake Consulting.  He is a director of
West Coast Savings & Loan and formerly was a director of various other financial
institutions.  Mr. Blake  resigned as director on October 1, 2003,  for personal
reasons.

         RAYMOND C.  BAPTISTA.  Director.  Baptista has 25 years  experience  in
banking and  finance,  both  nationally  and  internationally.  He has also been
actively involved in real estate  acquisitions and development and was president
and CEO of a national  real estate  management  company.  Baptista has served as
director of Summa Energy  Development  Corp., a mining services  company,  since
July 2001.

         DAVID R. PAES. Vice President, Treasurer, and Assistant Secretary. Paes
has been involved in real estate development as a chief financial officer of two
real estate land companies since 1977, and is a certified public accountant. Mr.
Paes resigned for personal reasons from all offices on April 2, 2003.

         ASHLEY B. BLOOM.  Vice President,  Treasurer and Assistant  Secretary..
Bloom is a certified  public  accountant and a licensed  mortgage  broker in the
state of Florida. Bloom's experience includes working with Coopers & Lybrand LLP
in the Ligation  Consulting  and Corporate  Finance  department  and in the real
estate  development  industry since 1998.  Bloom has been involved in developing
various real estate  projects over the last five years in excess of  $50,000,000
in Florida  through  development  and/or  ownership  interest.  He has extensive
experience in negotiating the  acquisition and development of projects,  through
site  planning,  pro  forma  and  cash  flow  analysis,  financing,  operational
management to sales and marketing programs.



                                       28
<PAGE>


         DONALD R.LE GAULT.  Director. Mr. LeGault was appointed by the Board of
Directors on October 15, 2003 to succeed Thomas Blake, who resigned for personal
reasons.  Mr.  LeGault has extensive  experience in real estate  investment  and
development  and is currently the owner of Sell America  Realty  Corporation,  a
real estate brokerage firm specializing in commercial  properties,  primarily in
South Florida. He also is the current president of the South Florida Real Estate
Exchangors,   as  well  as  chairman  of  the  Florida  Real  Estate   Marketing
Association.


         SIGNIFICANT EMPLOYEES

         The Company's sole significant  full-time  employee is Michael G. Todd,
its Chairman, President and Chief Executive Officer.

         FAMILY RELATIONSHIPS

         There are no family  relationships  between any  directors or executive
officers of the Company, either by blood or by marriage.

         INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

         During the past five years, any director,  person nominated to become a
director, executive officer, promoter or control person of the Company:

                  (1) was a general partner or executive officer of any business
 against  which any  bankruptcy  petition  was filed,  either at the time of the
 bankruptcy  or two years prior to that time;  The officers and directors of the
 Company  due to the  Operating  Subsidiary  filing a voluntary  petition  under
 Chapter 11 of the Bankruptcy Code.

                  (2) was convicted in a criminal proceeding or named subject to
 a pending criminal  proceeding  (excluding  traffic  violations and other minor
 offenses);

                  (3)  was  subject  to  any  order,  judgment  or  decree,  not
 subsequently  reversed,  suspended  or  vacated,  of  any  court  of  competent
 jurisdiction,  permanently or  temporarily  enjoining,  barring,  suspending or
 otherwise  limiting  his  involvement  in any type of business,  securities  or
 banking activities; or

                  (4) was found by a court of competent jurisdiction (in a civil
 action), the SEC or the Commodity Futures Trading Commission to have violated a
 federal or state  securities or commodities  law, and the judgment has not been
 reversed, suspended or vacated.

         SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE.   Federal
securities  laws require the  Company's  directors  and  executive  officers and
persons  who own more than 10% of the  Company's  common  stock to file with the
Securities and Exchange  Commission  initial reports of ownership and reports of
changes  in  ownership  of any  securities  of  the  Company.  To the  Company's
knowledge   all  of   the   Company's   directors,   executive   officers,   and
greater-than-10% beneficial owners made all required filings for the fiscal year
ended September 30, 2003.

ITEM 10. EXECUTIVE COMPENSATION.

EXECUTIVE COMPENSATION

         The following table sets forth certain  information with respect to the
compensation  that was paid in the 2003 fiscal year to the  Company's  executive
officers  and the  aggregate  compensation  paid  by the  Company  for  services
rendered during the periods indicated:


                                       29

<PAGE>

<TABLE>

<CAPTION>

                           SUMMARY COMPENSATION TABLE

                                                      LONG-TERM COMPENSATION

      ANNUAL COMPENSATION                           AWARDS              PAYOUTS

(a)        (b)      (c)        (d)     (e)          (f)           (g)        (h)     (i)
<S>        <C>      <C>        <C>     <C>          <C>           <C>        <C>     <C>

Name &     Year     Salary     Bonus   Other        Res-          Securi-            All
Prin-      or         ($)       ($)    Annual       tric-         ties       Pay-    Other
cipal      Period                      Compen-      ted           Under-     outs    Compen-
Position   Ended                       sation       Stock         Lying      LTIP    sation
                                                                  Options/
                                                                  SARs
Michael    9/30/03  $0           0       0           0               0         0       0
Todd,
Chairman/
President

</TABLE>

         (1) Michael G. Todd has been employed as President of the Company since
November  1994.  During fiscal year,  Mr. Todd agreed to forego all salary since
the Company was not in a financial position to pay such expenses.

         The following table provides  information  about the Company's  capital
common stock that may be issued under the  Non-Qualified  Stock  Incentive  Plan
("Employee Stock Plan").

           (a) The information presented in the Financial Statements,  Financial
 Footnotes entitled "Capital Transactions," is incorporated herein by reference.

           (b) The  following  table  provides  information  about the Company's
 capital  common stock that may be issued under the Employee  Stock Plan,  as of
 September 30, 2003.

<TABLE>

<CAPTION>

                                             EQUITY COMPENSATION PLAN INFORMATION

           Plan               No. of Securities          Weighted-average           No. of securities
           Category           to be issued upon          exercise price of          remaining available
                              exercise of out-           outstanding options,       for future issuance under
                              standing options,          warrants & rights          equity compensation plan
                              warrants & rights                                     (excluding securities
                                                                                    reflected in column
<S>                           <C>                        <C>                        <C>

                                    (a) (1)                 (b)(2)                         (c)
           Non-Qualified
           Employee Incent-
           i ve Stock Plan          3,000,000                N/A
           Approved by
           Security Holders(3)

           Number of securities
           issued under the plan      200,000                $.07

           Total                    3,000,000                N/A                        325,000(4)

</TABLE>



                                       30
<PAGE>

         (1) Column (a) represents  stock options granted under the February 20,
2002,  Employee  Stock  Plan  ("Employee  Plan"),  authorized  by the  Board  of
Directors and approved by a majority of security holders.

         (2)Determined  at the date of option  based on the  average of the high
and low prices of the Common  Shares for the last five days prior to the date of
the option grant, as reported by the National Quotation Bureau, Inc. ("NQB").

         (3)The   Employee  Plan  was  voted  and  approved  by  a  majority  of
shareholders on February 20, 2002.

         (4) Subsequent to the Company's fiscal  year-ended  September 30, 2003,
the Company  issued  options to  purchase  15,000  shares of common  stock at an
exercise  price of $.075 per share to three of its  employees.  The Company also
issued an option to purchase  5,000 shares of common stock to Raymond  Baptista,
director of the Company at an exercise price of $0.75 per share.

         Non-Qualified Employee Incentive Stock Plan

         The  Company  registered  3,000,000  shares of  common  stock par value
$0.01,  filed on Form S-8 with the Securities and Exchange  Commissions on March
6, 2002.  The shares of common  stock are to be offered or sold  pursuant to the
Employee  Stock  Plan,  dated  February  20,  2002  authorized  by the board and
directors and approved by a majority of security  holders.  The options  granted
under the Employee Plan must be exercised no later than 10 years from the option
date and the exercise price must be fair market value or greater,  as determined
on the option grant date.

         DIRECTOR COMPENSATION

         For the fiscal year ended  September 30, 2003,  outside  directors were
not  compensated  for  their  services.  Commencing  in  January  2004,  outside
directors will receive $500 per meeting.

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

         The following  table sets forth the  beneficial  ownership of shares of
Common Stock as of September  30, 2003,  for (i) each person who is known by the
Company to be the  beneficial  owner of more than a 5% interest in the  Company,
(ii) directors of the Company,  (iii) the sole "named executive  officer" of the
Company,  as defined  in Item  402(a)(2)  of SEC  Regulation  S-B,  and (iv) the
directors  and  named  executive  officer  of the  Company  as a  group.  Unless
otherwise indicated in the footnotes, all such interests are owned directly, and
the indicated person or entity has sole voting and investment  power.  Addresses
are provided only for 5% or greater owners.

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                           Name and
         Title of Class    address of               Amount and          Percent
                           beneficial               nature of bene-     of class
                           owner(1)                 ficial owner

         Common Stock      Michael G. Todd(2)         16,706,896          66.69%

         Common Stock      Howard Bloom(3)            18,116,000          72.32%

         Common Stock      Alan Katz (4)              16,200,000          64.67%

         Common Stock      Thomas Blake(7)            0                   0%

         Common Stock      Raymond Baptista           0                   0%



                                       31
<PAGE>


         Common Stock      David Paes(8)              50,000               .002%

         Common Stock      Ashley Bloom(5)            16,035,000          64.01%

         Common Stock      Leonard Gross(6)           16,000,000          63.87%

         Common Stock      Directors and Executive
                           Officers as a Group        19,107,896 shares   76.28%

         (1)  Unless otherwise  indicated,  the address of the beneficial owner
              is 7100 Camino Real Blvd., Suite 402, Boca Raton, Florida 33433.

         (2)  506,851 of these shares are owned by Prescott  Investments,  L.P.
              Michael G. Todd is the sole managing member of Granite Industries
              LLC, which is the managing  general  partner of Prescott LP. Todd
              is the sole "named executive officer" of the Company,  as defined
              in Item  402(a)(2)  of SEC  Regulation  S-B.  Mr. Todd also has a
              beneficial  interest  in  16,000,000  shares  owed by Boca  First
              Capital LLLP, the  controlling  shareholder  of the Company.  Mr.
              Todd is a managing member of Addison Capital Group, LLC, a Nevada
              limited  liability  company,  the  general  partner of Boca First
              Capital  LLLP.  See  ITEM  9,  "DIRECTORS,   EXECUTIVE  OFFICERS,
              PROMOTERS AND CONTROL PERSONS."

         (3)  16,000,000  of these shares are owned by Boca First Capital LLLP,
              the controlling shareholder of the Company of which Howard. Bloom
              has a limited  partnership  interest.  Howard Bloom is a managing
              member of Addison  Capital  Group,  the  general  partner of Boca
              First Capital LLLP. 90,000 shares are owned by Mr. Bloom's spouse
              and minor child and 2,000,000 are beneficially  owned by MB 2002,
              LLC, a Florida limited  liability company which Mr. Bloom and his
              spouse are the sole managing members.

         (4)  16,000,000  of these shares are owned by Boca First Capital LLLP,
              the controlling  shareholder of the Company of which Mr. Katz has
              a limited  partnership  interest.  Mr.  Katz also  directly  owns
              200,000 shares.

         (5)  16,000,000  of these shares are owned by Boca First Capital LLLP,
              the controlling  shareholder of the Company of which Ashley Bloom
              has a limited partnership interest.  Mr. Bloom also directly owns
              35,000  shares.  See  ITEM  9,  "DIRECTORS,  EXECUTIVE  OFFICERS,
              PROMOTERS AND CONTROL PERSONS."

         (6)  16,000,000  of these shares are owned by Boca First Capital LLLP,
              the controlling shareholder of the Company of which Mr. Gross has
              a limited partnership interest.

         (7)  Thomas Blake  resigned as director on October 1, 2003 . See, ITEM
              9,  "  DIRECTORS,   EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL
              PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT."

         (8)  David Paes resigned as treasurer  and vice  president on April 2,
              2003.. See, ITEM 9, " DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS
              AND  CONTROL  PERSONS;  COMPLIANCE  WITH  SECTION  16(a)  OF  THE
              EXCHANGE ACT."


                                       32
<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         SERVICES PROVIDED BY AFFILIATED COMPANIES


         The Company has paid fees or expects to pay fees to certain  affiliated
companies  for  various  types of  services,  and will  continue to do so in the
future. These arrangements are summarized below.

         MAUMELLE ENTERPRISES, INC. AGREEMENT. The Company had an oral agreement
with Maumelle Enterprises,  Inc. ("Maumelle  Enterprises") to provide management
and administrative services for the Maumelle Property. As of March 31, 2003, the
Company  decided to  directly  manage the  Maumelle  Property  and ceased  doing
business with Maumelle  Enterprises.  David Paes and Mary Peyton each own 50% of
the outstanding shares of Maumelle Enterprises.  Mary Peyton is the President of
the Home  Construction  Subsidiary  and David Paes was an officer of the Company
until April, 2003.

         The Company had paid Maumelle Enterprises $29,897 as September 30, 2003
and as the date of this Report.

         SUBLEASING OF OFFICE SPACE. The Company subleased its Boca Raton office
from B&G  Acceptance  Corp.,  a Florida  corporation  controlled by a beneficial
owner of Boca First. The Company paid 72,000 for the office space and a total of
$34,151.21 in expenses, as of September 30, 2003.

         Subsequent  to the fiscal  year-end,  the Company  moved its  principal
place of business to its own offices located in Boca Raton. The Company has a 31
month lease for 2,200 square feet at approximately  $4,000 per month,  including
CAM..

         PRIME REALTY & INVESTMENTS  INC.  ("Prime") is a real estate  brokerage
firm  beneficially  owned by Howard  Bloom,  a  controlling  shareholder  of the
Company  through  his  beneficial  interest  in Boca  First.  Prime may  receive
commissions derived from transactions dealing with the Company,  either directly
or paid by the borrower.  Management  anticipates that any such commissions paid
will  based  on  standard   industry   fees  at  the  accepted   rates  paid  to
non-affiliated third parties.  These activities  constitute an inherent conflict
of interest.

         HIGHLAND MORTGAGE & FINANCE CO., ("Highland  Mortgage"),  is a mortgage
brokerage  firm  owned  and  controlled  by Ashley  Bloom,  the  Company's  vice
president  and  treasurer  and a  beneficial  owner  of  the  Company.  Highland
Investment may receive  mortgage broker fees derived from  transactions  dealing
with the Company directly or paid by the borrower.  Management  anticipates that
any such commissions paid to Highland  Mortgage will based on standard  industry
fee at the accepted rates paid to non-affiliated third parties. These activities
constitute an inherent conflict of interest

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

         (a) FINANCIAL STATEMENTS AND EXHIBITS

         FINANCIAL STATEMENTS


CAPITOL FIRST CORPORATION, INCLUDING PREDECESSOR CORPORATION AND SUBSIDIARIES.

         Report of Independent Auditors.................................. F-1

         Balance Sheet as of September 30, 2003.......................... F-2

         Statements of Operations for the Years Ended
         September 30, 2003 and 2002..................................... F-3

         Statements of Changes in Shareholders' Equity
         September 30, 2003.............................................. F-4

         Statements of Cash Flows for the Years Ended
         September 30, 2003 and 2002..................................... F-5

         Notes to Financial Statements................................... F-6



                                       33

<PAGE>

                              BAUM & COMPANY, P.A.
                          CERTIFIED PUBLIC ACCOUNTANTS
                        1515 UNIVERSITY DRIVE - SUITE 209
                          CORAL SPRINGS, FLORIDA 33071


                          INDEPENDENT AUDITOR'S REPORT

Board of Directors and Stockholders
Capitol First Corporation and Subsidiaries
Boca Raton, Florida

We have audited the  accompanying  consolidated  balance  sheet of Capitol First
Corporation and subsidiaries ( formerly Capitol Communities Corporation. ) as of
September  30,  2003 and the  related  consolidated  statements  of  operations,
stockholders'  equity and cash flows for the years ended September 30, 2003, and
2002.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion the financial statements referred to in the first paragraph above
present  fairly,  in all material  respects,  the financial  position of Capitol
First Corporation and subsidiaries ( formerly Capitol Communities  Corporation )
as of September  30, 2003 and the results of its  operations  and its cash flows
for the years ended  September 30, 2003 and 2002 in conformity  with  accounting
principles generally accepted in the United States of America..


/s/ Baum & Company, P.A.
------------------------
    Baum & Company, P.A.

Coral Springs, Florida
December 29, 2003






                                       F-1
<PAGE>

<TABLE>

<CAPTION>


Capitol First Corporation and Subsidiaries
Consolidated Balance Sheet
as of September 30, 2003


<S>                                                                   <C>

Current Assets
      Cash                                                            $  2,661,998
      Accounts Receivable                                                     --
      Accrued Interest Receivable                                           41,431
      Notes receivable-Current                                           1,000,000
      Other Current Assets                                                 190,100
                                                                      ------------
               Total Current Assets                                      3,893,529
                                                                      ------------


Other Assets
      Land and Real Estate Holdings                                      4,382,508
      Deferred Tax Benefit                                               1,203,000
                                                                      ------------
               Total Other Assets                                        5,585,508
                                                                      ------------

               Total Assets                                           $  9,479,037
                                                                      ============




Current Liabilities
      Notes Payable                                                   $    908,723
      Accounts Payable & Accrued Expenses                                  287,038
      Accrued Expenses- Related Parties                                     10,053
                                                                      ------------
               Total Current Liabilities                                 1,205,814
                                                                      ------------

Long Term Liabilities
      Notes Payable Non Current                                          4,665,857
      Note Payable- Related Party                                        1,255,000
                                                                      ------------
               Total Long Term Liabilities                               5,920,857
                                                                      ------------

                                                                      ------------
               Total Liabilities                                         7,126,671
                                                                      ------------

Stockholders' Equity

      Preferred Stock-$.01 par value, 10,000,000 shares                     41,376
               authorized; 4,137,591 shares issued and outstanding
      Common Stock-$.01 par value, 40,000,000 shares                       292,900
               authorized; 29,290,050 shares issued and outstanding
      Additional Paid in Capital                                        14,172,886
      Preferred Stock Dividend                                            (323,195)
      Treasury Stock; 3,629,989 shares                                  (4,805,229)
      Accumulated Deficit                                               (7,026,372)
                                                                      ------------

               Total Stockholders' Equity                                2,352,366
                                                                      ------------

               Total Liabilities and
               Stockholders' Equity                                   $  9,479,037
                                                                      ============
</TABLE>



See Accountant's Report and Supplemental Footnotes.



                                      F-2
<PAGE>

<TABLE>

<CAPTION>

Capitol First Corporation and Subsidiaries
Consolidated Statements of Operations
For the Year Ended September 30, 2003 and 2002



                                                               2003             2002
                                                               ----             ----
<S>                                                        <C>             <C>

Revenues:
       Sales                                               $  2,721,933    $  8,500,000
                                                           ------------    ------------

       Total Revenues                                         2,721,933       8,500,000

       Cost of Sales                                          3,024,559       4,256,899
       Cost of Sales-Related Party Commissions                     --           120,000
                                                           ------------    ------------
               Total Cost of Sales                            3,024,559       4,376,899

Gross Profit                                                   (302,626)      4,123,101

Operating Expenses:
       General & Administrative Expenses                        517,380       1,450,073
       General & Administrative Expenses-Related Parties         99,500       1,185,173
                                                           ------------    ------------
               Total Operating Expenses                         616,880       2,635,246
                                                           ------------    ------------

Net Income (Loss) Before
       Other Income/(Expense)                                  (919,506)      1,487,855

Other Income and (Expense)
       Operations of Unconsolidated Investments                 (75,000)       (325,791)
       Interest Income                                           97,958          83,897
       Other Income                                                --             4,740
       Interest Expense                                        (950,914)       (595,854)
       Interest Expense- Related Parties                       (188,907)        (20,339)
                                                           ------------    ------------
               Total Other Income and (Expense)              (1,116,863)       (853,347)
                                                           ------------    ------------

Net Income (Loss) from continuing operations                 (2,036,369)        634,508

Income Tax Expense (Benefit)
       Current                                                     --                 0
       Deferred                                                    --         1,203,000
                                                           ------------    ------------
               Total Income Tax Expense (Benefit)                  --         1,203,000
                                                           ------------    ------------

Net Income (Loss) before Extraordinary Items                 (2,036,369)      1,837,508

Extraordinary Items
       Gain from retirement of debt at a discount,
          net of income tax provision of $0                   1,194,710       2,508,195
       Loss on Discount of Note                                 (70,298)           --
                                                           ------------    ------------
               Total Extraordinary Items                      1,124,412       2,508,195
                                                           ------------    ------------

Net Income (Loss)                                             ($911,957)   $  4,345,703
                                                           ============    ============

Basic Income (Loss) per share
       Income (Loss) before extraordinary item                   ($0.07)   $       0.07
       Extraordinary Items                                         0.04            0.10
                                                           ------------    ------------

       Net Income (Loss)                                         ($0.03)   $       0.18
                                                           ============    ============

Weighted average shares outstanding:                         29,090,050      24,754,197
                                                           ============    ============
</TABLE>


See Accountant's Report and Supplemental Footnotes.

                                      F-3
<PAGE>

<TABLE>

<CAPTION>

Capitol First Corporation and Subsidiaries
Consolidated Statement of Stockholders' Equity
as of September 30, 2003

                                 Preferred     Preferred    Common        Common       Add'l Paid     Treasury       Accumulated
                                  Shares        Stock       Shares        Stock        In Capital       Stock           Deficit
-----------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>           <C>          <C>           <C>          <C>            <C>            <C>

Balance at 9/30/01                     -             -      7,770,050     $ 77,700     $ 7,504,513    $ (4,795,852)  $ (10,460,118)

Common Stock issued 10/18/01
    for Services                                            9,895,100       98,951       1,392,378
    for Accrued Expenses                                    4,104,900       41,049         577,622
    for Note Receivable                                     2,000,000       20,000         280,000
    sold for Cash                                             100,000        1,000           4,000

Common Stock issued 2/25/02
    for Services                                            3,473,260       34,733         182,593
    for Accrued Expenses                                      726,740        7,267          65,407

Common Stock issued 3/26/02
    for Services                                                5,000           50             263
    for Accrued Expenses                                      140,000        1,400           7,350

Common Stock issued 3/29/02
    for Services                                               75,000          750           3,000

Exercise of Stock Options
    authorized April 18, 2002                                                               19,545
    issued August 12, 2002
        for Services                                          600,000        6,000          21,000
        for Accrued Expenses                                  200,000        2,000           7,000

Preferred Stock Issued
    on August 12, 2002         3,135,714        31,357                                   3,104,357
    on September 09, 2002        569,027         5,690                                     563,337
    on September 27, 2002        138,957         1,390                                     137,567

Common Stock Repurchase                                                                                     (9,377)

Net Income (Loss) for
    the Year Ended 9/30/02                                                                                               4,345,703

                             ------------------------------------------------------------------------------------------------------
Balance at 9/30/02             3,843,698        38,437     29,090,050      290,900      13,869,932      (4,805,229)     (6,114,415)
                             ----------------------------------------------------------------------================================

Common Stock Issued 09/30/03
        for Services                                          200,000        2,000          12,000

Preferred Stock Issued
    on December 19, 2002         216,858         2,169                                     214,689
    on July 17, 2003              52,035           520                                      51,515
    on September 30, 2003         25,000           250                                      24,750

Net Income (Loss) for
   the Year Ended 09/30/03                                                                                                (911,957)
                            -------------------------------------------------------------------------------------------------------

Balance at 09/30/03            4,137,591      $ 41,376     29,290,050    $ 292,900    $ 14,172,886    $ (4,805,229)   $ (7,026,372)
                            =======================================================================================================
</TABLE>






See Accountant's Report and Supplemental Footnotes.


                                      F-4
<PAGE>

<TABLE>

<CAPTION>


Capitol First Corporation and Subsidiaries
Statements of Cash Flows
For the Year Ended September 30, 2003 and 2002


                                                                      2003              2002
                                                                      ----              ----
<S>                                                                 <C>            <C>

Cash Flows from Operating Activities:
      Net Income (Loss)                                             $(2,036,369)   $ 4,345,703
      Depreciation                                                          738          1,823
      Services paid by Issuance of Common Stock                          14,000      1,739,718
      Common Stock Options granted for Services                            --           19,545


      Adjustments to Reconcile Income (Loss)
      to Net Cash Used for operating Activities                            --
          (Increase) Decrease in Accrued Interest Receivable             42,466        (83,897)
          (Increase) Decrease in Other Current Assets                  (187,469)        (1,688)
          Increase (Decrease) in Accrued Expenses                      (409,554)    (1,519,299)
          Increase (Decrease) in Accrued Expenses-Related Parties       (40,741)       (15,535)
          (Increase) Decrease in Deferred Tax Asset                        --       (1,203,000)
                                                                    -----------    -----------

      Net Cash (Used) Provided for Operations                        (2,616,929)     3,283,370
                                                                    -----------    -----------



Cash Flows from Investing Activities:
          (Increase) Decrease in Real Estate Holdings                (3,082,368)     4,057,370
          (Increase) Decrease in Investments                          2,291,089        325,791
          (Increase) Decrease in Notes Receivable                     1,070,000     (2,070,000)
          Disposal of Fixed Assets (net)                                  3,703           --
                                                                    -----------    -----------

                                                                    -----------    -----------
      Net Cash Provided (Used) in Investing Activities:                 282,424      2,313,161
                                                                    -----------    -----------

Cash Flows from Financing Activities:
      Proceeds from sale of Common Stock                                   --            5,000
      Proceeds from Notes Payable - Related Party                        39,000      1,216,000
      Proceeds from Notes Payable                                     7,080,000           --
      Payment of Notes Payable                                       (2,116,283)    (6,691,844)
      Payment of Preferred Dividends                                    (23,195)      (199,463)
      Acquisition of Treasury Stock                                        --           (9,377)
                                                                                   -----------

      Net Cash Provided (Used) in Financing Activities:               4,979,522     (5,579,684)
                                                                    -----------    -----------

Net Increase (Decrease) in Cash                                       2,645,017         16,847

Beginning Cash                                                           16,981            134
                                                                    -----------    -----------

Ending Cash                                                         $ 2,661,998    $    16,981
                                                                    ===========    ===========


Schedule of Noncash Financing Activities
      Common Stock Issued for Accrued Expenses                             --          709,095
      Common Stock Issued for Note Receivable                              --          300,000
      Common Stock Issued for Services                                   14,000      1,739,718
      Preferred Stock Issued for Debt                                   293,893      3,843,698
      Reoganization Expenditures                                           --           28,746
      Gain on Extinguishment on Notes Payable                         1,124,412      2,508,195
Supplemental Information:
Interest paid                                                       $ 1,335,046    $   794,385
Taxes Paid                                                          $      --      $      --

</TABLE>


See Accountant's Report and Supplemental Footnotes.


                                      F-5
<PAGE>

CAPITOL FIRST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003

NOTE 1 -SIGNIFICANT ACCOUNTING POLICIES

A. BACKGROUND
The Company was originally  incorporated in the State of New York on November 8,
1968 under the name of Century Cinema  Corporation.  In 1983, the Company merged
with a privately  owned company,  Diagnostic  Medical  Equipment  Corp. and as a
result  changed its name to that of the acquired  company.  By 1990, the Company
was an inactive publicly held corporation. In 1993, the Company changed its name
to AWEC  Resources,  Inc.  and  commenced  operations.  On February 11, 1994 the
Company  formed a wholly owned  subsidiary  AWEC  Development  Corp, an Arkansas
corporation, which later changed its name to Capitol Development of Arkansas.

In February,  1994 Petro Source Energy  Corporation  transferred the majority of
its  holdings  in  the  common  shares  of  the  predecessor  corporation,  AWEC
Resources,  Inc.,  to  Charlie  Corporation  and  Prescott  Investments  Limited
Partnership, a beneficial owner of the Company. These shares were transferred in
consideration  for  public  relations  services  provided  by  Prescott  Limited
Partnership and Charlie  Corporation to Petro Source.  Such services were deemed
by Petro Source to be integral and  indispensable to the concurrent  acquisition
of  approximately  2,041 acres of land in  Maumelle,  Arkansas by the  Company's
Operating Subsidiary. The Company was not a party to the transfer of shares. The
Company did not issue any new shares  pursuant to the  acquisition  of the land.
Accordingly,  the  transfer of shares did not affect the  capitalization  of the
Company, and was non-dilutive to all other shareholders.

In order to  effectuate  a change in  domicile  and name  change  approved  by a
majority  of  the   Predecessor   Corporation   shareholders,   the  Predecessor
Corporation  merged,  effective  January  30,  1996,  into  Capitol  Communities
Corporation,  a Nevada  corporation formed in August 1995 solely for the purpose
of the merger.  The Company is  currently  in the  business  of  developing  and
selling real estate properties.

On July 21, 2000, the Operating  Subsidiary,  a  wholly-owned  subsidiary of the
Company which holds substantially all of the Company's assets, filed a voluntary
petition for relief under Chapter 11 of the United States Bankruptcy Code in the
United  States  Bankruptcy  Court,  Eastern  District of  Arkansas.  The Company
continued to operate its business as a  debtor-in-possession  until September 6,
2002, when the United States  Bankruptcy  Court,  Eastern  District of Arkansas,
Little Rock  Division  entered an Order  Dismissing  the Chapter 11  Proceedings
against  the  Operating  Company.  The  Company  filed a Motion to  Dismiss  the
Bankruptcy  Proceedings  instead of a Plan of  Reorganization,  as all claims of
non-insiders of the Operating  Subsidiary,  except for the claim of the Arkansas
Department of Finance and Administration had been satisfied or released.

On July 17, 2002, Boca First Capital,  LLLP, a Florida limited liability limited
partnership  acquired control of Capitol Communities  Corporation in an exchange
of 16  million  shares  of Common  Stock of the  Company  held by the  Company's
president,  and  Prescott  Investments,   L.P.,  a  Nevada  limited  partnership
beneficially  owned by the Company's  president,  for a combined 33% interest in
Boca First  Capital  LLLP.  Boca First Capital LLLP is controlled by its general
partner,  Addison Capital Group LLC, a Nevada limited liability  company.  As of
the date of this Report,  Boca First  Capital LLLP owns 62.84% of the  Company's
issued and outstanding shares.

By reason of the  exchange  of  securities,  Addison  Capital  LLC,  the general
partner of Boca First  Capital  LLLP,  may be deemed to have voting power and/or
dispositive power with respect to the 16,000,000 shares of Common Stock owned by
Boca First Capital LLLP.

As part of the change of control,  the Company has moved its principal  place of
business from Torrance,  California to Boca Raton,  Florida,  effective July 22,
2002.

On October 15, 2003,  the Company  filed a  Certificate  of  Amendment  with the
Secretary  of State of  Nevada  to  change  its name  from  Capitol  Communities
Corporation to Capitol First Corporation.


                                      F-6
<PAGE>


CAPITOL FIRST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003

NOTE 1 -SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

B. PRINCIPLES OF CONSOLIDATION

The  Consolidated  financial  statements  include  accounts of its  wholly-owned
subsidiaries. All material intercompany transactions have been eliminated.

C. RESTATEMENT OF FINANCIAL STATEMENTS
The financial statements for the fiscal year ended September 30, 2003, have been
restated to reflect an over-accrual of approximately $98,000 of accrued taxes.

D. RECLASSIFICATIONS
Certain  reclassifications  have been made to the 2002  financial  statements to
conform to the 2003 presentation.

E. REAL ESTATE HOLDINGS
Real estate  investments are stated at the lower of cost or market.  Acquisition
costs are allocated to respective  properties based on appraisals of the various
properties acquired in the acquisition.

F. INCOME TAXES
In February 1992, the Financial  Accounting  Standards Board issued Statement on
Financial  Accounting  standards  109 of  "Accounting  for Income  Taxes." Under
Statement  109,  deferred  tax assets and  liabilities  are  recognized  for the
estimated  future tax  consequences  attributable  to  differences  between  the
financial  statement  carrying  amounts of existing  assets and  liabilities and
their  respective  tax bases.  The Company has net operating  losses  (NOL's) of
approximately $9,000,000 expiring in the years 2009 through 2022.

Deferred tax benefit (34% statutory rate)     $  3,060,000
Valuation allowance                              1,857,000
                                              ------------
Net Benefit                                   $  1,203,000
                                              ------------

Based  on the  anticipation  of  future  profitable  operations  for  the  years
subsequent to 2002, a deferred tax asset was recognized in 2002. Currently,  due
to the material  operating loss incurred  during the fiscal year ended September
30, 2003, no adjustment was deemed necessary.

G. REVENUE RECOGNITION
Revenue is  recognized  under the full  accrual  method of  accounting  upon the
completed  sale of real  property  held for  development  and  sale.  All  costs
incurred  directly or indirectly in acquiring and  developing  the real property
are capitalized.

H. USE OF ESTIMATES
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities  and  disclosures  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the period.  Actual results
could differ from those estimates.

I. CASH AND CASH EQUIVALENTS
Cash and cash  equivalents  include cash on hand, cash in banks,  and any highly
liquid  investments  with a  maturity  of  three  months  or less at the time of
purchase.  The Company and its  Subsidiaries  maintain cash and cash  equivalent
balances  at several  financial  institutions  which are  insured by the Federal
Deposit  Insurance  Corporation up to $100,000.  At times, the cash balances may
exceed  federally  insured  limits.  We have not  experienced any losses in such
accounts and we believe the risk related to these  deposits is minimal.


                                      F-7
<PAGE>


CAPITOL FIRST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003

NOTE 1 -SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

J. EARNINGS/LOSS PER SHARE
Primary earnings per common share are computed by dividing the net income (loss)
by the  weighted  average  number of shares of  common  stock and  common  stock
equivalents  outstanding  during  the year.  The  number of shares  used for the
fiscal years ended  September 30, 2003 and 2002 were  29,090,050 and 24,742,859,
respectively.

K. NEW ACCOUNTING PRONOUNCEMENTS

In November 2002, Financial Accounting Standards Board Interpretation ("FIN") NO
45,  "Guarantor's   Accounting  and  Disclosure   Requirements  for  Guarantors,
Including  Guarantees of Indebtedness of Others" was issued.  FIN NO 45 requires
recognition  of an  initial  liability  for the fair  value  of the  guarantor's
obligation  upon  issuance  of certain  guarantees.  We adopted  the  disclosure
requirements  of FIN NO 45 as of  December  31,  2002.  On January  1, 2003,  we
adopted the initial recognition and measurement  provisions which were effective
on a prospective  basis for  guarantees  issued or modified  after  December 31,
2002. The implementation of FIN NO 45 had no impact on our results of operations
or financial  position at adoption or during the fiscal year ended September 30,
2003.

In May 2003, Statement of Financial Accounting Standards NO 150 ("SFAS NO 150"),
Accounting  for  Certain  Financial  Instruments  with  Characteristics  of both
Liabilities and Equity," was issued.  This Statement improves the accounting for
certain  financial  instruments  that,  under previous  guidance,  issuers could
account  for as  equity.  This  Statement  requires  that those  instruments  be
classified as liabilities in the statement of financial position. This statement
is effective for financial  instruments  entered into or modified  after May 31,
2003,  and otherwise is effective at the  beginning of the first interim  period
beginning  after June 15,  2003,  except for  mandatorily  redeemable  financial
instruments  of nonpublic  entities.  It is to be  implemented  by reporting the
cumulative  effect  of  a  change  in  an  accounting  principle  for  financial
instruments created before the issuance date of the statement and still existing
at the beginning of the interim period of adoption. SFAS NO 150 had no impact on
our  results of  operations  or  financial  condition  at adoption or during the
fiscal year ended September 30, 2003.

NOTE 2 - RELATED PARTY TRANSACTIONS

During the fiscal year ended  September 30, 2002, the Company  subleased  office
space from B & G Acceptance Corp., a company controlled by a beneficial owner of
the  Company.  The Company paid $2,200 a month for the office space and $3,800 a
month for office  expenses.  The Company  moved its offices to a new location on
November 1, 2003. The new lease is with an unrelated party.

On July 17, 2002, Boca First Capital,  LLLP, a Florida limited liability limited
partnership  acquired control of Capitol  Communities  Corporation.  The Company
entered into a Business Loan  Agreement with Boca First Capital LLLP dated April
26, 2002 to borrow up to the sum of $3,000,000  from Boca First Capital LLLP. On
September  27,  2002,  the line of  credit  was  increased  from  $3,000,000  to
$4,000,000.

As  of  September  30,  2003,  the  Company  has  drawn   $1,255,000.00  on  the
$4,000,000.00  credit line from Boca First  Capital  LLLP  evidenced by the Boca
Note secured by substantially all of the assets of the Operating Subsidiary.  As
of December  31,  2003,  the balance on the credit line was  $1,245,000.00.  The
collateral  securing  the Boca Note,  includes a mortgage on the  remaining  696
acres of the Maumelle  Property,  1,000 shares of common stock of the  Operating
Subsidiary owned by the Company,  representing one hundred percent of the issued
and outstanding  shares and a note  receivable  payable on March 26, 2005 with a
face value of  $1,000,000.00,  respectively,  with an annual rate of interest of
6.25%.  The Boca  Credit Line  matures on  November 1, 2004,  and has an initial
interest  rate of ten percent  (10%) per annum and will,  on a quarterly  basis,
adjust to a rate,  which is equal to the greater of ten percent per annum or one
percent  (1%)  above the prime  rate,  in effect  on that  date.


                                      F-8
<PAGE>

<TABLE>


CAPITOL FIRST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003

NOTE 2 -RELATED PARTY TRANSACTIONS - (CONTINUED)

Commencing in September,  2002, the Company  entered into an informal  agreement
with a related party for consulting services. The monthly fee is $2,500.

The Company has a five-year  written agreement with an individual to perform the
duties of President.  Under the agreement,  which became effective on October 1,
2001, he is to be  compensated at a  rate of $20,000  per month.  The employment
agreement was modified on April 24, 2002, to reduce the  individual's  salary to
$10,000   per   month  due  to  the   financial   condition   of  the   company.
Notwithstanding,  the President has agreed,  as of September 27, 2002, to forego
his salary  until the Company is in a financial  position to pay such  expenses.
The Company is not a party to any other employment agreements.

NOTE  3- NOTES RECEIVABLE

On January 10,  2003,  West  Maumelle  L.P.,  retired its debt to the  Operating
Subsidiary,  comprised  of a promissory  note in the face amount of  $1,070,000,
with a cash payment of  $500,000.00  and an assignment of a $640,000  promissory
note made by  Transcontinental  Realty  Investors,  Inc. (the  "Transcontinental
Note"),  a Nevada  corporation,  and payable to West  Maumelle L.P. The $640,000
note is secured by a mortgage to certain property located in Maumelle, Arkansas,
and pays interest at a rate of 5.75% per annum with interest paid monthly,  with
a maturity date of July 10, 2004.  The Company has agreed to allow West Maumelle
to repurchase the  Transcontinental  Note for a period of 90 days, from the date
of assignment, at a discounted rate that increases each 30-day period.

The  Company  renewed  Note  2 owed  by  West  Maumelle  L.P.  to the  Operating
Subsidiary in the face amount of $1,030,000.00.  The new note, with a face value
of $1,000,000.00,  bears interest at a rate of 5.75% per annum with interest due
annually,  with a maturity date of January 10, 2006. The Renewal Note is secured
by a mortgage to certain property located in Maumelle,  Arkansas,  and is junior
to a senior  mortgage from Great Southern Bank.  West Maumelle L.P., also made a
unsecured note payable to the Operating  Subsidiary in the amount of $46,170.00,
with the unpaid principal due and payable on April 10, 2003.

NOTE 4 - NOTES PAYABLE Notes payable consist of the following:
<S>                                                                                          <C>
Notes Payable - Various
Unsecured notes, interest from 10.90% to 14.00% with various maturities.                     $     328,723

Note Payable - Boca First Capital,  LLLP (Related Party) Secured Line of Credit.
The Boca Credit Line  matures on November 1, 2004,  and has an initial  interest
rate of ten percent (10%) per annum and will, on a quarterly basis,  adjust to a
rate which is equal to the greater of ten percent per annum or one percent  (1%)
above the prime rate, in effect on that date. The  collateral  securing the Boca
Note includes a subordinated mortgage on the remaining 736 acres of the Maumelle
Property;  1,000 shares of common stock of the Operating Subsidiary owned by the
Company,  representing one hundred percent of the issued and outstanding shares;
and a  note  receivable  payable  on  March  26,  2005  with  a  face  value  of
$1,000,000.00 and an annual rate of interest of 6.25%.                                       $  1,255,000

Note Payable - New Era
Mortgage secured by approximately 68 acres of land in Maumelle, Arkansas.  The
note bears interest at a rate of 13% per annum and has been verbally extended to
November, 2004.  The mortgage obligation originated from the assumption of
liabilities as part of the dissolution of TradeArk Properties, LLC.                          $  1,665,857


                                      F-9
<PAGE>

CAPITOL FIRST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003

NOTE 4 -NOTES PAYABLE - (CONTINUED)

Note Payable - Trade Partners, Inc.
Partial reimbursement to Trade Partners for expenses paid for TradeArk Properties
as part of dissolution agreement.  The note bears no interest and is payable when
Tract D is sold.                                                                             $    580,000
Notes Payable - Noble Investments
In September, 2003, the Company issued $3,000,000 in secured promissory notes
pursuant to Rule 506 of Regulation D of the Securities and Exchange Commission.
The notes bear interest at a rate of 8% per annum and are secured by 206 acres of
land.  The notes mature in September, 2006.                                                  $  3,000,000
                                                                                             ------------






Total Note Obligations                                                                       $  6,829,580
Less: Short-term Maturities                                                                  $    908,723
                                                                                             ------------
Long-term Maturities                                                                         $  5,920,857
                                                                                             ============

Maturities on the  long-term  note  obligations  are as follows at September 30,
2003:
2004                                                                                          $ 1,665,857
2005                                                                                          $ 1,255,000
2006                                                                                          $ 3,000,000

</TABLE>


NOTE 5 - INVESTMENT IN TRADEARK PROPERTIES, LLC

The Company and its  partner,  Trade  Partners,  Inc. (a Michigan  corporation),
agreed to dissolve Trade Partners,  Inc.  effective January 8, 2003. The Company
reacquired  approximately  251 acres of real  property  in  exchange  for giving
TradeArk  Properties,  LLC the Company's 35.16% membership interest in TradeArk.
The land,  comprised of single  family,  multi-family  and  commercial  land, is
located in the city of Maumelle,  the County of Pulaski,  Arkansas.  The Company
assumed  approximately three million five hundred thousand dollars  ($3,500,000)
in debt held by New Era Life Insurance Company, secured by the real property and
a $580,000 liability to Trade Partners. The real property received from TradeArk
has been  pledged  as  collateral  to Boca  First  Capital  LLLP to  secure  its
$4,000,000 line of credit.

On May 28, 2003,  the Company  completed the sale of  approximately  19 acres of
multi-family land of the Maumelle  Property.  The multi-family tract was used to
partially  secure a loan  from New Era  Insurance  Company  and a loan from Boca
First  Capital  LLLP,  junior to the New Era loan.  From the sale,  the  Company
received  gross  proceeds of  $700,882.20  and net proceeds of $38,673.07  after
closing costs and a partial payoff in the amount of $606,674.00 to New Era.

On July 1, 2003, the company  completed the sale of  approximately  192 acres of
single family  residential land for a gross sales price of $2,016,000,  with net
proceeds of  $491,781.83  after closing costs and a partial payoff in the amount
of $1,384,592 to New Era.


NOTE 6 - CAPITAL TRANSACTIONS
On October 18,  2001,  the Company  issued  100,000  shares of common stock to a
consultant of the Company,  in  consideration  of cash at the price of $0.05 per
share.  The Company  relied on Section 4 (2) of the  Securities  Act of 1933, as
amended ("Securities Act"), in agreeing to issue such securities.

On October 18, 2001, the Company issued  6,000,000  shares of common stock to an
affiliated  company  beneficially  owned  by the  Company's  president,  for the
purchase  price of $0.05 per share  payable in a note payable due  September 30,
2002.  Additional  compensation for services was recognized at the rate of $0.10


                                      F-10
<PAGE>

CAPITOL FIRST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003

NOTE 6 - CAPITAL TRANSACTIONS - (CONTINUED)

per share.  The Company relied on Section 4 (2) of the Securities Act of 1933 in
agreeing to issue such securities.

On October 18, 2001, the Company issued 10,000,000 shares of common stock to the
Company's president, in consideration of and in lieu of unpaid cash compensation
and  benefits  at the  price of $0.05 per  share.  Additional  compensation  for
services was  recognized at the rate of $0.10 per share.  The Company  relied on
Section  4 (2)  of  the  Securities  Act of  1933  in  agreeing  to  issue  such
securities.

On February 25, 2002,  the Company  issued  500,000 shares of common stock to an
advisor  to the  Company,  in  consideration  of  and in  lieu  of  unpaid  cash
compensation  at the price of $0.10 per share.  Such shares were issued pursuant
to a Non-Qualified  Employee Stock Option Plan registered on March 6, 2002, with
the Securities and Exchange Commission.

On February  25, 2002 the Company  issued  500,000  shares of common stock to an
advisor  to the  Company,  in  consideration  of  and in  lieu  of  unpaid  cash
compensation  at the price of $0.10 per share.  On March 29, 2002 an  additional
75,000  shares were issued in lieu of unpaid cash  compensation  at the price of
$0.05 per share.  Such shares were issued pursuant to a  Non-Qualified  Employee
Stock Option Plan  registered on March 6, 2002, with the Securities and Exchange
Commission.

On February  25, 2002 the Company  issued  600,000  shares of common  stock to a
consultant  to the  Company,  in  consideration  of and in lieu of  unpaid  cash
compensation  at the price of $0.10 per share.  Such shares were issued pursuant
to a Non-Qualified  Employee Stock Option Plan registered on March 6, 2002, with
the Securities and Exchange Commission.

On February 25, 2002 the Company issued  2,000,000  shares of restricted  common
stock to a director of the Company,  in  consideration  of and in lieu of unpaid
cash compensation at the price of $0.05 per share. The Company relied on Section
4 (2) of the Securities Act of 1933 in agreeing to issue such securities.

On February 25, 2002 the Company  issued  500,000  shares of  restricted  common
stock to an advisor to the Company,  in  consideration  of and in lieu of unpaid
cash compensation at the price of $0.05 per share. The Company relied on Section
4 (2) of the Securities Act of 1933 in agreeing to issue such securities.

On February 25, 2002 the Company  issued  100,000  shares of  restricted  common
stock to an advisor to the Company,  in  consideration  of and in lieu of unpaid
cash compensation at the price of $0.05 per share. The Company relied on Section
4 (2) of the Securities Act of 1933 in agreeing to issue such securities.

On March 26, 2002 the Company issued, 5,000 shares of common stock to an advisor
to the Company,  in consideration of and in lieu of unpaid cash  compensation at
the price of $0.0625 per share.

On March 26,  2002 the  Company  issued  140,000  shares  of common  stock to an
advisor  to the  Company,  in  consideration  of  and in  lieu  of  unpaid  cash
compensation at the price of $0.0625 per share.

On April 18, 2002 the Company issued 200,000 shares of the Corporation's  Common
Stock to the president of the Company in  consideration of and in lieu of unpaid
reimbursements  at the  price of $0.045  per  share.  Such  shares  were  issued
pursuant to a  Non-Qualified  Employee Stock Option Plan  registered on March 6,
2002, with the Securities and Exchange Commission.

On April 18, 2002 the Company issued 200,000 shares of the Corporation's  Common
Stock to an affiliate and advisor of the of the Company in  consideration of and
in lieu of cash  compensation at the price of $0.045 per share. Such shares were
issued  pursuant to a  Non-Qualified  Employee  Stock Option Plan  registered on
March 6, 2002, with the Securities and Exchange Commission.


                                      F-11
<PAGE>


CAPITOL FIRST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003

NOTE 6 - CAPITAL TRANSACTIONS - (CONTINUED)

On April 18, 2002 the Company issued 200,000 shares of the Corporation's  Common
Stock an affiliate and advisor of the Company in consideration of and in lieu of
cash  compensation  at the price of $0.045 per share.  Such  shares  were issued
pursuant to a  Non-Qualified  Employee Stock Option Plan  registered on March 6,
2002, with the Securities and Exchange Commission.

On April 18, 2002 the Company issued 200,000 shares of the Corporation's  Common
Stock  an  advisor  to the  Company,  in  consideration  of and in  lieu of cash
compensation at the price of $0.045 per share.  Such shares were issued pursuant
to a Non-Qualified  Employee Stock Option Plan registered on March 6, 2002, with
the Securities and Exchange Commission.

Effective  August 15,  2002,  the Company had agreed to exchange  $4,198,271  in
debt, including principal and interest, with a group of existing promissory note
security holders ("Note Holders") for 4,198,271 shares of Convertible  Preferred
Stock,  Series A Non-Voting  stock (the "Series A Preferred  Stock"),  par value
$0.01 per  share.  Each share of Series A  Preferred  Stock  bears a  cumulative
dividend rate of 5.25% per annum.  The Series A Preferred Stock, in the event of
any  liquidation,  dissolution  or winding up of the  Company,  is senior to the
holders of Common Stock.  The Company relied on Section  3(a)(9) and Rule 145 of
the  Securities  Act in agreeing to issue such  securities.  As of September 30,
2002 the Company had issued 3,843,698 shares of Series A Preferred Stock to Note
Holders.

On August 12, 2002 the Company  repurchased 25,000 of the Company's Common Stock
at $0.1058 per share.

On August 20, 2002 the Company  repurchased 47,000 of the Company's Common Stock
at $0.1047 per share.

On August 12, 2002 the Company  repurchased  5,300 of the Company's Common Stock
at $0.1068 per share.

For the year ended  September 30, 2003,  the Company  issued 293,893 of Series A
Preferred Stock to noteholders to satisfy obligations.

In September,  2003,  the Company  issued 200,000 shares of S-8 common stock for
consulting services valued at $14,000.

NOTE 7 - NON-QUALIFIED EMPLOYEE STOCK OPTION PLAN
The  Company  has a Stock  Option  Plan under  which  directors,  officers,  key
consultants and other persons  employed by the Company may be granted options to
purchase  shares of the Company's  authorized but unissued or reacquired  common
stock.  The maximum  number of shares  available for issuance  under the Plan is
3,000,000  shares.  As of  September  30,  2003 the  maximum  number  of  shares
available for future grants under the Plan is 525,000 shares. Under the plan the
option exercise price shall not be less than the Fair Market Value of the stock.
Options  currently  expire no later than 10 years from the grant date.  Proceeds
received by the Company from  exercises of stock  options are credited to common
stock and additional paid-in capital. Additional information with respect to the
Plan's stock option activity is as follows:

                                        Number of Shares     Weighted Average
                                                              Exercise Price
Outstanding at September 30, 2002                 0                    0
Granted                                     200,000                $0.07
Exercised                                   200,000                $0.07
Cancelled                                         0                    0
Outstanding at September 30, 2003                 0                    0


                                      F-12
<PAGE>

CAPITOL FIRST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003

NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company has  subsequently in November,  2003,  executed a 31 month lease for
its office facility in Boca Raton, Florida. Minimum annual lease payments are as
follows as of September 30, 2003:

2004     $28,550
2005     $29,690
2006     $12,780

NOTE 9 - LEGAL PROCEEDINGS
The Company is not involved in any other  litigation,  other than those  actions
arising  from the normal  course of business.  Management  does not believe will
have a material effect on the Company's operations.

NOTE 10 - SUBSEQUENT EVENTS

The Company in a newly formed subsidiary,  Interfund Mortgage  Corporation,  has
subsequently made secured short-term loans of $2,328,000.














                                      F-13
<PAGE>



         EXHIBITS

         The  following  Exhibits  are filed as part of this  Report.  (Exhibits
numbers correspond to the exhibits required by Item 601 of Regulation S-B for an
annual report on Form 10-KSB:

         See Financial Statements starting at F-1.

         3.2(1)   Capitol First Corporation, Certificate of Amendment filed with
                  the Secretary of State of Nevada on October 15, 2003;

         11       Statement re: computation of per share earnings

         21.1     Subsidiaries of the Registrant.

         21.1(1)  Interfund Mortgage Corp., Articles of Incorporation filed with
                  the Secretary of State of Florida on October 8, 2003;

         21.1(2)  Capitol  Development,  Inc.,  Articles of Incorporation  filed
                  with the Secretary of State of Nevada on October 20, 2003;

         21.1(3)  Capitol  Management,  LLC, Articles of Organization filed with
                  the Secretary of State of Florida on December 1, 2003; and

         21.1(4)  Interfund  Investment  Fund I, LLC,  Articles of  Organization
                  filed with the  Secretary  of State of Florida on  December 1,
                  2003.

         31.1     Section 302 Certification

         31.2     Section 302 Certification

         32.1     Section 906 Certification

         32.2     Section 906 Certification

         (b) REPORTS ON FORM 8-K

         The following  reports on Form 8-K were filed by the Company during the
fiscal quarter ended September 30, 2003:

         None

ITEM 14. CONTROLS AND PROCEDURES

         DISCLOSURE  CONTROLS AND PROCEDURES.  The Company maintains  disclosure
controls and procedures that are designed to ensure that information required to
be  disclosed  in our  Securities  Exchange  Act of 1934  reports  is  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our  management,  including our Chief  Executive  Officer and  Treasurer,  as
appropriate,  to allow timely decisions regarding required disclosure. As of the
end of the period  covered by this report,  September  30, 2003, we completed an
evaluation,  under the supervision and with the participation of our management,
including our Chief Executive Officer and Treasurer, of the effectiveness of the
design and  operation  of our  disclosure  controls and  procedures  pursuant to
Securities  Exchange Act of 1934 Rules  13a-14(C)) and 15d-14c).  Based upon the
foregoing,  our Chief  Executive  Officer and our Treasurer  concluded  that our
disclosure  controls and procedures are effective in connection  with the filing
of this annual  report on Form 10-KSB for the fiscal  year ended  September  30,
2003.


                                       34
<PAGE>



         CHANGES IN INTERNAL CONTROLS.  There were no significant changes in our
internal  controls  over  financial  reporting  during  the  fiscal  year  ended
September 30, 2003 that have  materially  affected or are  reasonably  likely to
materially affect, our internal controls over financial reporting.

         PRINCIPAL  ACCOUNTING  FEES AND SERVICES.  The aggregate fees billed by
Baum & Company,  PA were $20,000 for the fiscal year ended  September  30, 2003,
and  $20,000  for the fiscal  year ended  2002.  Fees for review of the  interim
financial statements for the fiscal year ended 2003, were approximately $12,000.
SIGNATURES  In  accordance  with  Section 13 or 15(d) of the  Exchange  Act, the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
there unto duly authorized.

         Date:                            CAPITOL FIRST CORPORATION

         January 13, 2004                 /s/ Michael G. Todd
                                              ---------------
                                              Michael G. Todd, President & CEO

         January 13, 2004                /s/  Ashley B. Bloom
                                              ---------------
                                              Ashley B. Bloom, Treasurer

         In accordance  with the Exchange Act, this Report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.

         Date:                            CAPITOL FIRST CORPORATION

         January 13, 2004                 /s/ Michael G. Todd
                                              ---------------
                                              Michael G. Todd, President &
                                              CEO, Director

         January 13, 2004                 /s/ Ashley B. Bloom
                                              ---------------
                                              Ashley B. Bloom, Treasurer

         January 13, 2004                 /s/ Raymond Baptista
                                              ----------------
                                              Raymond Baptista, Director

         January 13, 2004                 /s/ Donald R. LeGault
                                              -----------------
                                              Donald R. LeGault






                                       35