UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                   FORM 10-QSB

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended June 30, 2004

                                       OR

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

       For the transition Period from ________________ to ________________

                        Commission file number 000-24057

                        Rush Financial Technologies, Inc.
                        ----------------------------------
             (Exact name of registrant as specified in its charter)

                 Texas                             75-2375969
                 -----                             ----------
       (State of Incorporation)        (I. R. S. Employer Identification No.)

                 13355 Noel Road, Suite 300, Dallas, Texas 75240
                 -----------------------------------------------
                                  972-450-6000
                ------------------------------------------------
                (Issuer's telephone number, including area code)


         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                                 Yes XXX No ____

         State the number of shares  outstanding of each of the issuer's classes
of common equity as of June 30, 2004:  19,038,685 shares of common stock,  $0.01
par value.

         Transitional Small Business Disclosure Format;

                                 Yes ____ No XXX


<PAGE>

PART I.  FINANCIAL INFORMATION
Item 1.           Financial Statements
































































<PAGE>
<TABLE>
<CAPTION>

           RUSH FINANCIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

                       CONSOLIDATED BALANCE SHEETS

                                                                                           (Unaudited)
                                                                                            June 30,      December 31,
                                 ASSETS                                                        2004            2003
                                                                                          ------------    ------------
<S>                                                                                       <C>             <C>
Current assets
         Cash and cash equivalents                                                        $    134,480    $    171,088
         Accounts receivable                                                                    33,003          17,008
         Prepaid expenses and deposits                                                          87,904          84,043
                                                                                          ------------    ------------
             Total current assets                                                              255,387         272,139
                                                                                          ------------    ------------
Capitalized software development costs, net of accumulated amortization                      1,003,796       1,288,245
Property and equipment, net of accumulated depreciation                                         74,886          81,359
Intangibles, net                                                                               295,923         213,500
Goodwill                                                                                       200,247            --
Deferred financing fees, net                                                                    12,702          19,630
Deferred offering costs                                                                         94,113            --
                                                                                          ------------    ------------
             Total assets                                                                 $  1,937,054    $  1,874,873
                                                                                          ============    ============

                  LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities
         Accounts payable                                                                 $    871,752    $    788,826
         Accrued expenses and other liabilities                                              1,296,354         967,817
         Common stock pending issuance (including $513,045 to related
             parties at December 31, 2003)                                                        --         1,007,319
         Liabilities acquired in 2001 acquisition                                              332,098         332,098
         Convertible notes payable (including $316,816 and $185,000 due to related
             parties, respectively), net of unamortized debt discount of $4,547 and
             $0, respectively                                                                  480,453         185,000
         Notes payable                                                                          20,607            --
         Advances from related parties                                                          20,000          55,000
                                                                                          ------------    ------------
             Total current liabilities                                                       3,021,264       3,336,060
                                                                                          ------------    ------------

Long-term notes payable                                                                           --            31,452
Convertible notes payable (including $122,007 due to related parties),
         net of unamortized debt discount of $15,872                                              --           284,128
Convertible bonds payable, net of unamortized debt discount of $32,195
          and $107,649, respectively                                                           467,805         564,351
                                                                                          ------------    ------------
             Total liabilities                                                               3,489,069       4,215,991
                                                                                          ------------    ------------

Commitments and contingencies

Shareholders' deficit
         Preferred stock - cumulative; $10 par value; 14,063 shares
             issued and outstanding; liquidation preference of $10 per share                   140,630         140,630
         Preferred stock - convertible cumulative; $10 par value; 51,980 and 54,480
             shares issued and outstanding, respectively, liquidation preference of $10
             per share                                                                         519,800         544,800
         Common stock - $0.01 par value, 50,000,000 and 10,000,000 shares
             authorized, respectively; 19,038,685 and 9,960,444 shares issued
             and outstanding respectively                                                      190,386          99,604
         Common stock subscriptions receivable                                                  (3,277)         (3,277)
         Common stock issued for assets not yet received                                          --           (36,000)
         Additional paid in capital                                                         14,755,256      12,768,184
         Accumulated deficit                                                               (17,154,810)    (15,855,059)
                                                                                          ------------    ------------
             Total shareholders' deficit                                                    (1,552,015)     (2,341,118)
                                                                                          ------------    ------------
             Total liabilities and shareholders' deficit                                  $  1,937,054    $  1,874,873
                                                                                          ============    ============
</TABLE>

           See accompanying notes to consolidated financial statements

                                       3
<PAGE>
<TABLE>
<CAPTION>

               RUSH FINANCIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

                                                  For the Three Months             For the Six Months
                                                     Ended June 30,                  Ended June 30,
                                             ----------------------------    ----------------------------
                                                  2004            2003            2004            2003
                                             ------------    ------------    ------------    ------------
<S>                                          <C>             <C>             <C>             <C>
Revenue:
        Investment services                  $    519,771    $    274,405    $  1,048,762    $    448,203
        Software services                          43,118            --            87,908            --
                                             ------------    ------------    ------------    ------------
                     Total revenue                562,889         274,405       1,136,670         448,203
                                             ------------    ------------    ------------    ------------
Expenses:
        Investment services                       307,309         372,037         771,687         459,271
        Software services                         243,224            --           512,100            --
        General and administrative                203,003         232,882         457,900         635,341
        Depreciation and amortization             228,502         198,762         436,894         393,033
        Loss on settlement of liabilities          83,100            --           108,130            --
                                             ------------    ------------    ------------    ------------
                     Total expenses             1,065,138         803,681       2,286,711       1,487,645
                                             ------------    ------------    ------------    ------------

Operating loss                                   (502,249)       (529,276)     (1,150,041)     (1,039,442)

Interest expense                                   46,347          45,177         149,710          90,617
                                             ------------    ------------    ------------    ------------

Net loss                                     $   (548,596)   $   (574,453)   $ (1,299,751)   $ (1,130,059)
                                             ============    ============    ============    ============


Basic and diluted net loss per share
     attributable to common
     shareholders                            $      (0.03)   $      (0.06)   $      (0.07)   $      (0.12)
                                             ============    ============    ============    ============

Weighted average common shares
     outstanding, basic and diluted            18,834,820       9,799,176      17,834,027       9,749,220
                                             ============    ============    ============    ============

</TABLE>

          See accompanying  notes to consolidated  financial  statements


                                       4
<PAGE>
<TABLE>
<CAPTION>

               RUSH FINANCIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the Six Months ended June 30, 2004 and 2003
                                   (unaudited)

                                                                     2004           2003
                                                                 -----------    -----------
<S>                                                              <C>            <C>
Cash flows from operating activities:
     Net loss                                                    $(1,299,751)   $(1,130,059)
     Adjustments to reconcile net loss to net cash used in
     operating activities:
          Common stock issued for compensation, services and
               expenses                                               53,545         20,162
          Depreciation and amortization                              369,864        376,867
          Amortization of debt discount                               86,779          5,892
          Amortization of deferred financing fees                      6,928          6,928
          Amortization of intangible                                  67,030         16,166
          Loss on settlement of liabilities                          108,130           --
          Change in assets and liabilities, net of effects
            of acquistion:
              (Increase) decrease in assets:
                  Accounts receivable                                 (3,382)        14,521
                  Prepaid expenses and deposits                       (3,861)        51,353
               Increase (decrease) in liabilities:
                 Accounts payable                                     80,935         97,097
                 Accrued expenses and other liabilities              321,895        212,470
                                                                 -----------    -----------
Net cash used in operating activities                               (211,888)      (328,603)
                                                                 -----------    -----------

Cash flows from investing activities:
     Cash acquired in acquisition                                      4,446           --
     Purchase of equipment                                            (9,092)          --
     Capitalization of software development costs                    (61,116)       (54,924)
                                                                 -----------    -----------
Net cash used in investing activities                                (65,762)       (54,924)
                                                                 -----------    -----------

Cash flows from financing activities:
     Increase in bank overdraft                                         --            5,636
     Proceeds from sale of common stock                              303,000           --
     Payments on notes payable                                       (10,845)       (11,606)
     Advances from related parties                                      --           95,000
     Proceeds from convertible bonds (including $0 and $10,000
          from a related party, respectively)                         43,000        233,000
     Deferred offering costs                                         (94,113)          --
                                                                 -----------    -----------
Net cash provided by financing activities                            241,042        322,030
                                                                 -----------    -----------

Net decrease in cash and cash equivalents                            (36,608)       (61,497)
Cash and cash equivalents at beginning of period                     171,088         64,278
                                                                 -----------    -----------
Cash and cash equivalents at end of period                       $   134,480    $     2,781
                                                                 ===========    ===========


                                       5
<PAGE>

Supplemental Disclosure of Cash Flow Information:
     Cash paid for interest                                      $      --      $      --
     Cash paid for income taxes                                  $      --      $      --

Supplemental Disclosure of Non-Cash Information:
     Preferred stock dividend accrued                            $    30,282         33,207
     Preferred stock converted into convertible bonds            $      --           85,000
     Common stock issued as payment for accrued interest
          and accrued dividends                                  $    50,103    $      --
     Common stock issued in the LostView acquisition             $   337,500    $      --
     Receipt of asset purchased with common stock                $    36,000    $    88,000
     Conversion of bonds to common stock                         $   215,000    $      --
     Common stock issued for pending issuances                   $ 1,007,319    $      --
     Common stock issued for repayment of advances
          from related parties                                   $   116,667    $      --

</TABLE>

           See accompanying notes to consolidated financial statements


                                       6
<PAGE>

          NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1.   Basis of Presentation and Company Information

     The  financial  statements  included  herein  have  been  prepared  by Rush
Financial  Technologies,   Inc.,  without  audit,  pursuant  to  the  rules  and
regulations of the Securities and Exchange  Commission.  Certain information and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted  pursuant to such rules and  regulations,
although the Company believes that the disclosures contained herein are adequate
to make the information presented not misleading.  In the opinion of management,
the  information  furnished  in the  unaudited  interim  consolidated  financial
statements  reflects all adjustments  which are ordinary in nature and necessary
to present fairly the Company's  financial  position,  results of operations and
changes in financial  position for such interim period.  These interim financial
statements should be read in conjunction with the Company's financial statements
and the notes thereto as of and for the year ended  December 31, 2003,  included
in the Company's  annual  report on Form 10-KSB for the year ended  December 31,
2003.

     Rush  Financial   Technologies,   Inc.,  dba  RushTrade(R)  Group  ("RSHF,"
"RushTrade  Group,"  "we," "our" or "the  Company"),  is a holding  company that
operates through two primary subsidiaries.  We were formed in September 1990 and
commenced operations in March 1991 as Rushmore Capital Corporation.  In 1997, we
changed our name to Rushmore  Financial Group,  Inc., and on January 26, 2004 to
our current name.

     RushTrade Securities, Inc. ("RushTrade"),  a wholly-owned subsidiary of the
Company,   is  registered   under  federal  and  state   securities  laws  as  a
broker-dealer and is a member of the National  Association of Securities Dealers
("NASD"). RushTrade does not offer advice or trade recommendations. All customer
accounts are self-directed and strict suitability  requirements along with other
disclosures  must be met and  agreed to before the firm  accepts a new  account.
RushTrade is a "fully disclosed introducing broker-dealer," meaning that it does
not hold any customer funds or securities nor have a seat on any stock exchange.
RushTrade  "clears" its  securities  trades  through a third party,  which holds
customer funds and securities and executes trades for such transactions.

     RushGroup  Technologies,  Inc. formerly RushTrade Software Services,  Inc.,
("RushGroup"),  a  wholly-owned  subsidiary  of  the  Company,  is  the  primary
technology  development unit of the Company, and is expected to become a Service
Bureau and a licensor of real-time  market data  services  and various  software
applications  of the RushTrade  platform to  broker-dealers  and other financial
institutions.  Through  June 30,  2004,  RushGroup  had  generated  only minimal
revenue.

     Rushmore Securities  Corporation ("RSC"), a wholly-owned  subsidiary of the
Company,  was also  registered  under  federal  and state  securities  laws as a
broker-dealer and was a member of the National Association of Securities Dealers
("NASD") during the years prior to and including  2003. RSC is largely  inactive
due to the Company's  decision to transition  away from the  traditional  retail
brokerage  business with its lower  operation  margins and the inherent risks of
outside   independent   registered    representatives    offering   advice   and
recommendations.  RSC filed a  broker-dealer  withdrawal  of  membership  ("Form
BD/W") with the NASD in December 2003. RSC has no substantial  revenue-producing
assets and no longer has any outside independent registered representatives.

     Rushmore  Insurance  Services,   Incorporated  ("Rushmore  Agency")  is  an
insurance agency and an affiliate of the Company by means of service agreements.
The agency formerly offered life, health, and disability insurance and annuities
through a network of agents,  most of which were terminated during 2002 and 2003
in accordance with our repositioning  plan.  Rushmore Agency is 100% owned by D.
M.  "Rusty"  Moore,  Jr.  The  Company  and  Mr.  Moore  have  entered  into  an
administrative  services agreement whereby net revenues and expenses are charged
via a management fee to Rushmore  Agency by the Company as allowed by regulatory
requirements.   Rushmore  Agency  has  been  consolidated  in  the  accompanying
consolidated  financial  statements.  Rushmore Agency is largely inactive due to
the Company's decision to transition away from the traditional financial service
businesses.

     We were founded as a traditional  financial  services  company,  which grew
from a start-up into a retail  brokerage  organization for the sale of insurance
and investment products.  We completed numerous acquisitions and integrated them
into a retail brokerage  organization with a nationwide account base and network
of agents and registered representatives.  Our common stock began trading on the
Nasdaq  SmallCap  Market under the symbol "RFGI"  following  its initial  public
offering  in April  1998.  On August 23,  2002 the stock moved to the Nasdaq OTC
Bulletin Board Market.


                                       7
<PAGE>

     In  2000,  we  launched  a  multi-million  dollar  proprietary   technology
development  initiative in response to the  burgeoning  market for direct access
online  trading.  After more than three years of development and successful beta
testing,  we  introduced  our direct access  technology  platform in August 2002
under our RushTrade(R) brand. Currently, we expect RushTrade revenues, growth in
new accounts and trade volumes to continue their  quarter-to-quarter  increases,
now that the RushTrade business unit has become our primary source of revenue.

     As  part  of  our  repositioning  as  a  real-time   financial   technology
development and direct access online financial  services  company,  the board of
directors  approved a name change to Rush Financial  Technologies,  Inc.,  which
became effective upon shareholder approval and the filing of amended articles of
incorporation with the Secretary of the State of Texas in January 2004. With the
name change,  our ticker symbol on the OTC Bulletin  Board Market was changed to
"RSHF."

     The accompanying  financial  statements have been prepared assuming that we
will  continue as a going  concern.  At June 30, 2004,  our current  liabilities
exceeded our current  assets by  $2,765,077.  Also,  we incurred net losses from
continuing  operations  of  $2,475,947  in 2003  and  $3,131,636  in  2002,  and
$1,299,751 in the first six months of 2004.  Although we believe that we will be
able to continue to raise the necessary funds until we reach a sustainable level
of  profitability,  these matters raise  substantial  doubt about our ability to
continue  as a going  concern.  The  accompanying  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.

     We have taken several  steps to increase cash by the use of borrowings  and
equity.  In February  2004, we commenced a private  placement of common stock to
raise operating capital.  The offering closed in March 2004, and we sold 538,178
shares  at an  average  price of $0.32 per  share  for  total  net  proceeds  of
approximately $175,000.  Additionally, in the second quarter of 2004, we sold an
additional 406,666 shares for total net proceeds of approximately $128,000.

     On May 4, 2004, we filed with the Securities and Exchange  Commission  (the
"Commission")  a  Registration   Statement  on  Form  SB-2,  together  with  all
amendments,  schedules and exhibits thereto,  pursuant to the Securities Act for
the purpose of raising  additional  capital.  We retained the services of Invest
Linc Securities, LLC (the "Placement Agent"), to offer and sell our common stock
on a "best  efforts"  basis  which is  contingent  upon the sale of a minimum of
1,000,000 shares of our common stock and up to a maximum of 11,000,000 shares of
common stock.  Assuming the minimum  offering is attained,  with net proceeds of
$243,000, we believe we can fund execution of the RushTrade business plan during
2004, but will be unable to meet any contingent liability obligations or enhance
and market the RushGroup software products.  If we are able to raise the maximum
amount of the offering, net proceeds of approximately  $3,573,000,  and are able
to  successfully  execute  our  business  plan,  we  believe  we will  not  need
additional  financing in the foreseeable  future.  The Final  Prospectus on Form
424(b)(4) was declared effective and filed with the SEC on July 21, 2004.

2.   Use of Accounting Estimates

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported  financial
statement amounts and disclosures.  Accordingly, the actual amounts could differ
from those estimates.

3.       Industry Segment Information

     The Company's  segments have been identified based on products and services
offered, as well as risks assumed, in a manner consistent with the data utilized
by the Chief Executive Officer in evaluating operations. RSC and RushTrade offer
broker/dealer   services,  and  their  operations  have  been  included  in  the
Investment  Services segment.  Rushmore Agency's  operations,  for the most part
inactive,  have been  included in  Investment  Services.  The Software  Services
segment is  comprised of  RushGroup,  which  offers  licensing of the  RushTrade
direct  access  software  and other  arrangements  and is expected to become the
significant  focus for the Company in the future.  There is ongoing  development

                                       8
<PAGE>
<TABLE>
<CAPTION>

activity on the software to enhance its use to outside  entities;  however,  the
Company has received  minimal  revenue to date related to the Software  Services
segment.

     The assets of the parent company,  Rush Financial  Technologies,  Inc., are
used to support the  operations  of the two  primary  operating  divisions.  The
expenses  of the parent  company  are  included  in general  and  administrative
expenses.

     The  following   summarizes   the  Company's   industry   segment  data  of
identifiable assets, capital expenditures and depreciation and amortization:


                                                 June 30,
                                        ---------------------------
               Identifiable Assets           2004           2003
            ------------------------    ------------   ------------
            Investment Services         $    382,239   $    336,754
            Software Services              1,340,624      1,578,657
            Corporate                        214,191         63,056
                                        ------------   ------------
                       Total            $  1,937,054   $  1,978,467
                                        ============   ============

                         Three Months Ended June 30,    Six Months Ended June 30,
                         ---------------------------   ---------------------------
 Capital Expenditures         2004           2003           2004           2003
-----------------------  ------------   ------------   ------------   ------------
<S>                      <C>            <C>            <C>            <C>
Investment Services      $       --     $       --     $       --     $       --
Software Services              31,098         28,110         61,116         54,924
Corporate                       3,414           --            9,092           --
                         ------------   ------------   ------------   ------------
           Total         $     34,512   $     28,110   $     70,208   $     54,924
                         ============   ============   ============   ============

                         Three Months Ended June 30,    Six Months Ended June 30,
  Depreciation and       ---------------------------   ---------------------------
    Amortization              2004           2003           2004           2003
-----------------------  ------------   ------------   ------------   ------------
Investment Services      $     31,666   $      8,823   $     39,298   $     18,605
Software Services             190,019        172,911        363,691        345,822
Corporate                       6,817         17,028         33,905         28,606
                         ------------   ------------   ------------   ------------
           Total         $    228,502   $    198,762   $    436,894   $    393,033
                         ============   ============   ============   ============




                                       9
<PAGE>

     The  following  summarizes  our  industry  segment  operating  data for the
periods indicated:

                         Three Months Ended June 30,    Six Months Ended June 30,
                         ---------------------------   ---------------------------
       Revenue                2004           2003           2004           2003
-----------------------  ------------   ------------   ------------   ------------
Investment Services      $    519,671   $    264,389   $  1,048,662   $    438,187
Software Services              43,118           --           87,908           --
Corporate                         100         10,016            100         10,016
                         ------------   ------------   ------------   ------------
           Total         $    562,889   $    274,405   $  1,136,670   $    448,203
                         ============   ============   ============   ============


                         Three Months Ended June 30,    Six Months Ended June 30,
                         ---------------------------   ---------------------------
   Interest Expense           2004           2003           2004           2003
-----------------------  ------------   ------------   ------------   ------------
Investment Services      $         33   $        613   $         33   $      1,579
Software Services                 233           --              347           --
Corporate                      46,081         44,564        149,330         89,038
                         ------------   ------------   ------------   ------------
           Total         $     46,347   $     45,177   $    149,710   $     90,617
                         ============   ============   ============   ============


                         Three Months Ended June 30,    Six Months Ended June 30,
                         ---------------------------   ---------------------------
       Expense                2004           2003           2004           2003
-----------------------  ------------   ------------   ------------   ------------
Investment Services      $    420,611   $    372,037   $    915,650   $    769,301
Software Services             437,244        172,911        879,793        345,822
Corporate                     253,630        303,910        640,978        463,139
                         ------------   ------------   ------------   ------------
           Total         $  1,111,485   $    848,858   $  2,436,421   $  1,578,262
                         ============   ============   ============   ============


                         Three Months Ended June 30,    Six Months Ended June 30,
                         ---------------------------   ---------------------------
   Net Income (Loss)          2004           2003           2004           2003
-----------------------  ------------   ------------   ------------   ------------
Investment Services      $     99,111   $   (107,648)  $    133,013   $   (331,114)
Software Services            (394,126)      (172,911)      (791,884)      (345,822)
Corporate                    (253,581)      (293,894)      (640,880)      (453,123)
                         ------------   ------------   ------------   ------------
           Total         $   (548,596)  $   (574,453)  $ (1,299,751)  $ (1,130,059)
                         ============   ============   ============   ============

</TABLE>

4.   Reclassifications

     Certain  2003  balances  have  been  reclassified  to  conform  to the 2004
presentation.

5.    Net Loss Per Share

     Basic and  diluted  net loss per share is  computed  by  dividing  net loss
applicable  to common  shareholders  by the  weighted  average  number of common
shares outstanding for the period.  Common stock equivalents  representing stock
options and warrants,  convertible  bonds,  notes,  and preferred stock were not
included  in the  computation  of diluted net loss per share  because  they were
antidilutive.

     Net loss per  share  applicable  to  common  shareholders  for the  periods
indicated are computed using the following information:


                                       10
<PAGE>
<TABLE>
<CAPTION>

                         Three Months Ended June 30,    Six Months Ended June 30,
                         ---------------------------   ---------------------------
                              2004           2003           2004           2003
                         ------------   ------------   ------------   ------------
<S>                      <C>            <C>            <C>            <C>
Net loss                 $   (548,596)  $   (574,453)  $ (1,299,751)  $ (1,130,059)
Dividends on preferred
stock                         (14,860)       (15,647)       (30,282)       (33,207)
                         ------------   ------------   ------------   ------------
Net loss applicable to
common shareholders      $   (563,456)  $   (590,100)  $ (1,330,033)  $ (1,163,266)
                         ============   ============   ============   ============
Net loss per share
applicable to common
shareholders             $      (0.03)  $      (0.06)  $      (0.07)  $      (0.12)
                         ============   ============   ============   ============

</TABLE>

6.   Acquisition

     We acquired LostView Development  Corporation  ("LostView") through a stock
purchase  agreement  effective  February 27, 2004, where we purchased all of the
outstanding  stock of LostView in exchange for 750,000  shares of our restricted
common stock at closing and an additional  750,000 shares to be issued all or in
part on December  31,  2004,  to the extent that  LostView's  primary  employees
fulfill  the  terms of their  employment  agreements.  LostView  is a  financial
technology  and  web  development   company  providing   professional   software
development  services  for  online  trading  and  document  management  systems.
RushTrade  Group  expects to benefit  from the  addition  of LostView in several
significant  ways.  By  utilizing  LostView's  resources,  RushGroup's  software
development  capabilities  will increase,  accelerating  its options and futures
trading development. RushGroup will also be better positioned to quickly add new
product enhancements, including the ability to capture market data directly from
the financial  exchanges.  Moreover,  RushTrade will gain  additional  levels of
redundancy  and fault  tolerance for its products and services.  RushGroup  will
also retain key employees of LostView, bringing valuable experience in real-time
financial software development, market data collection and distribution.

     The consideration for the purchase of LostView has been valued at $337,500,
based on the fair value of the stock issued on February 27, 2004. The contingent
consideration  will  be  recorded  when  the  contingency  is  resolved  and the
consideration is transferred.  This will result in an additional  element of the
cost of the  acquired  entity and will be valued using the current fair value of
the stock issued.

     The  acquisition was accounted for using the purchase method of accounting.
As such,  the assets and  liabilities  of LostView  have been  recorded at their
estimated  fair value and the results of  operations  have been  included in the
consolidated  results of  operations  from the date of  acquisition.  The excess
purchase  price  over  the fair  value of the  tangible  and  intangible  assets
acquired in the acquisition totaled $200,247 and was allocated to goodwill.

     The  following  is a summary  of the  amounts  assigned  to the  assets and
liabilities of LostView:

       Cash                                                         $ 4,446
       Accounts receivable                                           12,612
       Property and equipment                                         8,733
       Goodwill                                                     200,247
       Employment agreement (1 year amortization period)             63,453
       Intellectual Property (3 year amortization period)            50,000
       Accounts payable                                              (1,991)
                                                                ------------

       Total purchase price                                        $337,500
                                                                ============

None of the goodwill  recorded as a result of the  acquisition is expected to be
deductible for tax purposes.

Pro Forma Results

     The following  unaudited pro forma consolidated  results of operations have
been prepared as if the  acquisition  discussed above had occurred at January 1,
2003:


                                       11
<PAGE>
<TABLE>
<CAPTION>

                                      Three Months Ended June 30,    Six Months Ended June 30,
                                      ---------------------------   ---------------------------
                                           2004           2003           2004           2003
                                      ------------   ------------   ------------   ------------
<S>                                   <C>            <C>            <C>            <C>
Revenues                              $    562,889   $    360,010   $  1,317,491   $    614,973
Net loss attributed to
       common shareholders                (563,456)      (576,599)    (1,298,146)    (1,149,765)
Net loss per share attributed to
       common shareholders, basic
       and diluted                           (0.03)         (0.05)         (0.07)         (0.11)
Weighted average shares outstanding,
        basic and diluted               18,834,820     10,549,176     18,073,036     10,499,220

</TABLE>

7.   Convertible Bonds

     As of December  31,  2003 the  $1,500,000  offering  of 12% Senior  Secured
Convertible Bonds ("Bonds") was fully subscribed. The Bonds bear interest at 12%
per  annum and are  convertible  into our  common  stock at a rate of 50% of the
average market price of the stock for the ten days preceding conversion, but not
less than $0.15 per share.  Principal  and interest  will be repaid on or before
December 27, 2007, if not converted  prior. We may force conversion if the stock
trades above $2.00 per share for 10 consecutive  trading days. We calculated the
beneficial conversion feature embedded in the Bonds in accordance with EITF 98-5
and EITF 00-27 and recorded  $485,175 as a debt  discount.  The debt discount is
being amortized as interest expense over the term of the Bonds. Interest expense
related to the  amortization  of the debt  discount for the three and six months
ended June 30, 2004 was $17,689 and $75,454, respectively.

     During the six months ended June 30, 2004, $215,000 of Bonds converted into
1,039,664  shares of common stock and at June 30, 2004,  Bonds  payable  totaled
$467,805 net of unamortized debt discount of $32,195.

8.   Stock-Based Compensation

     We  account  for its  stock-based  employee  compensation  plan  using  the
intrinsic  value-based method prescribed by Accounting  Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
As such, compensation expense is recorded on the date of grant to the extent the
current market price of the underlying  stock exceeds the option exercise price.
We did not record  any  compensation  expense in the three and six months  ended
June 30, 2004 and 2003 as the exercise  prices of the options  issued equaled or
exceeded  the fair  market  value of the stock on the date of  issuance.  Had we
determined  compensation based on the fair value at the grant date for its stock
options  under  Statement of Financial  Accounting  Standards  ("SFAS") No. 123,
"Accounting for Stock-Based  Compensation," as amended by SFAS No. 148, net loss
and loss per share would have been increased as indicated below:

<TABLE>
<CAPTION>

                                                         Three Months                  Six Months
                                                        Ended June 30,               Ended June 30,
                                                 --------------------------   --------------------------
                                                     2004           2003          2004           2003
                                                 -----------    -----------   -----------    -----------
<S>                                              <C>            <C>           <C>            <C>
Net loss attributable to common stockholders,
     as reported                                 $  (563,456)   $  (590,100)  $(1,300,033)   $(1,163,266)
Add:  Stock-based employee compensation
     expense included in reported net loss              --             --            --             --
Deduct:  Stock-based employee compensation
     expense determined under fair value based
     method                                         (106,976)          --        (133,344)          --
                                                 -----------    -----------   -----------    -----------
Pro forma net loss                               $  (670,432)   $  (590,100)  $(1,463,377)   $(1,163,266)
                                                 ===========    ===========   ===========    ===========

Net loss per share
As reported                                      $     (0.03)   $     (0.06)  $     (0.07)   $     (0.12)
                                                 ===========    ===========   ===========    ===========
Pro forma                                        $     (0.04)   $     (0.06)  $     (0.08)   $     (0.12)
                                                 ===========    ===========   ===========    ===========

</TABLE>

                                       12
<PAGE>

9.   Shareholders' Deficit

     During the first  quarter of 2004 we issued  63,458  shares of common stock
(valued  at $21,744  based on the fair value of our common  stock on the date of
issuance) to employees as compensation, holders of $203,000 of convertible bonds
elected to convert  their bonds into  989,664  shares of common  stock,  750,000
shares of common  stock were issued for the  purchase  of  LostView  Development
Corporation,  9,212 shares of common stock were issued as directors fees (valued
at  $3,501  based on the fair  value of our stock on the date of  issuance)  and
$22,280 of accrued  interest and accrued  dividends  were  converted into 99,195
shares of common stock valued at $47,310 on the date of issuance. Since the fair
value of common stock  issued for accrued  interest  and accrued  dividends  was
greater than the amount owed, a loss was recorded  during the three months ended
March 31, 2004 for the difference which totaled $25,030.  Additionally,  538,178
shares of common stock were issued for proceeds of approximately $175,000.

     During the first quarter of 2004, we also issued 5,851,833 shares of common
stock to settle pending issuances from 2003.

     During the first  quarter of 2004, we granted  70,000  options to employees
and  directors.  The options have an exercise price of $0.38, a term of 10 years
and vest immediately.

     During the second  quarter of 2004 we issued 233,333 shares of common stock
(valued at $116,667  based on the fair value of our common  stock on the date of
issuance)  to settle an advance of $35,000 from  related  party.  Since the fair
value of the common stock issued as repayment of the advance exceeded the amount
owed,  a loss was  recorded  during the three months ended June 30, 2004 for the
difference,  which  totaled  $81,667.  56,000  shares of common stock (valued at
$28,300  based on the fair  value of our common  stock on the date of  issuance)
were issued to  employees  as  compensation,  holders of $12,000 of  convertible
bonds elected to convert their bonds into 50,000 shares of common stock, holders
of 2,500 shares of preferred stock elected to convert their preferred stock into
25,000 shares of common stock, and $1,360 of accrued interest was converted into
5,665 shares of common stock valued at $2,793 on the date of issuance. Since the
fair value of common  stock  issued for accrued  interest  was greater  than the
amount owed, a loss was recorded during the three months ended June 30, 2004 for
the  difference  which totaled  $1,433.  Additionally,  406,666 shares of common
stock were issued for proceeds of approximately $128,000.

10.  Payroll Tax Obligation

     The Company has an estimated  federal and state  payroll tax  obligation of
$317,382 at June 30, 2004. The Company has estimated  this  obligation to be the
amounts  of tax  withheld  from  employees  and the  employer  portion of Social
Security  Federal Tax  Obligation for the first,  second and fourth  quarters of
2003 and the first and  second  quarters  of 2004 in  addition  to an  estimated
accrual for interest and penalties.  There is no obligation  outstanding for the
third quarter 2003, as these taxes have been submitted.  This amount is included
in accrued  expenses  and other  liabilities  in the  accompanying  consolidated
balance sheets.

11.  Legal Proceedings

     From time to time our subsidiaries and we are engaged in legal  proceedings
and  arbitrations.  We believe some of these  proceedings  could have a material
effect  upon the  operations  or  financial  condition  of the Company if we are
unsuccessful in defending against the actions.

     Company  Proceedings.  On June 24, 2003, in Sumner Group Inc. d/b/a Datamax
Office  Systems  Leasing  Division  v.  Rushmore   Financial  Group;  Cause  No.
CC-03-7400-b;  County Court at Law No. 2, Dallas County,  Texas, a former vendor
filed a claim in the  Dallas  County  Court  claiming  that we failed to pay for
services  rendered  on a  copier  in the  amount  of  $39,710.  We have  filed a
counterclaim  alleging  overcharges  and  improper  installation  of a  software
product causing us  incalculable  harm. A jury trial is set for August 25, 2004.
We believe  the range of  possible  loss is up to  $55,000.  The Company has not
recorded a provision  for this matter as we intend to  vigorously  defend  these
allegations and believe the payment is not probable.

     On February 10, 2004, in Great Southern Life Insurance  Company v. Dewey M.
Moore, Jr. and Rushmore Insurance Services, Inc.; Cause No. CC-04-01666-C in the
County  Court at Law No. 3,  Dallas  County,  Texas,  a  provider  of  insurance
products for whom Rushmore Agency and D. M. Moore, Jr. acted as an agent,  filed
a claim in the Dallas County Court for overpaid commissions in excess of $70,000
plus  attorney's fees and interest.  Rushmore  Agency and D. M. Moore,  Jr. have

                                       13
<PAGE>

filed a response  disputing the claim.  We believe the range of possible loss is
up to $95,000.  The Company has not  recorded a provision  for this matter as we
intend to  vigorously  defend these  allegations  and believe the payment is not
probable.

     On March 18, 2004,  in  Citicapital  Technology  Finance,  Inc. v. Rushmore
Financial Group, Inc.; Cause No. 04-02267; 101st Judicial District Court, Dallas
County,  Texas,  a vendor filed a claim in the Dallas  District Court claiming a
total of $39,810 in delinquent  lease  payments,  plus  interest and  attorney's
fees,  and return of  equipment.  We dispute  the claims and plan to  vigorously
defend  ourselves  in this  matter.  At June 30, 2004 and  December  31, 2003 we
estimated  our  liability  for  this  claim  to be  approximately  $16,000,  and
accordingly have recorded a liability for this amount.

     RSC  Proceedings.  On January  16,  2002,  in Eichhof,  et al. v.  Rushmore
Securities Corporation;  NASD Dispute Resolution Arbitration No. 02-07677, eight
former customers of a former registered  representative of RSC filed a complaint
contending  that they made numerous  investments in securities  which the former
account representative sold outside and away from RSC. The claimants alleged the
investments were fraudulent,  speculative and unsuitable, and that RSC failed to
properly  supervise the  representative.  The claimants  contended they invested
$808,000 in these  securities  and  virtually the entire amount was lost through
such investments.  The claimants'  Statement of Claim did not specify the amount
of damages  sought,  but requested the panel to award damages in an amount to be
determined by the arbitrators.  RSC denied the allegations,  contended they were
barred by the applicable statutes of limitations, that RSC owed no legal duty to
three of the  claimants who never had an account with RSC, that RSC did not fail
to  properly  supervise  its former  registered  representative.  The matter was
defended  by  RSC's  former  errors  and  omissions  insurance  carrier  under a
reservation  of rights.  RSC had a $405,000  unused  retention  limit  under our
errors and omissions  insurance to cover any  settlement  up to that amount.  In
July 2004 we entered into a settlement  agreement  with the claimants that falls
within the policy limits of the errors and omissions insurance, and consider the
matter closed.

     On April 17, 2003, in E.F. (Mickey) Long, II, et al. v. Rushmore  Financial
Group,  Inc.,  Rushmore  Securities  Corporation  and D.M.  "Rusty" Moore;  NASD
Dispute  Resolution  Arbitration  No.  03-01451,  a group of  former  securities
representatives of RSC filed for NASD Dispute Resolution, naming the Company and
Mr. Moore. The former  representatives are claiming $178,288 in commissions.  At
December  31, 2003 we  estimated  our  liability  to be $43,000 and  recorded an
accrual for this amount.  Subsequent to year end we negotiated a settlement with
the representatives in the amount of $98,750. This amount has been recorded as a
liability at June 30, 2004.

     On  November  14,  2003,  in William  E.  McMahon  v.  Rushmore  Securities
Corporation,  Chicago  Investment  Group,  LLC, et al; NASD  Dispute  Resolution
Arbitration No. 03-07986,  a former  securities  account customer filed for NASD
arbitration against RSC, their former account  representative and their previous
brokerage  firm  claiming  his account  decreased  in value by  $100,000  due to
improper  and  unauthorized  sales and  trading  practices.  We filed a response
disputing  the claims based on our belief that RSC should not be a party to this
matter,  and on June 15, 2004 received a Notice of Voluntary  Dismissal  Without
Prejudice, which terminated our involvement in the matter.

     RSC was subject to a joint NASD and SEC  examination  in the second quarter
of 2002. As a result of this  examination the Company has accrued a liability of
$25,000 at June 30, 2004 and  December  31, 2003 to account for a possible  NASD
fine. This is management's best estimate of the ultimate liability to RSC.

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

1.   Recent Developments

     We have taken  several steps to increase cash through the use of borrowings
and equity.  In February 2004, we commenced a private  placement of common stock
to raise  operating  capital.  The  offering  closed in March 2004,  and we sold
538,178  shares at an average price of $0.32 per share for total net proceeds of
approximately  $175,000.  During the current period,  approximately $128,000 was
received  under this  placement for 406,666 shares that were sold to subscribers
at an average price of $0.32, for total offering proceeds of $303,000.

     On May 4, 2004, we filed with the Securities and Exchange  Commission  (the
"Commission")  a  Registration   Statement  on  Form  SB-2,  together  with  all
amendments,  schedules and exhibits thereto,  pursuant to the Securities Act for
the purpose of raising  additional  capital.  We retained the services of Invest
Linc Securities, LLC (the "Placement Agent"), to offer and sell our common stock
on a "best  efforts"  basis  which is  contingent  upon the sale of a minimum of
1,000,000 shares of our common stock and up to a maximum of 11,000,000.

                                       14
<PAGE>

     At any level of funding,  we must be able to execute our  business  plan to
secure our long-term  survival.  We believe that we will reach  profitability in
the  next  twelve  months  if we are  able to  continue  funding  operations  to
successfully execute our business plan. At the minimum funding level of $243,000
we will be able to bring some of our more  pressing  accounts  payable  current,
provide  additional  net capital for  RushTrade,  provide  funds to litigate and
settle some of the  litigation,  provide for minimal system upgrades and provide
some much needed working  capital.  If we are able to obtain the maximum funding
level of  $3,573,000  we will be able to bring  our  accounts  payable  current,
provide  sufficient net capital to fund RushTrade's  continued  growth,  provide
funds to litigate and settle some of the litigation, enable us to retire part of
the long term debt,  of which  $317,000  is to a related  party,  provide for an
increase in our  advertising to accelerate  continued  revenue  growth,  provide
sufficient funds to upgrade our network and provide  sufficient  working capital
to provide for any  foreseeable  contingencies.  If we are only able to obtain a
50% of the maximum offering,  approximately  $1,741,500, we would make a reduced
contribution  to RushTrade  and working  capital,  but would still be able bring
accounts payable current,  provide for litigation  settlements,  fund additional
advertising and acquire customers for RushTrade.

     Effective  February 27, 2004 we acquired LostView  Development  Corporation
("LostView").  LostView is a financial  technology and web  development  company
providing  professional  software  development  services for online  trading and
document  management systems. We expect to benefit from the addition of LostView
in several ways. By utilizing  LostView's  resources,  our software  development
capabilities  will  increase,  accelerating  our  options  and  futures  trading
development.  We will also be  better  positioned  to  quickly  add new  product
enhancements,  including  the ability to capture  market data  directly from the
financial exchanges.  Moreover, we will gain additional levels of redundancy and
fault  tolerance  for  our  products  and  services.  Under  the  terms  of  the
acquisition  agreement,  up to 1,500,000  shares of our restricted  common stock
will be issued,  depending  on various  contingencies,  in exchange  for 100% of
LostView's outstanding common stock and intellectual property assets. LostView's
existing and ongoing  development  contracts and business  relationships will be
evaluated  in  light  of our own  development  plan.  We will  also  retain  key
employees of  LostView,  bringing  valuable  experience  in real-time  financial
software development, market data collection and distribution.

     The consideration for the purchase of LostView has been valued at $337,500,
based on the fair  value of the stock  issued on the date of the  purchase.  The
contingent  consideration  will be recorded when the contingency is resolved and
the consideration is transferred.  This will result in an additional  element of
the cost of the acquired  entity and will be valued using the current fair value
of the stock  issued.  The  results of  operations  of the  acquired  entity are
included in the  consolidated  operations  of the Company  from the  acquisition
date.

2.   RushTrade and RushGroup Business Summary

Overview

     Rush Financial Technologies,  Inc., dba RushTrade Group ("RSHF," "RushTrade
Group" or  "Rush")  is a holding  company  that  operates  through  two  primary
subsidiaries.  We are a Texas corporation  formed in September 1990,  commencing
operations in March 1991 as Rushmore Capital Corporation. In 1997 we changed our
name to Rushmore  Financial Group,  Inc., and on January 26, 2004 to our current
name.

     RushGroup   Technologies,   Inc.,  our  financial  technology   development
subsidiary,  develops and operates  proprietary  real-time portfolio  management
software  products,  order  management  systems,  direct access trading software
applications  and  data  services  center.  Utilizing  a number  of  proprietary
technologies  and its exclusive DART,  RushGroup  offers  real-time  market data
platforms  and  direct  access  products  to meet  the  needs of  active  online
investors,  semi-professional  traders and institutional  portfolio managers and
traders.

     RushTrade Securities, Inc., a wholly-owned subsidiary and a fully disclosed
introducing  broker/dealer  and member of NASD and SIPC,  offers  securities and
online brokerage services to its retail customers utilizing RushGroup's software
products.  RushTrade customer trades are cleared through,  and customer accounts
are held at, Penson Financial  Services,  Inc. RushTrade is registered in all 50
U.S. states and accepts customers from most foreign countries. Customer accounts
are  self-directed,  and  RushTrade  does  not  provide  advice  or  make  trade
recommendations.

     As  we  began  2002,   Rushmore  Securities  Corp.  ("RSC")  was  our  only
broker/dealer  operating  primarily  as  a  traditional  retail  brokerage  with
independent sales representatives. A traditional brokerage operation requires an
infrastructure  for support and operates on a very small margin  because most of
the revenue is paid to the  independent  representatives  as sales  commissions.
During the second quarter of 2002 we changed our focus from  traditional  retail

                                       15
<PAGE>

brokerage  to  online  brokerage  which  yields  higher  margins  and  has  less
compliance  risk.  The online  brokerage  services were to be provided using the
software  we  developed.  As a  result,  we no  longer  had the need  for  sales
representatives  and certain  customer  accounts were no longer  desired as they
were traditional retail accounts. In August of 2002 we acquired GRO Corporation,
now known as RushTrade, a registered broker/dealer.  As a result of ongoing NASD
investigations  and litigation  against RSC, among other factors,  we decided to
conduct our direct online brokerage operations through RushTrade instead of RSC.
At  that  point,  any  customer  accounts  that  fit  with  our new  focus  were
transferred  from  RSC to  RushTrade  and  all  new  business  was  directed  to
RushTrade.  We began a systematic  reduction of our independent  sales force and
their books of  business  through  sales to other  broker/dealers  and  outright
releases.  By the end of the third quarter 2002,  RSC had  eliminated its entire
sales  force  and was no  longer  originating  new  retail  brokerage  business.
Subsequent to the  acquisition of GRO, RSC revenue  consisted of renewals on old
business and trail commissions paid on mutual funds and insurance products. Late
in 2003, RSC sold most of the remaining trail commissions to Brazos Holdings and
transferred many of the remaining retail brokerage accounts to SamCo in exchange
for a portion of any revenue generated by those accounts, which to date has been
minimal.

     Following  more than a decade of  experience in the  traditional  financial
services industry, management over the past two years has divested or redeployed
assets in an  aggressive  re-positioning  strategy to  capitalize on the rapidly
expanding market for real-time financial services technologies and direct access
online trading that is  revolutionizing  the online brokerage and  institutional
trading  industry.  In 2000,  we  launched a  multi-million  dollar  proprietary
technology  development  initiative  in  response to the  burgeoning  market for
direct access online  trading.  After more than three years of  development  and
successful beta testing,  we introduced our direct access technology platform in
August 2002 under the RushTrade brand.  Management  currently  expects RushTrade
revenues,   growth  in  new  accounts  and  trade  volumes  to  continue   their
quarter-to-quarter increases now that the RushTrade business unit has become our
primary source of revenue.  Management  expects  future  revenues from licensing
RushGroup's  software trading platforms to other  broker-dealers,  institutional
investors and financial  institutions,  but to date has received minimal revenue
from this source.

     RushTrade's   premier  online  trading  platform  utilizes  our  exclusive,
proprietary  DART  offering  various  software  applications  and direct  access
trading  products  to  meet  the  needs  of  active  online   investors.   These
technologies  are designed to provide  real-time  quotes and high quality  trade
executions  in the U.S.  equities  markets,  including  multiple  direct  access
trading routes,  streaming real-time quotes,  charts and other advanced decision
support tools.

     The RushTrade business model integrates state-of-the-art technology and low
cost operational  infrastructure  with a trader education program that serves to
generate  end-user  customers.  We believe  our  marketing  programs,  strategic
alliances and  potential  licensing  arrangements  give us the  opportunity  for
significant revenue growth.

Products

     We develop and support software  applications for active on-line  investors
who trade in the stock market. We offer three platforms: RushTrade Direct Pro--a
"Level  II"   software-based   product,   RushTrade  Direct  Plus--a  "Level  I"
software-based   platform,  and  RushTrade  Direct--a  "Level  I"  browser-based
product.

     Level I access systems  provide current inside market  quotations,  highest
bid price and lowest  offer  price that make up the best  available  price.  Our
Level  II  system  provides  this  same  service,  as  well as  detailed  quotes
(including  each Market  Maker and ECN  posting bid and ask and other  real-time
market data), and the most recently executed trades (including the size and time
of the transactions). Our trading platforms provide customers and licensees with
real-time quotes and charts,  fast and reliable access to various  markets,  and
many other advanced decision support tools and portfolio management tools.

     Using our products,  we believe that customers purchasing or selling shares
of stock receive the best possible  price,  because  orders are sent directly to
the  particular  Exchange  or ECN in most cases  offering  the best price on any
particular stock at any given time. In contrast,  most of the traditional online
brokerage firms process customer orders through standard  browser-based software
that  routes  the  order  through  the  firm's  trading  desk or to  third-party
wholesalers with "payment for order flow"  arrangements  that normally  increase
the customers' price, and inhibit speed and quality of execution.

     RushTrade  Direct  Pro  meets  the  demands  of more  sophisticated  online
investors  and  semi-professional   traders  by  providing  the  latest  trading
technologies   and  services   available  in  an  easy-to-use   trading  system.

                                       16
<PAGE>

Significant features of the Level II product include streaming,  real-time Level
II  stock  quotes,  news,  advanced  charting,  time  and  sales,  research  and
RushTrade's   proprietary  DART.  Registered   securities   representatives  are
available by telephone to provide customer service.

     The technological  advancements made in RushTrade Direct Pro constitute the
third generation of trading software platforms.  RushTrade Direct Pro provides a
clean and  intuitive  user  interface  through  the use of  multiple  methods of
accessing  each tool and performing  each task, and the  utilization of advanced
Windows(TM)  functionality.  We believe that  RushTrade's  Level II product user
interface is designed to be much more efficient and "user friendly" than that of
the competition.

     RushTrade   Direct  Pro  software  can  be  downloaded  with  less  than  a
1.6-megabyte  requirement  versus 10 to 15  megabytes  required  for most of the
other competitive software platforms.  While other competitive platforms require
broadband data connections such as ISDN, DSL or T-1 connections, we believe that
RushTrade  Direct Pro is one of the only Level II software  applications  of its
kind that will operate effectively with as little as a 56K dial up connection.

     While  improving  upon  the user  interface,  we  simultaneously  developed
decision  support  tools  that  provide  many  of the  latest  advanced  trading
technologies.   These   technologies   include  multiple  order  entry  methods,
sophisticated basket trading capabilities, conditional orders, parametric alerts
and a stock market screening tool. These advanced  decision support tools enable
traders and active investors to quickly make more informed decisions.

RushTrade Direct Pro features include:

     o    User defined alarms and screen alerts
     o    Streaming, real-time Level II quotes
     o    Direct access order routing utilizing DART
     o    Conditional Orders, i.e., Trailing Stops, Make Best, etc.
     o    Powerful charting package including intra-day charts with numerous
          advanced studies
     o    3G Board View (Watch list)
     o    Real-time news available
     o    A listing of several market indices with quotes
     o    Multiple Level II books
     o    Customizable tickers
     o    Real-time portfolio and account balances
     o    Multiple account and sub-account management
     o    Advanced order management and automated trading features
     o    Customizable hot key setup
     o    Time and sales studies

     RushTrade Direct Plus is the newest member of our family of products. It is
a hybrid of the Direct Pro and Direct platforms,  is available without a monthly
software fee, and was developed for the active trader that needs streaming Level
I data,  advanced charting,  real-time news and other functions available on the
Direct Pro  platform.  RushTrade  Direct  Plus  clients  have access to the same
customer service support that RushTrade Direct Pro users receive.

     RushTrade Direct Plus features include:

     o    Streaming Level I data
     o    Advanced order execution
     o    User defined alarms and screen alerts
     o    Powerful  charting  package  including  intra-day charts with numerous
          advanced studies
     o    3G Board View (a customizable watch list for up to 30 securities)
     o    Real-time news

     RushTrade  Direct  fulfills  the needs of online  investors  by  delivering
real-time quotes and aggregated  information from third party providers combined
with RushTrade's DART. RushTrade Direct clients have access to the same customer
service  support that RushTrade  Direct Pro users receive.  RushTrade  Direct is
delivered to customers via the Internet and can be accessed  from  virtually any
computer with a web browser.

                                       17
<PAGE>

     RushTrade Direct features include:

     o    Intraday and historical charts
     o    Most active, % losers, % gainers
     o    News headlines by symbol and by industry
     o    Company and symbol lookup
     o    Market summary
     o    Online direct access order execution
     o    A listing of several market indices with quotes

Customers

     We market our products and services to the general  public via the Internet
and other media.  According to Bear Stearns & Co.,  Inc., the retail user market
is  estimated  at 20  million  and grew by 20% in 2001 and 8% in 2002  (during a
period of market decline).  Our target is the active traders in this market, who
we believe offer the greatest  profit  potential.  Since September 2002, when we
began opening  accounts in RushTrade,  until  December 2003, we have added 1,272
customer  accounts.  We are not  dependent  upon  any one  customer  or group of
customers. Our average customer account has a net asset value as of December 31,
2003 of  approximately  $30,600  and makes an average of more than 12 trades per
month.

     Our second target group is expected to be that of  institutional  customers
to license versions of RushGroup software, which is still in development.

Technology

     DART is a proprietary smart order routing technology that provides advanced
direct  access  trading  capabilities  to  online  investors.  DART is  directly
connected to multiple  Exchanges and Electronic  Communication  Networks (ECNs),
allowing customers,  in most cases, to bypass the "middlemen," brokers or Market
Makers that have  traditionally  executed  customer orders.  ECNs receive orders
that are executed against other orders within the ECN's electronic order book.

         These market participants include:

     o    Nasdaq SuperMontage(TM)System
     o    ISI with connection to the NYSE SuperDOT
     o    ABN Amro
     o    Archipelago ECN
     o    Instinet/Island ECN
     o    BRUT ECN
     o    Globe NET ECN
     o    Crown Financial
     o    NITE Trading Group
     o    TRAC ECN

     Utilizing  these  multiple  direct  connections,   DART  automatically  and
continuously  searches  the  entire  market  for the best  price  available  and
automatically  sends  the  order  to that  particular  market  participant  in a
fraction of a second. DART continues to send the order until it is completed.

Market Opportunities

     Demographic shifts and new technologies always drive change, and electronic
brokerage,  electronic  clearing and  electronic  order matching is changing the
retail  brokerage  and  institutional  trading  industry.  In  addition,  recent
regulatory  actions  are  opening  up new  opportunities  for our  products  and
services.  Various regulatory agencies are requiring changes in long established
practices, such as "payment-for-order-flow" between market makers, "soft dollar"
arrangements  to  trading  firms in  exchange  for  research  coverage  and more
recently, Mutual Fund managers' after-market hours trading practices. We believe
the dominant  market leaders can no longer rely on those  industry  practices to
justify the higher rates they generally obtained from their clients.  We believe

                                       18
<PAGE>

we are  positioning  ourselves to benefit from the convergence of these industry
trends in the  midst of all the  regulatory  changes  because  of our  efficient
proprietary product design and our low cost scalable system. We believe that new
technologies have begun to erode the dominance previously enjoyed by a few large
players  such as  Bloomberg,  ILX/Thompson  and  Reuters  and  that  new  market
opportunities  have opened up for new  providers,  like  RushGroup  who can more
efficiently and cost- effectively  deliver  financial tools and information.  We
believe that  RushTrade  will be able to capitalize  on this market  opportunity
with  our  easy-to-use,  multi-product  offering  and our low  cost  operational
infrastructure  and therefore can position RushTrade as a low cost leader in the
direct access market.

     Online trading remains a dynamic force today representing over one-third of
the total trading volume on the New York Exchange and Nasdaq. According the Bear
Stearns & Co., Inc., there were over 19.8 million online retail trading accounts
in the  U.S.  at the  end of the  fourth  quarter  of  2003.  The  more  active,
self-directed  traders,  also known as semi-professional  traders or day traders
accounted  for  75%  of  this  volume.  The  institutional  market  consists  of
proprietary and institutional  trading firms, hedge funds, mutual fund and other
private portfolio managers, banks, other financial institutions,  broker/dealer,
market data vendor and media content provider.

     According to Active Trader,  an industry  magazine,  many industry  experts
expect  direct-access to become an increasingly large part of trading operations
and hedge  funds in the U.S.  and abroad and  continue  to  dominate  retail day
trading with order volumes to increase over the next few years.  We believe that
our market  opportunity can be maximized by our multi-product  offering with its
superior  functionality and ease of use; a low cost operational  infrastructure;
and a motivated and effective customer service support team to address receptive
markets in both retail direct  access online space as well as the  institutional
market.

Growth Strategy

     We have two core businesses with two primary  channels of distribution  for
our  products  and  services.  Currently  driving our revenue  growth is our new
generation,  direct-access broker/dealer subsidiary, RushTrade Securities, Inc.,
an NASD and SIPC member that is registered in all 50 U.S. states and accepts new
customers from most foreign countries. RushTrade does not provide advice or make
trade recommendations,  all accounts are self-directed and customers meet strict
suitability requirements.

     We are  executing  a low cost  "guerrilla"  sales  and  Internet  marketing
strategy in addition to our strategic  alliances  that are  producing  sustained
rates of sales growth.  This strategy employs,  among other things, the use of a
targeted keyword search Internet advertising program,  with a timing strategy to
maximize  its  effectiveness  that is,  we  believe,  more cost  efficient  than
traditional  advertising  programs.  In addition, we have received the exclusive
endorsement of Steve  Crowley's  nationally  syndicated  American Scene Business
Talk Radio,  which has been heard live daily in over 75 major  markets from over
250 radio stations  across the USA.  Through our Internet  advertising,  we have
been seen on Google,  CBS Market Watch,  Big Charts,  Kiplinger,  CNN.com,  MSN,
C/Net, Ask Jeeves,  Elite Trader, Info Space, AOL, Alta Vista and Yahoo Finance.
Visits to our web domains, www.daytrade.com and www.rushtrade.com,  have created
a growing web traffic that generates most of our current sales leads. We believe
that we can position  ourselves as a low cost leader in the retail direct access
market as we prepare to launch our products  and  services in the  institutional
marketplace.

     Our sales and marketing  efforts are  beginning to show results.  Since the
release  of the  RushTrade  products  in late  2002  RushTrade  has  experienced
substantial quarter-to-quarter increases in new accounts, share/trade volume and
customer account assets.


                                       19
<PAGE>
<TABLE>
<CAPTION>

     The number of RushTrade customer accounts and corresponding customer assets
has grown as follows:

   As of      Total      Securities       Cash           Total          Margin         Total
   Date      Accounts       Value        Balance         Assets          Debt         Equity
-----------------------------------------------------------------------------------------------
<S>          <C>        <C>            <C>            <C>            <C>            <C>
  9/30/02        95     $ 1,492,474    $ 1,671,317    $ 3,163,791    $   (27,652)   $ 3,136,139
 12/31/02       140       4,335,121      1,984,429      6,319,550       (318,152)     6,001,398
  1/31/03       190       5,608,639      4,501,291     10,109,930       (829,355)     9,280,575
  2/28/03       225      10,415,611      5,188,474     15,604,085     (1,426,446)    14,177,639
  3/31/03       301      11,552,613      4,803,235     16,355,848     (1,169,472)    15,186,376
  4/30/03       421      14,054,217      6,765,568     20,819,785     (1,468,478)    19,351,307
  5/31/03       522      15,434,623      8,304,606     23,739,229     (1,799,998)    21,939,231
  6/30/03       636      18,794,159      9,141,242     27,935,402     (2,598,923)    25,336,479
  7/31/03       751      20,419,951      9,993,480     30,413,430     (2,701,092)    27,712,338
  8/31/03       856      22,312,506     10,612,005     32,924,511     (3,148,393)    29,776,118
  9/30/03     1,001      20,740,815     10,992,947     31,733,762     (2,075,382)    29,658,380
 10/31/03     1,116      21,590,111     11,396,924     32,987,035     (1,261,640)    31,725,395
 11/30/03     1,185      23,325,859     12,693,979     36,019,838     (1,467,801)    34,552,037
 12/31/03     1,272      27,818,441     12,940,421     40,758,862     (1,811,751)    38,947,111
  1/31/04     1,422      28,824,596     14,083,292     42,907,888     (2,090,120)    40,817,768
  2/29/04     1,587      31,161,088     13,797,508     44,958,596     (2,327,977)    42,630,619
  3/30/04     1,775      31,222,653     16,627,495     47,850,149     (2,342,976)    45,507,172
  4/30/04     1,884      31,875,885     18,555,467     50,431,352     (2,665,504)    47,765,848
  5/31/04     2,007      33,398,506     18,875,300     52,273,807     (3,040,401)    49,233,406
  6/30/04     2,080      34,677,309     18,767,608     53,444,917     (3,319,895)    50,125,023
  7/31/04     2,161      30,450,573     20,212,429     50,663,002     (2,345,174)    48,317,828

</TABLE>

     The following  table shows the 2003 through July 2004 activity level of the
RushTrade Securities, Inc. customer base:

                     For the          Number          Number
                    Month of         of Trades       of Shares
                  -------------      ---------      -----------
                  January 2003          3,414         3,596,532
                  February 2003         3,851         3,583,894
                  March 2003            4,521         3,039,325
                  April 2003            7,019         4,242,451
                  May 2003              8,178        10,029,062
                  June 2003            11,054         8,772,640
                  July 2003            10,839        11,632,790
                  August 2003          10,112        12,672,975
                  September 2003       13,315        32,177,054
                  October 2003         15,700        39,072,872
                  November 2003        14,746        54,738,776
                  December 2003        16,311        47,055,892
                  January 2004         18,362        69,948,879
                  February 2004        16,270        46,033,738
                  March 2004           20,307        78,024,289
                  April 2004           21,873        98,027,673
                  May 2004             14,616       122,286,369
                  June 2004            17,161       173,243,821
                  July 2004            15,378       128,038,074

     Later in 2004,  we  expect  RushGroup  to begin to  produce  an  additional
revenue stream by licensing  versions of the RushGroup  Software products and by
providing  real-time  financial  data  services  to other  brokerage  firms  and
financial institutions.  RushGroup plans to offer to the institutional market, a
$14 billion industry,  a new-age platform that is efficient,  complete and price
competitive.  As the industry  consolidates  both vendors and costs,  we believe
that we can position  ourselves to obtain market share from the current industry
leaders through aggressive marketing,  competitive pricing, flexible deployment,
strategic alliances, efficient delivery and creative consolidation.

                                       20
<PAGE>

Financial Highlights

     With the launch of the  RushTrade  products  in the third  quarter of 2002,
RushTrade  began a marketing  effort to acquire new customer  accounts.  Despite
limited funds for advertising and marketing personnel,  RushTrade has grown from
a total of 95 customer accounts at September 30, 2002 to a total of 2,161 at the
end of the current  period,  representing a compound annual growth rate ("CAGR")
of  451%  in  customer   accounts.   Total  customer   assets  have  grown  from
approximately  $3,100,000 to over $50,000,000 in the same period, an increase of
over 1500%.  Trades  executed have grown from less than 3,500 in January 2003 to
over 17,000 in June 2004, an increase of 385%.

     Acceptance of the RushTrade trading  platforms,  as evidenced by the growth
in customer  accounts and trade  volumes,  is the primary  factor behind revenue
growth from only  $34,000 in the third  quarter of 2002 to over  $513,000 in the
current  period,  a  quarterly  revenue  growth  at a CAGR of 288%.  RushTrade's
clearing costs, including third party clearing fees, exchange fees and ECN order
routing  fees,  averaged  30% in the  current  period  giving  RushTrade a gross
operating margin of 70%.

     Continued growth of customer accounts,  customer assets and customer trades
are  necessary to drive  revenue  increases  and coupled with the current  gross
margins, should enable us to become cash flow positive in the near term.


3.   Results of Continuing Operations

Three Months Ended June 30, 2004 and 2003

Revenues

     The  following  table sets forth the  components  of our  revenues  for the
periods indicated:

                                    Three Months Ended June 30,
                                    ---------------------------
                  Revenue                2004           2003
           -----------------------  ------------   ------------
           Investment Services      $    519,671   $    264,389
           Software Services              43,118           --
           Corporate                         100         10,016
                                    ------------   ------------
                      Total         $    562,889   $    274,405
                                    ============   ============

     Total revenue for the second quarter increased $288,485, or 105%, from 2003
to 2004. This increase  reflects the increased revenue from 2,080 total customer
accounts  in the  RushTrade  business  unit in 2004  compared to 636 in the same
period of 2003, and also reflects the additional  Software Services revenue from
the LostView acquisition.

     Investment Services revenue increased $255,282,  or 97%, from 2003 to 2004.
The increase in revenue is primarily  due to our efforts to  concentrate  on the
continued  development,  launch and  marketing  of the  RushTrade  products  and
services.  We expect  revenues from the  RushTrade  business unit to continue to
increase  during  the  remainder  of  2004.   However,   RushTrade,   like  most
broker/dealers, is dependent on the overall activity in the United States equity
markets.  RushTrade expects to continue to devote resources toward marketing its
online trading  platforms and increasing the overall customer base, which should
continue to drive increases in trade volumes and revenues.

     RushGroup   Technologies,   Inc.,  our  financial  technology   development
subsidiary,  had revenue of $43,118,  an increase of $43,118  from 2003 to 2004.
The increase is due to the  acquisition  of LostView and its related  sources of
revenue.  When we launched the RushTrade  business  model and began our software
development  project in 2000, the intent was to develop for our own  proprietary
internal  use, a  software-trading  platform  for the  purpose  of  opening  new
customer accounts subscribing to the RushTrade software and making self-directed
trades.  However, as the RushTrade software applications  developed,  management
identified  other  opportunities  available  in the  marketplace  to  derive  an
additional  revenue stream from sale or licensing of "private label" versions of
the software to other users.  From this came the  introduction  of the RushGroup
software services business model.

                                       21
<PAGE>

     RushTrade began to add direct access online accounts in mid to late 2002 as
we moved  from  beta  test to  product  launch.  From  the  date of our  initial
marketing  efforts  through  year-end 2003 the  RushTrade  software has produced
total revenue of $1,170,610.  For the first six months of 2004 RushTrade revenue
was  $749,081.  First six months of  revenue is almost 64% of the total  revenue
received  in 2003.  If the first six months of  revenue  were  annualized,  2004
revenue would be approximately  $1,498,000 without additional growth. Because of
the intercompany relationship,  RushGroup is not charging RushTrade the software
license fees that it would an unrelated third party. Nonetheless,  the RushTrade
revenues are a direct consequence of the RushGroup software asset and we believe
have more than validated the asset value we carry on our balance sheet.

     Although the RushGroup  software  products are not yet ready for deployment
in the institutional  market,  the additional revenue stream from RushGroup that
we expect to develop is for the sale and  licensing of the software to unrelated
third  party  entities.  We have  had  contact  with  several  institutions  and
brokerages  about the  licensing  potential of various  software  components  or
applications  of the  RushTrade  platforms  when they are ready for  deployment.
While  there  remain  additional  development  requirements,  and we continue to
enhance and strengthen our various  software  applications,  we expect RushGroup
software  services and licensing  potential to be a new source of revenue in the
future.

Expenses

     The  following  table sets forth the  components  of our  expenses  for the
periods indicated:

                                    Three Months Ended June 30,
                                    ---------------------------
                  Expense                2004           2003
           -----------------------  ------------   ------------
           Investment Services      $    420,611   $    372,037
           Software Services             437,244        172,911
           Corporate                     253,630        303,910
                                    ------------   ------------
                      Total         $  1,111,485   $    848,858
                                    ============   ============

     Total  expenses  increased  $262,627 or 31%, from 2003 to 2004.  Investment
Services  expenses  increased  13%,  or  $48,574.   Software  Services  expenses
increased  $264,333,  or 153% from 2003 to 2004 and Corporate expenses decreased
17%, or $50,280.

     Investment  Services expenses increased $48,574, or 13%, from 2003 to 2004.
From 2003 to 2004,  transaction-  based cost  increased  due to the  increase in
shares  traded  from  approximately  10,000,000  to  over  390,000,000.  We  are
continuing to execute the RushTrade business plan, and accordingly we expect the
number of  employees  focused  on sales,  marketing,  and  business  development
activities  to  increase in future  periods  that would cause an increase in the
related compensation and benefits expenses. We do not anticipate a proportionate
increase in the number of administrative  personnel. We will continue to tightly
control costs and expenses and limit  expenditures to necessary items to support
the addition of sales and sales resources.  Discontinuing  retail sales, RSC and
Rushmore Insurance Services, has caused our revenue from this source to continue
its  decline.  Retail  sales for the  quarter  ending  June 30,  2004 was $6,712
compared to $67,148 for the same period in 2003. We expect  residual  revenue to
continue to decline as the  underlying  revenue-producing  stream  continues  to
deplete.

     Software Services expenses increased 153% or $264,333 from 2003 to 2004. As
the business unit transitioned  from development stage to the  implementation of
the products through the RushTrade business unit it became necessary to increase
the  infrastructure  supporting the products.  Among the major  increases was an
increase in payroll of  approximately  $98,000,  $14,300 in  subscription  fees,
$20,000 in amortization of employment contracts,  $32,500 in quotation services,
$6,000 in  general  office  expenses,  and an  increase  in data  line  costs of
$50,000,  which includes the  incorporation  of LostView  Development  into this
business unit and its $10,000 for office rental.  As overall market activity and
acceptance of the products increases, costs will continue to increase.

     Corporate  expenses  decreased  $50,280,  or 17% from 2003 to 2004. In part
this is due to a decrease in accounting fees of $8,000, a decrease in consulting
fees of $16,000, a decrease in investor relations expenses of $9,000, a decrease
in depreciation expense of $10,000, a decrease in payroll expense of $33,000 and
a decrease in equipment rental expense of $13,000. The major contributing factor
to the decrease in  Corporate  expenses  was the  allocation  of expenses to the
other two  segments in 2004 that had been  allocated  to  Corporate  in the past
totaling  approximately  $110,000.  These decreases were offset by a loss on the
settlement  of a  liability  of $83,000,  increases  in  commission  expenses of
$12,000,  increases  in legal fees of  $32,000,  and an  increase in stock based
compensation of $25,000.

                                       22
<PAGE>

Net loss

     The  following  table  sets  forth the  components  of our net loss for the
periods indicated:

                                       Three Months Ended June 30,
                                       ---------------------------
                 Net Income (Loss)          2004           2003
              -----------------------  ------------   ------------
              Investment Services      $     99,111   $   (107,648)
              Software Services            (394,126)      (172,911)
              Corporate                    (253,581)      (293,894)
                                       ------------   ------------
                         Total         $   (548,596)  $   (574,453)
                                       ============   ============

     Net losses  decreased  $25,857,  or 4%,  from 2003 to 2004.  The net income
(loss) from Investment  Services  increased from a loss of $107,648 to income of
$99,111 from 2003 to 2004. This in part is a reflection of the increased margins
offered by the RushTrade  business model.  Software  Services net loss increased
$221,215  from  2003  to  2004.   This  is  due  in  part  to  the  increase  in
infrastructure to support the increased  activity levels and the addition of the
LostView  related  expenses  offset  by  LostView  revenue.  Corporate  net loss
decreased  from  $293,894 to $253,581.  The decrease in Corporate net loss is in
part due to a decrease in  accounting  fees of $8,000,  a decrease in consulting
fees of $16,000, a decrease in investor relations expenses of $9,000, a decrease
in depreciation expense of $10,000, a decrease in payroll expense of $33,000 and
a decrease in equipment rental expense of $13,000. The major contributing factor
to the decrease in  Corporate  expenses  was the  allocation  of expenses to the
other two  segments in 2004 that had been  allocated  to  Corporate  in the past
totaling  approximately  $110,000.  These decreases were offset by a loss on the
settlement  of a  liability  of $83,000,  increases  in  commission  expenses of
$12,000,  increases  in legal fees of  $32,000,  and an  increase in stock based
compensation of $25,000.

Six Months Ended June 30, 2004 and 2003

Revenues

     The  following  table sets forth the  components  of our  revenues  for the
periods indicated:

                                        Six Months Ended June 30,
                                       ---------------------------
                     Revenue                2004           2003
              -----------------------  ------------   ------------
              Investment Services      $  1,048,662   $    438,187
              Software Services              87,908           --
              Corporate                         100         10,016
                                       ------------   ------------
                         Total         $  1,136,670   $    448,203
                                       ============   ============

     Total revenue for the first six months  increased  $688,467,  or 153%, from
2003 to 2004.  This  increase  reflects the  increased  revenue from 2,080 total
customer accounts in the RushTrade  business unit in 2004 compared to 636 in the
same period of 2003, and also reflects the additional  Software Services revenue
from the LostView acquisition.

     Investment Services revenue increased $610,476, or 139%, from 2003 to 2004.
The increase in revenue is primarily  due to our efforts to  concentrate  on the
continued  development and marketing of the RushTrade products and services.  We
expect revenues from the RushTrade  business unit to continue to increase during
the  remainder  of  2004.  However,  RushTrade,  like  most  broker/dealers,  is
dependent on the overall activity in the United States equity markets. RushTrade
will continue to devote resources toward marketing its online trading  platforms
and  increasing  the  overall  customer  base,  which  should  continue to drive
increases in trade volumes and revenues.

     RushGroup   Technologies,   Inc.,  our  financial  technology   development
subsidiary,  had revenue of $87,908,  an increase of $87,908  from 2003 to 2004.
The increase is due to the  acquisition  of LostView and its related  sources of
revenue.  When we launched the RushTrade  business  model and began our software
development  project in 2000, the intent was to develop for our own  proprietary
internal  use, a  software-trading  platform  for the  purpose  of  opening  new
customer accounts subscribing to the RushTrade software and making self-directed
trades.  However, as the RushTrade software applications  developed,  management
identified  other  opportunities  available  in the  marketplace  to  derive  an
additional  revenue stream from sale or licensing of "private label" versions of
the software to other users.  From this came the  introduction  of the RushGroup
software services business model.

     RushTrade began to add direct access online accounts in mid to late 2002 as
we moved  from  beta  test to  product  launch.  From  the  date of our  initial
marketing  efforts  through  year-end 2003 the  RushTrade  software has produced

                                       23
<PAGE>

total  revenue  of  $1,170,610.  For the  first  six  months  2004  revenue  was
$1,022,530. First six months revenue is almost 87% of the total revenue received
in 2003. If the first six months of revenue were annualized,  2004 revenue would
be  approximately   $2,045,000  without   additional  growth.   Because  of  the
intercompany  relationship,  RushGroup  is not charging  RushTrade  the software
license fees that it would an unrelated third party. Nonetheless,  the RushTrade
revenues are a direct consequence of the RushGroup software asset and we believe
have more than validated the asset value we carry on our balance sheet.

     Although the RushGroup  software  products are not yet ready for deployment
in the institutional  market,  the additional revenue stream from RushGroup that
we expect to develop is for the sale and  licensing of the software to unrelated
third  party  entities.  We have  had  contact  with  several  institutions  and
brokerages  about the  licensing  potential of various  software  components  or
applications  of the  RushTrade  platforms  when they are ready for  deployment.
While  there  remain  additional  development  requirements,  and we continue to
enhance and strengthen our various  software  applications,  management  expects
RushGroup  software  services  and  licensing  potential  to be a new  source of
revenue in the future.

Expenses

     The  following  table sets forth the  components  of our  expenses  for the
periods indicated:

                                        Six Months Ended June 30,
                                       ---------------------------
                     Expense                2004           2003
              -----------------------  ------------   ------------
              Investment Services      $    915,650   $    769,301
              Software Services             879,793        345,822
              Corporate                     640,978        463,139
                                       ------------   ------------
                         Total         $  2,436,421   $  1,578,262
                                       ============   ============

     Total  expenses  increased  $858,159 or 54%, from 2003 to 2004.  Investment
Services expenses increased 19%, or $146,349.  Corporate expenses increased 38%,
or $177,839 and Software Services expenses increased $528,137, or 154% from 2003
to 2004.

     Investment Services expenses increased $146,349, or 19%, from 2003 to 2004.
In general  this is  attributable  to the  increase in  marketing-related  costs
associated   with  the  new  RushTrade   business  model  and  the  increase  in
transaction-based expenses. In 2003 advertising costs related to the acquisition
of new RushTrade  customer accounts was  approximately  $42,000 compared to over
$118,000 in 2004, an increase of $76,000. From 2003 to 2004,  transactions-based
costs  increased  due  to the  increase  in  shares  traded  from  approximately
33,000,000 to over  580,000,000.  We are continuing to execute our business plan
and accordingly we expect the number of employees  focused on sales,  marketing,
and business  development  activities  to increase in future  periods that would
cause an increase in the related  compensation and benefits expenses.  We do not
anticipate a proportionate  increase in the number of administrative  personnel.
We will continue to tightly control costs and expenses and limit expenditures to
necessary  items  to  support  the  addition  of  sales  and  sales   resources.
Discontinuing retail sales, RSC and Rushmore Insurance Services,  has caused our
revenue  from this  source to continue  its  decline.  Retail  sales for the six
months ending June 30, 2004 was $16,449 compared to $140,525 for the same period
in 2003.  We expect  residual  revenue to continue to decline as the  underlying
revenue-producing stream continues to deplete.

     Software Services expenses increased 154% or $533,971 from 2003 to 2004. As
the business unit transitioned  from development stage to the  implementation of
the products through the RushTrade business unit it became necessary to increase
the  infrastructure  supporting the products.  Among the major  increases was an
increase in payroll of  approximately  $277,000,  $29,000 in subscription  fees,
$68,000 in quotation  services,  $10,000 in general office  expenses,  $7,500 in
stock-based compensation, $20,000 in amortization of employment contracts and an
increase in data line costs of $95,000,  which  includes  the  incorporation  of
LostView  Development into this business unit and its $10,000 for office rental.
As overall market activity and acceptance of the products increases,  costs will
continue to increase.

     Corporate  expenses increased  $177,839,  or 38% from 2003 to 2004. In part
this is due to a loss on the settlement of a liability of $108,000,  an increase
in  interest  expense of  $60,000,  an  increase  in legal fees of  $32,000,  an
increase  in stock based  compensation  of  $28,000,  an increase in  commission
expenses of $16,000,  and increases in other expenses  totaling  $53,000.  These
increases were partially offset by a decrease in payroll of $49,000,  a decrease
in consulting fees of $32,000, a decrease in equipment rental of $22,000,  and a
decrease in legal settlements of $17,000.

                                       24
<PAGE>

Net Income (loss)

     The  following  table  sets  forth the  components  of our net loss for the
periods indicated:

                                        Six Months Ended June 30,
                                       ---------------------------
                 Net Income (Loss)          2004           2003
              -----------------------  ------------   ------------
              Investment Services      $    133,013   $   (331,114)
              Software Services            (791,884)      (345,822)
              Corporate                    (640,880)      (453,123)
                                       ------------   ------------
                         Total         $ (1,299,751)  $ (1,130,059)
                                       ============   ============

     Net losses  increased  $169,692,  or 15%, from 2003 to 2004. The net income
(loss) from Investment  Services  increased from a loss of $331,114 to income of
$133,013  from  2003 to  2004.  This in part is a  reflection  of the  increased
margins  offered by the RushTrade  business  model.  Software  Services net loss
increased  $446,062,  or  129%  from  2003 to  2004.  This is due in part to the
increase in  infrastructure  to support the  increased  activity  levels and the
addition of the LostView related  expenses offset by related revenue.  Corporate
net loss increased from $453,123 to $640,880. The increase in Corporate net loss
is in part  due to a loss on the  settlement  of a  liability  of  $108,000,  an
increase in interest  expense of $60,000,  an increase in legal fees of $32,000,
an increase in stock based  compensation  of $28,000,  an increase in commission
expenses of $16,000,  and increases in other expenses  totaling  $53,000.  These
increases were partially offset by a decrease in payroll of $49,000,  a decrease
in consulting fees of $32,000,  a decrease in equipment rental of $22,000, a and
a decrease in legal settlements of $17,000.

Liquidity

     Cash Flows from Operating Activities - We incurred a net loss of $1,299,751
for the six months ended June 30, 2004. This amount included  non-cash  expenses
totaling  $692,276.  Cash  flows from  operating  activities  decreased  from an
increase in  receivables of $3,382 and by a increase in prepaids and deposits of
$3,861  offset  from a increase in  accounts  payable  and  accrued  expenses of
$402,830 due to our lack of available  cash;  thus yielding a net cash flow used
by operating  activities of $211,888.  We incurred a net loss of $1,130,059  for
the six months  ended June 30,  2003.  This amount  included  non-cash  expenses
totaling $426,015. Cash flows from operating activities increased by an decrease
in  receivables of $14,521 and by a decrease in prepaids and deposits of $51,353
offset by a increase in accounts payable and accrued expenses of $309,567 due to
our lack of  available  cash;  thus  yielding a net cash flow used by  operating
activities of $328,603.

     Cash  Flows  From  Investing  Activities  - Cash  flow  used  by  investing
activities during the six months ended June 30, 2004 was $65,762,  from purchase
of equipment and capitalized software development costs related to the RushTrade
direct access software RushTrade Back Office Tool offset by cash acquired in the
LostView  acquisition.  Cash flow used by  investing  activities  during the six
months ended June 30, 2003 was $54,924,  from capitalized  software  development
costs related to the  RushTrade  direct access  software  RushTrade  Back Office
Tool.

     Cash Flows from Financing Activities - During the six months ended June 30,
2004, we raised $303,000 from the sale of common stock and $43,000 from the sale
of Bonds.  This  increase was offset by  repayments  of notes  payable  totaling
$10,845 and deferred offering costs of $94,113. During the six months ended June
30, 2003, we raised  $233,000 from the sale of Bonds and received  advances from
related parties totaling $95,000.  We also had an increase in its bank overdraft
of $5,636.  These increases were off set by repayments of notes payable totaling
$11,606.

     Our cash and cash  equivalents  available  for  operations at June 30, 2004
were  $134,480,  and our current  liabilities  exceeded  our  current  assets by
$2,765,877. Our requirements for normal cash expenditures,  as well as costs for
the further  development of the  proprietary  online  RushTrade  software,  have
historically been supplemented with borrowings and equity capital raised through
the private  placement of  securities;  however,  there can be no assurance that
these sources of cash will be available in the future.

     The accompanying  financial  statements have been prepared assuming that we
will continue as a going concern. At June 30, 2004, we had $3,021,264 in current
liabilities,  and  current  assets  of  $255,387.  Also,  we had net  losses  of
$2,475,947  in 2003 and  $3,131,636  in 2002,  and  $1,299,751  in the first six
months of 2004.  Although  we believe  that we will be able to continue to raise
the necessary funds until we reach a sustainable level of  profitability,  these
matters  raise  substantial  doubt  about our  ability  to  continue  as a going
concern.  The  financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.

                                       25
<PAGE>

     We have taken  several steps to increase cash through the use of borrowings
and equity.  In February 2004, we commenced a private  placement of common stock
to raise operating  capital.  The offering closed in March 2004, and the Company
sold  538,178  shares  at an  average  price of $0.32  per  share  for total net
proceeds of approximately $175,000.  Subsequent to the end of the quarter, funds
were  received  under  this  placement  for  406,666  shares  that  were sold to
subscribers  at an  average  price of $0.32,  for  total  offering  proceeds  of
$303,000.

     On May 4, 2004, we filed with the Securities and Exchange  Commission  (the
"Commission")  a  Registration   Statement  on  Form  SB-2,  together  with  all
amendments,  schedules and exhibits thereto,  pursuant to the Securities Act for
the purpose of raising  additional  capital.  We retained the services of Invest
Linc Securities, LLC (the "Placement Agent"), to offer and sell our common stock
on a "best  efforts"  basis  which is  contingent  upon the sale of a minimum of
1,000,000 shares of our common stock and up to a maximum of 11,000,000.

     At any level of funding,  we must be able to execute our  business  plan to
secure our long-term  survival.  We believe that we will reach  profitability in
the  next  twelve  months  if we are  able to  continue  funding  operations  to
successfully execute our business plan. At the minimum funding level of $243,000
we will be able to bring some of our more  pressing  accounts  payable  current,
provide  additional  net capital for  RushTrade,  provide  funds to litigate and
settle some of the  litigation,  provide for minimal system upgrades and provide
some much needed working  capital.  If we are able to obtain the maximum funding
level of  $3,573,000  we will be able to bring  our  accounts  payable  current,
provide  sufficient net capital to fund RushTrade's  continued  growth,  provide
funds to litigate and settle some of the litigation, enable us to retire part of
the long term debt,  of which  $317,000  is to related  parties,  provide for an
increase in our  advertising to accelerate  continued  revenue  growth,  provide
sufficient funds to upgrade our network and provide  sufficient  working capital
to provide for any  foreseeable  contingencies.  If we are only able to obtain a
50% of the maximum offering,  approximately  $1,741,500, we would make a reduced
contribution  to RushTrade  and working  capital,  but would still be able bring
accounts payable current,  provide for litigation  settlements,  fund additional
advertising and acquire customers for RushTrade.

     Our sales and  marketing  efforts are  beginning to show  results.  We have
grown from 190 accounts in January 2003 with approximately  $10,000,000 in total
assets  producing  about  3,400  trades,  to 1,775 accounts  in March  2004 with
approximately  $47,000,000 in total assets producing about 20,000 trades.  Since
the  release of the  RushTrade  products  in late 2002,  the  quarter-to-quarter
increases in new accounts,  share/trade  volume and customer  account assets has
driven our increased  revenue.  We believe that we have the low cost operational
infrastructure and a relatively low threshold to reach profitability in the near
future.  There can be no assurances  that the steps we have taken will result in
our being able to settle our  liabilities as they become due, or that we will be
able to generate  revenues or cash flows from  financings  sufficient to support
our operations in the short term.

Forward-looking statements

     Certain  statements  contained  in this  10-QSB  Report  and other  written
material and oral statements made from time to time by us do not relate strictly
to historical or current facts.  As such,  they are considered  "forward-looking
statements"  that provide  current  expectations  or forecasts of future events.
Such statements are typically  characterized  by terminology  such as "believe,"
"anticipate,"   "should,"   "intend,"  "plan,"  "will,"  "expect,"   "estimate,"
"project,"  "strategy" and similar expressions.  Our forward-looking  statements
generally  relate to the  prospects  for future sales of our  products,  and the
success of our strategic  corporate  relationships.  These  statements are based
upon  assumptions  and  assessments  made  by our  management  in  light  of its
experience and its perception of historical trends, current conditions, expected
future developments and other factors our management believes to be appropriate.
These  forward-looking   statements  are  subject  to  a  number  of  risks  and
uncertainties,  including  the  following:  our  ability to  achieve  profitable
operations and to maintain  sufficient cash to operate our business and meet our
liquidity  requirements;  our ability to obtain financing, if required, on terms
acceptable  to us, if at all;  the  success  of our  research  and  development;
competitive   developments  affecting  our  current  products;  our  ability  to
successfully  attract  strategic  partners  and to market both new and  existing
products;  exposure  to  lawsuits  and  regulatory  proceedings;  our ability to
protect our intellectual  property;  governmental laws and regulations affecting
operations; our ability to identify and complete diversification  opportunities;
and  the  impact  of   acquisitions,   divestitures,   restructurings,   product
withdrawals  and other unusual  items.  A further list and  description of these
risks,  uncertainties  and other matters can be found  elsewhere in this 10-QSB.
Except as required by  applicable  law, the Company  undertakes no obligation to
update any forward-looking  statements,  whether as a result of new information,
future events or otherwise.

                                       26
<PAGE>

Item 3.  Controls and Procedures

     (a)  Within the 90-day period prior to the date of this report,  we carried
          out an evaluation, under the supervision and with the participation of
          our  management,  including  the  Chief  Executive  Officer  and Chief
          Financial Officer, of the effectiveness of the design and operation of
          our disclosure  controls and procedures pursuant to Rule 13a-14 of the
          Securities  Exchange Act of 1934 (the "Exchange Act"). Based upon that
          evaluation,  the Chief Executive  officer and Chief Financial  Officer
          concluded that our disclosure controls and procedures are effective in
          timely alerting them to material  information  relating to the Company
          (including its consolidated  subsidiaries)  required to be included in
          our Exchange Act filings.

     (b)  There have been no significant  changes in our internal controls or in
          other factors,  which could  significantly  affect  internal  controls
          subsequent to the date we carried out our evaluation.

















                                       27
<PAGE>

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

     The  Company and its  subsidiaries  are  engaged in legal  proceedings  and
arbitrations  from time to time.  Management  believes some of these proceedings
could have a material  effect upon the operations or financial  condition of the
Company if the Company is unsuccessful in defending against the actions.

     Company  Proceedings.  On June 24, 2003, in Sumner Group Inc. d/b/a Datamax
Office  Systems  Leasing  Division  v.  Rushmore   Financial  Group;  Cause  No.
CC-03-7400-b;  County Court at Law No. 2, Dallas County,  Texas, a former vendor
filed a claim in the  Dallas  County  Court  claiming  that we failed to pay for
services  rendered  on a  copier  in the  amount  of  $39,710.  We have  filed a
counterclaim  alleging  overcharges  and  improper  installation  of a  software
product causing us  incalculable  harm. A jury trial is set for August 25, 2004.
We  believe  the  range of  possible  loss is up to not more than  $55,000.  The
Company has not recorded a provision  for this matter as we intend to vigorously
defend these allegations and believe the payment is not probable.

     On February 10, 2004, in Great Southern Life Insurance  Company v. Dewey M.
Moore, Jr. and Rushmore Insurance Services, Inc.; Cause No. CC-04-01666-C in the
County  Court at Law No. 3,  Dallas  County,  Texas,  a  provider  of  insurance
products for whom Rushmore Agency and D. M. Moore, Jr. acted as an agent,  filed
a claim in the Dallas County Court for overpaid commissions in excess of $70,000
plus  attorney's fees and interest.  Rushmore  Agency and D. M. Moore,  Jr. have
filed a response  disputing the claim.  We believe the range of possible loss is
up to not more than  $95,000.  The Company has not recorded a provision for this
matter as we intend to  vigorously  defend  these  allegations  and  believe the
payment is not probable.

     On March 18, 2004,  in  Citicapital  Technology  Finance,  Inc. v. Rushmore
Financial Group, Inc.; Cause No. 04-02267; 101st Judicial District Court, Dallas
County,  Texas,  a vendor filed a claim in the Dallas  District Court claiming a
total of $39,810 in delinquent  lease  payments,  plus  interest and  attorney's
fees,  and return of equipment.  We dispute the amount of the claims and plan to
vigorously  defend  ourselves in this matter.  At December 31, 2003 we estimated
our liability for this claim to be approximately  $16,000,  and accordingly have
recorded a liability for this amount.

     RSC  Subsidiary  Proceedings.  On January 16, 2003,  in Eichhof,  et al. v.
Rushmore  Securities  Corporation;   NASD  Dispute  Resolution  Arbitration  No.
02-07677,  eight former customers of a former  registered  representative of RSC
filed a complaint  contending that they made numerous  investments in securities
which the former  account  representative  sold  outside and away from RSC.  The
claimants  alleged the investments were fraudulent,  speculative and unsuitable,
and that RSC failed to properly  supervise  the  representative.  The  claimants
contended  they invested  $808,000 in these  securities and virtually the entire
amount was lost through such investments.  The claimants' Statement of Claim did
not  specify  the amount of damages  sought,  but  requested  the panel to award
damages  in an  amount to be  determined  by the  arbitrators.  RSC  denied  the
allegations,   contended  they  were  barred  by  the  applicable   statutes  of
limitations, that RSC owed no legal duty to three of the claimants who never had
an account  with RSC,  that RSC did not fail to  properly  supervise  its former
registered  representative.  The matter was defended by RSC's former  errors and
omissions  insurance  carrier under a reservation of rights.  RSC had a $405,000
unused  retention  limit under our errors and  omissions  insurance to cover any
settlement  up to  that  amount.  In  July  2004 we  entered  into a  settlement
agreement  with the claimants  that falls within the policy limits of the errors
and omissions insurance, and consider the matter closed.

     On April 17, 2003, in E.F. (Mickey) Long, II, et al. v. Rushmore  Financial
Group,  Inc.,  Rushmore  Securities  Corporation  and D.M.  "Rusty" Moore;  NASD
Dispute  Resolution  Arbitration  No.  03-01451,  a group of  former  securities
representatives of RSC filed for NASD Dispute Resolution, naming the Company and
Mr. Moore. The former  representatives are claiming $178,288 in commissions.  At
December  31, 2003 we  estimated  our  liability  to be $43,000 and  recorded an
accrual for this amount.  Subsequent to year end we negotiated a settlement with
the representatives in the amount of $98,750.

     On  November  14,  2003,  in William  E.  McMahon  v.  Rushmore  Securities
Corporation,  Chicago  Investment  Group,  LLC, et al; NASD  Dispute  Resolution
Arbitration No. 03-07986,  a former  securities  account customer filed for NASD
arbitration against RSC, their former account  representative and their previous
brokerage  firm  claiming  his account  decreased  in value by  $100,000  due to
improper  and  unauthorized  sales and  trading  practices.  We filed a response
disputing  the claims based on our belief that RSC should not be a party to this
matter,  and on June 15, 2004 received a Voluntary  Notice of Dismissal  Without
Prejudice, which terminates our involvement in the matter.


                                       28
<PAGE>

Item 2.  Changes in Securities and Use of Proceeds.

     During the second  quarter of 2004 we issued 233,333 shares of common stock
to settle an advance of $35,000 from a related party  (valued at $116,667  based
on the fair value of our common stock on the date of issuance). 56,000 shares of
common stock  (valued at $28,300  based on the fair value of our common stock on
the date of  issuance)  were issued to  employees  as  compensation,  holders of
$12,000 of  convertible  bonds elected to convert their bonds into 50,000 shares
of common stock,  holders of $2,500 shares of preferred stock elected to convert
their preferred stock into 25,000 shares of common stock,  and $1,360 of accrued
interest was converted into 5,665 shares of common stock valued at $2,793 on the
date of issuance.  Additionally,  406,666 shares of common stock were issued for
proceeds of approximately $128,000.

Item 3.  Defaults Upon Senior Securities

     None.

Item 4.  Submission of Matters to a Vote of Security Holders

     None.

Item 5.  Other Information

     None.

Item 6.  Exhibits and Reports on Form 8-K

     a.   Exhibits.

Exhibit 31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
or Rule 15d-14(a).

Exhibit 31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
or Rule 15d-14(a).

Exhibit 32.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)
or Rule 15d-14(b) and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)
or Rule 15d-14(b) and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.

     b.   Reports on Form 8-K

On April 28, 2004,  the Company filed a Current Report on Form 8-K reporting the
filing of its 10K-SB Annual Report for year-end 2003.

On May 6, 2004,  the Company  filed a Current  Report on Form 8-K  reporting  it
filed a  Registration  Statement on Form SB-2 with the  Securities  and Exchange
Commission  ("SEC") for a secondary  offering of up to 10,000,000  shares of its
common  stock  (excluding  shares  which may be sold  pursuant to the  Placement
Agent's over-allotment option).




                                       29
<PAGE>

                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                                          Rushmore Financial Group, Inc.

Dated: August 17, 2004                    By /s/ Dewey M. Moore, Jr.
                                          --------------------------------------
                                          Dewey M. Moore, Jr.
                                          Chief Executive Officer

Dated: August 17, 2004                    By /s/ Randy Rutledge
                                          --------------------------------------
                                          Randy Rutledge
                                          Chief Financial and Accounting Officer








                                       30