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


                                   FORM 10-Q/A
                                   -----------


(Mark One)

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

        FOR THE QUARTERLY PERIOD ENDED September 30, 2005

                                       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 000-27437



                          PARAGON FINANCIAL CORPORATION
                          -----------------------------
             (Exact name of registrant as specified in its charter)




                         Delaware                        94-3227733
                         --------                        ----------
             (State or other jurisdiction of            (I.R.S. Employer
              incorporation or organization)             Identification No.)

            2207 Sawgrass Village Drive, Ponte Vedra Beach, FL 32082
            --------------------------------------------------------
              (Address of principal executive offices and zip code)

                                 (904) 285-0000
                                 --------------
              (Registrant's telephone number, including area code)



Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No |_|

Indicate  by check mark  whether  the  Registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|


<PAGE>





Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange  Act.):  Yes |_| No |_| The total number of shares of
the registrant's common stock outstanding as of November 15, 2005: 88,006,250


Table of Contents
<TABLE>
<CAPTION>
<S>                                                                                                             <C>

                                      INDEX


                                          PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements
           Unaudited Condensed Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004       3
           ----------------------------------------------------------------------------------------------

           Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended        4
           ----------------------------------------------------------------------------------------------
           September 30, 2005 and 2004

           Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30,    5
           --------------------------------------------------------------------------------------------------
           2005 and 2004
           -------------

           Notes to the Unaudited Condensed Consolidated Financial Statements                                   6
           ------------------------------------------------------------------

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations                18
           -------------------------------------------------------------------------------------

Item 3.    Quantitative and Qualitative Disclosures About Market Risk                                           23
           ----------------------------------------------------------

Item 4.    Controls and Procedures                                                                              25
           -----------------------

                                           PART II - OTHER INFORMATION

Item 1.    Legal Proceedings                                                                                    25
           -----------------

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                                          25
           -----------------------------------------------------------

Item 3.    Defaults Upon Senior Securities                                                                      25
           -------------------------------

Item 4.    Submission of Matters to a Vote of Security Holders                                                  25
           ---------------------------------------------------

Item 5.    Other Information                                                                                    25
           -----------------

Item 6.    Exhibits and Reports on Form 8-K                                                                     25
           --------------------------------

SIGNATURE                                                                                                       26
</TABLE>

                                EXPLANATORY NOTE

This Form 10-Q/A (the  "Amendment")  amends our Form 10-Q for the quarter  ended
September 30, 2005, which was filed with the Securities and Exchange  Commission
on November 21, 2005 (the "Original Filing").  We are filing this Form 10-Q/A to
amend the Financial Statements.

In  connection  with the  filing  of this  Form  10-Q/A  and  pursuant  to Rules
13a-14(a)  or  15d-14(a)  under  the  Securities  Exchange  Act of 1934,  we are
including with this Form 10-Q/A certain currently dated certifications.

This  Amendment  does not reflect  events  occurring  after the Original  Filing
except as noted above. Except for the foregoing amended  information,  this Form
10-Q/A  continues to speak as of the date of the Original Filing and the Company
has not otherwise  updated  disclosures  contained  therein or herein to reflect
events that occurred at a later date.


<PAGE>



                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.




<PAGE>



<PAGE>
<TABLE>
<CAPTION>

                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                 AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
                   (Dollars in thousands, except share data)
<S>                                                                           <C>               <C>

                                                                                   2005              2004*
                                                                              ---------------   ----------------
                                                                                                (As restated, Note 11)
Assets
        Current Assets:
               Cash and cash equivalents                                               $ 130              $ 135
               Fees receivable                                                            67                 46
               Prepaid and other current assets                                            6                  9
                                                                              ---------------   ----------------
        Total Current Assets                                                             203                190
                                                                              ---------------   ----------------

               Office property and equipment, net of accumulated
                  depreciation of $64 and $43                                             78                 64
               Goodwill                                                                  171                  -
               Other assets                                                                5                  3
                                                                              ---------------   ----------------
Total Assets                                                                           $ 457              $ 257
                                                                              ===============   ================

Liabilities and Stockholders' Deficit
        Current liabilities
               Liabilities to formerly related party                                 $ 1,531              $ 580
               Short-term debt                                                           186                221
               Notes payable                                                              26                 48
               Notes payable - related parties                                            33                 25
               Convertible notes payable                                                   -                379
               Accounts payable                                                          383                371
               Stock subscription proceeds received                                        -                178
               Accrued expenses - related parties                                         59                 59
               Accrued expenses - other                                                  604                393
                                                                              ---------------   ----------------
        Total Current Liabilities                                                      2,822              2,254

Long-term debt:
               Liabilities to formerly related parties, less current portion               -                951
               Convertible debentures                                                    455                  -
                                                                              ---------------   ----------------
        Total Liabilities                                                              3,277              3,205
                                                                              ---------------   ----------------
Stockholders' deficit:
        Preferred stock:  Issuable in series, $0.0001 par value; 5,000,000
          shares authorized: Series E, $1,000 stated value;
          659 shares issued and outstanding, respectively                                  -                  -
        Common stock, $0.0001 par value; 400,000,000 shares
          authorized, 86,006,250 and 65,212,744 shares issued and outstanding
          at September 30, 2005 and December 31, 2004, respectively                        8                  6
        Additional paid-in capital                                                     7,697              6,914
        Retained deficit                                                             (10,464)            (9,861)
        Cumulative comprehensive income:
          Unearned stock-based compensation                                              (61)                (7)
                                                                              ---------------   ----------------
               Total Stockholders' deficit                                            (2,820)            (2,948)
                                                                              ---------------   ----------------
Total liabilities and stockholders' deficit                                            $ 457              $ 257
                                                                              ===============   ================
* Derived from audited consolidated  financial statements filed in the Company's
2004 Annual Report on Form 10-K

            See Notes to Unaudited Condensed Consolidated Financial Statements.

</TABLE>

                                      3

<PAGE>
<TABLE>
<CAPTION>


                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                    (Dollars in thousands, except share data)
<S>                                                         <C>               <C>               <C>               <C>


                                                                  Three Months Ended                   Nine Months Ended
                                                                2005              2004              2005              2004
                                                            --------------    --------------    --------------    --------------
Revenue:
      Loan origination fees                                         $ 689             $ 479           $ 1,469           $ 1,698
                                                            --------------    --------------    --------------    --------------
Expenses:
      Salaries, commissions, benefits,
       and stock-based compensation                                   495               407             1,127             1,776
      Loan production costs                                            14                 7                31                54
      General and administrative expenses                             331               135               771               578
                                                            --------------    --------------    --------------    --------------
           Total expenses                                             840               549             1,929             2,408
                                                            --------------    --------------    --------------    --------------
Operating loss                                                       (151)              (70)             (460)             (710)

Other income (expense)
      Interest (expense)                                              (49)              (41)             (143)              (84)
      Loss on disposal of segment                                       -                 -                 -                 -
                                                            --------------    --------------    --------------    --------------
Loss from continuing operations                                      (200)             (111)             (603)             (794)

Discontinued operations (Note 2):
      (Loss) income from discontinued operations
          before provision for income taxes                             -                 -                 -            (3,640)
                                                            --------------    --------------    --------------    --------------
Net Loss                                                           $ (200)           $ (111)           $ (603)         $ (4,434)
                                                            ==============    ==============    ==============    ==============
Net Loss Per Common Share - Basic and Diluted:
      Loss from continuing operations                                 $ -               $ -           $ (0.01)          $ (0.01)
      (Loss) income from discontinued operations                      $ -               $ -               $ -           $ (0.04)
                                                            --------------    --------------    --------------    --------------
      Basic loss per share                                            $ -               $ -           $ (0.01)          $ (0.05)
                                                            ==============    ==============    ==============    ==============
Weighted average shares outstanding -
     basic and diluted                                             86,759            64,044            82,683            93,000
                                                            ==============    ==============    ==============    ==============

            See Notes to Unaudited Condensed Consolidated Financial Statements.
</TABLE>
                                      4

<PAGE>
<TABLE>
<CAPTION>


                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                             (Dollars in thousands)
<S>                                                                              <C>                  <C>


                                                                                       2005                2004
                                                                                 -----------------    ----------------
CASH FLOWS USED IN OPERATING ACTIVITIES:
         Net loss from continuing operations                                               $ (603)             $ (794)

Adjustments to reconcile  net loss to cash  provided by operating  activities of
         continuing operations:
         Depreciation                                                                          21                  33
         Loss on disposal of segment                                                           11                  57
         Non-cash interest expense for beneficial conversion feature                            9                   -
         Changes in assets and liabilities:
           Increase in fees receivable                                                        (21)                (27)
           Increase in prepaids and other assets                                                -                   4
           Increase (decrease) in accounts payable
             accrued expenses and other current liabilities                                   206                  78
                                                                                 -----------------    ----------------
                 Cash used in operating activities
                   from continuing operations                                                (377)               (649)

CASH FLOWS USED IN INVESTING ACTIVITIES:
         Purchases of property and equipment                                                   (8)                 (4)
         Cash acquired in purchase of business                                                  6                   -
         Proceeds from the sale of websites                                                     -                  30
                                                                                 -----------------    ----------------
                 Cash (used) provided by investing activities
                    from continuing operations                                                 (2)                 26

CASH FLOWS FROM FINANCING ACTIVITIES:
         Proceeds from issuance of common stock                                               338                   -
         Proceeds from the issuance of warrants                                                 9                   -
         Proceeds from the issuance of debentures                                             106
         Repayments of convertible debentures                                                 (30)                  -
         (Repayments of) proceeds from  promissory notes                                      (49)                 23
                                                                                 -----------------    ----------------
                 Cash provided by financing activities of
                   continuing operations                                                      374                  23

Net cash provided by discontinued operations                                                    -                 626

(Decrease) increase in cash and cash equivalents                                               (5)                 26

Cash and Cash Equivalents - Beginning of Period                                               135                  70
                                                                                 -----------------    ----------------
Cash and Cash Equivalents - End of Period                                                   $ 130                $ 96
                                                                                 =================    ================


       See Notes to Unaudited Condensed Consolidated Financial Statements.
</TABLE>
                                      5

<PAGE>


                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 1.  PRINCIPLES OF  CONSOLIDATION,  BASIS OF  PRESENTATION,  AND SIGNIFICANT
ACCOUNTING POLICIES

BASIS OF  PRESENTATION  - Paragon  Financial  Corporation  (the  "Company")  was
incorporated   in  Delaware  on  August  27,  1999.   The  unaudited   condensed
consolidated  financial  statements  include the  accounts of Paragon  Financial
Corporation and its wholly owned  subsidiaries,  Paragon  Homefunding,  Inc. and
First Charleston Mortgage,  L.L.C.  (collectively  referred to as the "Company",
"we", or "us").  The accompanying  unaudited  condensed  consolidated  financial
statements have been prepared in accordance with accounting principles generally
accepted  in the United  States of America for  interim  financial  information.
Accordingly,  they do not include all of the information and footnotes  required
by accounting  principles generally accepted in the United States of America for
complete financial  statements.  In the opinion of management,  all adjustments,
consisting  of  normal  recurring  accruals,  considered  necessary  for a  fair
presentation have been included. Operating results for the three and nine months
ended September 30, 2005 are not necessarily  indicative of the results that may
be expected for the year ending December 31, 2005. All intercompany balances and
transactions  are  eliminated  in  consolidation.   The  unaudited  consolidated
financial  statements  presented  herein should be read in conjunction  with the
audited consolidated  financial statements and related notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2004.

USE  OF  ESTIMATES  - In  preparing  financial  statements  in  conformity  with
generally  accepted  accounting  principles,  management  is  required  to  make
estimates and assumptions that materially  affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the date
of the  financial  statements,  and revenues and expenses  during the  reporting
period.  Material  estimates  that are  particularly  susceptible to significant
change in the near term  relate to the  determination  of  goodwill  and loss on
disposal of our  discontinued  segment.  Actual  results could differ from those
estimates.

FINANCIAL  STATEMENT   PRESENTATION  -  The  condensed   consolidated  financial
statements  and notes  are  representations  of the  Company's  management.  The
Company's  management is responsible  for the integrity and objectivity of these
financial statements.

RECLASSIFICATIONS - Certain  reclassifications  have been made to our previously
issued financial statements to conform to the current period's presentation.  As
of December 31, 2004,  certain  amounts due to formerly  related party have been
reclassified  from current  portion of long-term  debt ($100) and notes  payable
($580) and included under the caption  "Liabilities to formerly  related party."
In addition,  we reclassified  the loss on the disposal of PGNF as a part of the
loss from discontinued operations (see footnote 2 "Discontinued Operations"). In
our Form 10-Q for the nine months ended  September  30, 2004,  we reported  this
amount as part of our loss from continuing operations.

ACQUISITIONS  - On January 19, 2005,  the Company  completed its  acquisition of
First Charleston Mortgage, L.L.C. ("FCM"). As consideration for the acquisition,
the Company issued 4,285,714 shares of its $0.0001 par value common stock valued
at $186 (or $0.043  per  share).  FCM has been in the  business  of  originating
residential  mortgage loans since 2002. The acquisition is effective February 1,
2005  and  was  accounted  for as an  acquisition  pursuant  to  SFAS  No.  141,
Accounting for Business  Combinations ("SFAS 141").  Accordingly,  the Company's
results of operations  include the  operating  results of FCM from the effective
date of the acquisition.

                                       6


<PAGE>



                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 1.  PRINCIPLES OF  CONSOLIDATION,  BASIS OF  PRESENTATION,  AND SIGNIFICANT
ACCOUNTING POLICIES - (continued)

The Company's  unaudited condensed  consolidated  results of operations on a pro
forma basis for the nine months ended  September  30, 2005 and 2004 as if it had
consummated  the acquisition of FCM and disposed of PGNF Home Lending Corp. (see
Note 2) on January 1, 2004 are as follows (in thousands except per share data):

<TABLE>
<CAPTION>
<S>                                                                   <C>          <C>


                                                                        2005         2004
                                                                      -------      -------
Revenue                                                               $  1,480     $  1,769

Net loss                                                              $   (614)    $   (815)

Basic and diluted loss per share                                      $  (0.01)    $  (0.01)

Weighted average shares outstanding - basic and diluted                 82,982       68,256

</TABLE>

CASH AND CASH  EQUIVALENTS  - For purposes of the  statement of cash flows,  the
Company  considers  all  highly  liquid  investments   purchased  with  original
maturities  of  three  months  or  less  on  their  acquisition  date to be cash
equivalents.  Cash and cash  equivalents  include cash on hand and funds held in
checking, money market, and savings accounts.

FEES RECEIVABLE - Fees  receivable  consist of fees due on loans closed prior to
the balance sheet date. Fees receivable are typically collected within 30 days.

OFFICE  PROPERTY AND EQUIPMENT,  NET - Office  property and equipment,  net, are
stated at cost less accumulated depreciation. Depreciation is computed using the
straight-line method over the estimated useful lives of the asset as follows:


Computer hardware                                Five years
Furniture and fixtures                           Five to seven years
Computer software                                Three years
Leasehold improvements                           Lower of life of lease or asset

DERIVATIVE  FINANCIAL  INSTRUMENTS  - The Company does not  purchase,  sell,  or
utilize  off-balance  sheet  derivative  financial   instruments  or  derivative
commodity instruments.

GOODWILL - Goodwill  represents  the excess of the purchase  price over the fair
value of the net assets acquired in a purchase  business  combination.  Goodwill
and  other  intangible  assets  are  stated  on the  basis  of  cost.  See  also
"Impairment" which follows.



                                       7


<PAGE>


                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 1.  PRINCIPLES OF  CONSOLIDATION,  BASIS OF  PRESENTATION,  AND SIGNIFICANT
ACCOUNTING  POLICIES -  (continued)

IMPAIRMENT - Long-lived assets,  including certain identifiable  intangibles and
goodwill,  are reviewed for impairment annually or whenever events or changes in
circumstances indicate that the carrying amount of the asset in question may not
be recoverable  including,  but not limited to, a deterioration of profits for a
business segment that has long-lived  assets, and when other changes occur which
might impair recovery of long-lived assets.

ORIGINATION  FEES -  Origination  fees are  comprised  of points  and other fees
charged on  mortgage  loans  originated  by the retail  segment of the  Company.
Points  and fees are  primarily  a  function  of the  volume of  mortgage  loans
originated by our retail segment.  Origination  fees on loans  originated by the
Company that are  subsequently  sold are deferred and  recognized as part of the
gain on sale of loans.

INCOME TAXES - The Company  accounts  for income taxes  pursuant to Statement of
Financial  Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes."
Under the asset and liability  method specified  thereunder,  deferred taxes are
determined based on the difference between the financial reporting and tax bases
of assets and  liabilities.  Deferred tax liabilities are offset by deferred tax
assets  relating to net operating loss  carryforwards  and deductible  temporary
differences.

STOCK  BASED  COMPENSATION  - The  Company  has  elected  to  follow  Accounting
Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to  Employees"
("APB 25"),  and related  interpretations,  in  accounting  for  employee  stock
options  rather  than the  alternative  fair  value  accounting  allowed by FASB
Statement No. 123,  "Accounting for Stock-Based  Compensation" ("SFAS 123"). APB
25 provides that compensation  expense relative to the Company's  employee stock
options is recorded on the date of grant only if the current market price of the
underlying  stock exceeds the exercise price.  Under SFAS 123, the fair value of
stock  options at the date of grant is  recognized  in earnings over the vesting
period of the options.  In December 2002, FASB issued SFAS No. 148,  "Accounting
for Stock-Based  Compensation--Transition  and Disclosure"  ("SFAS 148"),  which
amends SFAS 123 to provide  alternative  methods of  transition  for a voluntary
change  to  the  fair  value  method  of  accounting  for  stock-based  employee
compensation.  In addition,  SFAS 148 amends the disclosure requirements of SFAS
123 to  require  prominent  disclosures  in both  annual and  interim  financial
statements about the method of accounting for stock-based employee  compensation
and the effect of the method on reported  results.  The Company will continue to
report  stock  based  compensation  under  APB 25 but has  adopted  the  interim
reporting requirements of SFAS 148. The maximum number of shares of common stock
that may be issued pursuant to the plan is 100,000,000  shares.  As of September
30, 2005,  29,744,250 shares had been issued under the 2002 Equity Participation
Plan.

                                       8


<PAGE>


                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 1.  PRINCIPLES OF  CONSOLIDATION,  BASIS OF  PRESENTATION,  AND SIGNIFICANT
ACCOUNTING POLICIES - (continued)

ADVERTISING - The Company's advertising costs are expensed as incurred.

FAIR VALUE OF  FINANCIAL  INSTRUMENTS  -  Financial  instruments  of the Company
consist of cash and cash  equivalents,  receivables for fees,  accounts payable,
notes  payable,  and  convertible  debentures  payable.  The carrying  amount of
financial instruments approximates fair value.

CONCENTRATIONS  OF RISKS - The  Company is required by  Statement  of  Financial
Accounting  Standards  No.  105  to  disclose   concentrations  of  credit  risk
regardless of the degree of such risk. The Company's operations are concentrated
in  single-family  first mortgage  residential  real estate market.  The Company
operates in a heavily regulated  environment.  The operations of the Company are
subject to changes in laws,  administrative directives and rules and regulations
of federal,  state, and local governments and regulatory agencies.  Such changes
may occur  with  little  notice of time for  compliance.  Further,  the  Company
performs credit evaluations of its customers' financial condition,  performs its
operations  under  contracts  and  requires   deposits  when  deemed  necessary.
Historically, the Company has not incurred any significant credit losses.

RECENT  ACCOUNTING  DEVELOPMENTS - In December  2004,  the Financial  Accounting
Standards  Board issued a revision of SFAS No. 123,  Accounting for  Stock-Based
Compensation,  which also  supersedes  APB 25,  Accounting  for Stock  Issued to
Employees.  The revised standard  eliminates the alternative to use Opinion 25's
intrinsic  value  method  of  accounting  and  eliminates  the  disclosure  only
provisions  of SFAS No. 123. The  compliance  date for the revised  standard was
extended by the  Securities and Exchange  Commission  (the "SEC") in April 2005.
The  revision,  as  extended  by the SEC,  applies to all awards  granted  after
December 31, 2005 and requires the recognition of the cost of employee  services
received in exchange for awards of equity  instruments  based on the  grant-date
fair value of those awards and applies to all stock  options and awards  granted
after December 31, 2005 and requires the recognition of compensation  expense in
the financial statements for all share-based payment transactions  subsequent to
that  date.   The  revision  also  requires  the   prospective   recognition  of
compensation  expense in the financial statements for all unvested options as of
January  1,  2006.  Adoption  of this  standard  on  January 1, 2006 will have a
slightly  negative  impact on our  earnings  based on the pro forma  data in the
table above.

In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections,
which  replaces APB Opinion No. 20,  Accounting  Changes,  and SFAS 3, Reporting
Accounting Changes in Interim Financial  Statements-An  Amendment of APB Opinion
No. 28. SFAS 154 changes the  requirements for the accounting and reporting of a
change  in  accounting  principle.  It  applies  to  all  voluntary  changes  in
accounting   principle  as  well  as  to  changes   required  by  an  accounting
pronouncement that does not include specific transition provisions. SFAS 154



                                       9


<PAGE>


                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 1.  PRINCIPLES OF  CONSOLIDATION,  BASIS OF  PRESENTATION,  AND SIGNIFICANT
ACCOUNTING POLICIES - (continued)

eliminates  the  requirement  in APB Opinion  No. 20 to include  the  cumulative
effect changes in accounting  principle in the income statement in the period of
change.  Instead, to enhance comparability of prior period financial statements,
SFAS 154  requires  that  changes in  accounting  principle  be  retrospectively
applied.  Under  retrospective  application,  the new  accounting  principle  is
applied as of the beginning of the first period  presented as if that  principle
had always been used.  The  cumulative  effect of the change is reflected in the
carrying value of assets and  liabilities  as of the first period  presented and
the  offsetting  adjustments  are recorded to opening  retained  earnings.  Each
period  presented is adjusted to reflect the period specific effects of applying
the change.  Although  retrospective  application is similar to restating  prior
periods,  SFAS 154  gives  the  treatment  a new name to  differentiate  it from
restatement  for correction of an error.  Only direct effects of the change will
be included in the  retrospective  application;  all  indirect  effects  will be
recognized  in the period of change.  If it is  impracticable  to determine  the
cumulative  effect  for all  periods,  the new  accounting  principle  should be
applied as if it were adopted  prospectively from the earliest date practicable.
SFAS 154 is effective for accounting  changes and  corrections of errors made in
fiscal years beginning after the date SFAS 154 was issued.  The changes required
by  SFAS  154 are  not  expected  to have a  material  impact  on the  financial
condition, results of operations, or liquidity of the Company.

NOTE 2. DISCONTINUED OPERATIONS

On June 30,  2004,  we sold our PGNF  Home  Lending  Corp.  ("PGNF")  subsidiary
effective May 31, 2004. Pursuant to the agreement, we exchanged the common stock
of PGNF, as well as the assumption of all of PGNF's liabilities,  contingent and
otherwise,  for  52,329,735  shares of our common stock valued at $3,140  (based
upon the closing  price of $0.06 on May 31, 2004) and 1,800 shares of our Series
E preferred stock plus accrued dividend valued at $1,813. At the closing of this
sale,  our book value in PGNF was $5,054,  and we recognized a loss of $102 as a
result of this sale.

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  144,
"Accounting  for  Impairment or Disposal of  Long-Lived  Assets," the assets and
liabilities of the PGNF have been  classified as discontinued  operations,  with
its operating  results in the current and prior periods reported in discontinued
operations  for the nine-month  period ended  September 30, 2004. We recorded an
impairment charge related to this subsidiary in the three months ended March 31,
2004 that was  included  in the  results  of  discontinued  operations  for that
period. A summary of the operating  results of the  discontinued  operations for
the nine months ended September 30, 2004 was as follows:

                                       10


<PAGE>
<TABLE>
<CAPTION>

                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 2. DISCONTINUED OPERATIONS - (continued)
<S>                                                                            <C>



Revenues:

      Gain on sale of loans                                                    $                             1,949

      Loan origination fees                                                                                    551

      Interest, dividends, and other income                                                                    546
                                                                               -----------------------------------

            Total revenue                                                                                    3,046
                                                                               -----------------------------------
Expenses:

      Salaries, commissions, benefits, and stock-based compensation                                          2,151

      Loan production costs                                                                                    309

      General and administrative expenses                                                                    1,306

      Impairment of goodwill                                                                                 2,582

      Non-recurring expense (income)                                                                          (198)

      Interest expense                                                                                         436

      Other (income) expense                                                                                    (2)
                                                                               -----------------------------------
            Total expenses                                                                                   6,584


Loss on disposal of segment                                                                                    102
                                                                               -----------------------------------
            Total expenses and loss on disposal of segment                                                   6,686
                                                                               -----------------------------------
Loss from discontinued operations                                              $                            (3,640)
                                                                               ===================================
</TABLE>

NOTE 3. GOING CONCERN

As  shown  in  the  accompanying   unaudited  condensed  consolidated  financial
statements, we incurred a net loss of $200 and $603 in the three and nine months
ended September 30, 2005,  respectively,  and have incurred cumulative losses of
$10,464. At September 30, 2005, we had a working capital deficit of $2,619 and a
stockholders' deficit of $2,820. These factors raise substantial doubt about the
Company's  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.  The  Company's  continued  existence  depends on a number of
factors,  including  but not  limited  to, the  ability to  originate  loans and
improve the operating results of our existing  subsidiaries,  to secure adequate
sources of capital and to locate and fund  acquisitions  of suitable  companies.
However, there can be no assurance that we will be successful in these endeavors
or able to continue as a going concern.


                                       11


<PAGE>




                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 4. OFFICE PROPERTY AND EQUIPMENT

Office  property and equipment  from  continuing  operations as of September 30,
2005 and December 31, 2004 are summarized as follows:
<TABLE>
<CAPTION>
<S>                <C>                                  <C>

                                  2005                                 2004
                            --------------                       --------------
Furniture and
   fixtures        $                                25  $                                20

Leasehold
   improvements                                     13                                   --

Office equipment                                   104                                   87
                   -----------------------------------  -----------------------------------
                                                   142                                  107

Accumulated
   depreciation                                    (64)                                 (43)
                   -----------------------------------  -----------------------------------
                   $                                78  $                                64
                   ===================================  ===================================
</TABLE>

Depreciation  expense for the nine months ended  September 30, 2005 and 2004 was
$21 and $33, respectively.

NOTE 5. GOODWILL

Goodwill  represents the excess of the merger  consideration over the fair value
of the net assets of FCM on the date they were  acquired.  A summary of goodwill
follows:

<TABLE>
<CAPTION>
<S>                                                                             <C>


FCM-  Consideration  for the merger was $186 consisting of $186 in shares of the
   Company's common stock (4,285,714 shares at approximately  $0.043 per share).
   At the time of the acquisition, the estimated fair value of the net assets of
   FCM was $15.                                                                     171
                                                                                =======
</TABLE>

NOTE 6. SEGMENT DATA

The Company previously operated in two separate business segments: wholesale and
retail. With the disposal of PGNF (Note 2), the Company operates in one business
segment: retail mortgage brokering.

                                      12




<PAGE>


                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES

       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 7. DEBT

The  Company's  debt from  continuing  operations  as of September  30, 2005 and
December 31, 2004 was as follows:
<TABLE>
<CAPTION>
<S>                                          <C>                                <C>

                                                           2005                                2004
                                                    ----------------                   -----------------

Revolving line of credit  subject to a
   standstill  agreement  with a commercial
   bank  secured by certain  equipment  and
   furniture  of the  Company  bearing
   interest at prime rate requiring monthly
   principal and interest
   payments of $5, due November 1, 2005      $                              186 $                               221

Insurance  premium  finance  note  bearing
    an interest  rate of 8% with  monthly
   principal and interest payments of $6,
   due May 1, 2005                                                           --                                  24

Promissory note to vendor bearing
   interest of 8% with monthly principal
   and interest payments of $4                                               26                                  24

Promissory note to shareholders of PHF
   bearing interest at 4.92%, due
   December 31, 2005                                                         25                                  25

Promissory note to former members of FCM                                      8                                  --

Convertible debentures bearing interest
   at 10% due December 31, 2006,
   currently in default                                                     349                                 379

Convertible debentures bearing interest
   at 12% due December 31, 2007                                             106                                  --

Subordinated  note  payable to former
   stockholder  bearing  interest at 5%, due
   November 30, 2005, currently in default
   for payments due at December 31, 2004                                    480                                 480

Subordinated note payable to former
   stockholder bearing interest at 5%,
   due May 31, 2008, currently in default                                 1,051                               1,051
                                             ----------------------------------   ---------------------------------
Total debt                                   $                            2,231 $                             2,204
                                             ==================================   =================================
</TABLE>

On August 8, 2005, our Board of Directors  authorized the issuance of up to $250
in 12% convertible  debentures with 1,000,000  detachable  warrants in a private
placement.  Under this  authorization,  the conversion price of the debt and the
exercise  price of the  warrants  is equal to the  closing  market  price of our
common stock on the closing  date. To date, we have placed $115 in face value of
these notes.  In  accordance  with EITF 98-05 and 00-27,  we allocated $9 to the
value of the warrants based upon the relative fair values of the securities.  In
addition,  we determined that the convertible  note had a beneficial  conversion
feature and recorded $9 as interest  expense in the three months ended September
30, 2005 for the value of the beneficial conversion feature.

                                      13


<PAGE>






                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 8. COMMITMENTS AND CONTINGENCIES

Off-Balance  Sheet Risks - The Company enters into  commitments to extend credit
in the normal course of business. These commitments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount  recognized in
the  balance  sheet.  Commitments  to fund  loans  are  agreements  to lend to a
customer as long as there is no violation of any  condition  established  in the
contract. Commitments generally have fixed expiration dates or other termination
clauses.   One-to-four  family   residential   properties,   if  funded,   would
collateralize   the   commitments.   The  Company   evaluates  each   customer's
creditworthiness  and obtains  appraisals to support the value of the underlying
collateral.  Also,  external market forces affect the probability of commitments
being exercised;  therefore,  total  commitments  outstanding do not necessarily
represent  future  cash  requirements.  The  Company  quotes  interest  rates to
borrowers,  which are generally  subject to change by the Company.  Although the
Company typically honors such interest rate quotes, the quotes do not constitute
interest rate locks,  minimizing the potential interest rate risk exposure.  The
Company had no binding commitments to fund loans at September 30, 2005.

Supervisory Regulation - The Company's mortgage brokering business is subject to
the rules and  regulations  of the  Department of Housing and Urban  Development
("HUD") and various  state and federal  agencies  with  respect to  originating,
processing, and selling mortgage loans as a nonsupervised  correspondent lender.
Those rules and  regulations  require,  among other  things,  that the Company's
subsidiary,  PHF,  maintain a minimum  net worth of $63 each,  plus $25 for each
branch  office.  As of September  30,  2005,  PHF was in  compliance  with these
requirements.  The Company  currently does not service loans for other investors
or federal agencies.

Minimum Operating Lease Commitments - The Company is party to real estate leases
for its  mortgage  offices in Florida  and South  Carolina as well as leases for
certain office  equipment.  The Company pays taxes,  insurance,  other operating
expenses, and general maintenance for all lease arrangements.

Litigation - On September 24, 2004, the Company defaulted on its promissory note
dated June 4, 2003 to Bank of America,  N.A.  ("BoA") being unable to repay this
note in full when  demanded  to do so by BoA.  BoA has  commenced  legal  action
against the Company and other guarantors of the  indebtedness for repayment.  On
December 13, 2004, the Company entered into a standstill  agreement whereby, for
a principal reduction payment of $25 and the payment of an extension fee and the
bank's  legal fees,  the  maturity  date of the note was extended to December 1,
2005,  the  interest  rate was  increased  to the bank's prime rate plus 4%, and
requires principal reduction payments of $5 per month through November 1, 2005.

On November 23, 2004, we entered into an agreement with our former corporate law
firm whereby we would make monthly  payments of $17 until we had  liquidated the
$231 due them.  In addition,  we executed an affidavit of confession of judgment
waiving notice upon default or breach of the agreement  related to this debt. On
May 15, 2005, we defaulted on this agreement due to non-payment.

In mid-2001,  the Company, and certain of its former directors and officers were
named as  defendants  in class  action  complaints  alleging  violations  of the
federal  securities  laws in the United States  District  Court for the Southern
District of New York.  In  mid-2002,  the  complaints  against the Company  were
consolidated into a single action.

The essence of the  complaint is that in connection  with the Company's  initial
public  offering in October 1999  ("IPO"),  the  defendants  issued and sold the
Company's  common  stock  pursuant  to a  registration  statement  which did not
disclose to investors  that certain  underwriters  in the offering had solicited
and received  excessive  and  undisclosed  commissions  from  certain  investors
acquiring the Company's  common stock in connection  with the IPO. The complaint
also  alleges  that the  registration  statement  failed  to  disclose  that the
underwriters   allocated   Company  shares  in  the  IPO  to  customers  of  the
underwriters  in exchange  for the  customers'  promises to purchase  additional
shares in the  aftermarket  at  pre-determined  prices above the IPO price.  The
action seeks damages in an unspecified amount.

                                      14


<PAGE>


                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 8. COMMITMENTS AND CONTINGENCIES - (continued)

The action is being  coordinated with  approximately  300 other nearly identical
actions filed  against  other  companies  that had initial  public  offerings of
securities between 1997 and 2000 same time period.

The Company  has  approved a  Memorandum  of  Understanding  ("MOU") and related
agreements  which set forth the terms of a settlement  between the Company,  the
plaintiff  class and the vast  majority  of the other  approximately  300 issuer
defendants.  Among other  provisions,  the  settlement  contemplated  by the MOU
provides  for a release of the Company  and the  individual  defendants  for the
conduct  alleged  in the  action to be  wrongful.  The  Company  would  agree to
undertake  certain  responsibilities,  including  agreeing to assign  away,  not
assert,  or release  certain  potential  claims the Company may have against its
underwriters.

It is  anticipated  that any  potential  financial  obligation of the Company to
plaintiffs  pursuant  to the  terms of the MOU and  related  agreements  will be
covered by existing insurance.  Therefore,  the Company does not expect that the
settlement  will  involve  any  payment  by the  Company.  The MOU  and  related
agreements are subject to a number of  contingencies,  including the negotiation
of a  settlement  agreement  and its approval by the Court.  The Company  cannot
opine as to whether or when a settlement will occur or be finalized.  Whether or
not the settlement is ultimately  approved,  the Company believes the resolution
of this matter will not have a material adverse effect on the Company.

The  Company is also a party to various  legal  proceedings  arising  out of the
ordinary  course  of  the  Company's  business.  Management  believes  that  any
liability with respect to these legal actions, individually or in the aggregate,
will not have a material adverse effect on the Company's  consolidated financial
position and results of operations.

NOTE 9. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
<S>                                                                                                   <C>     <C>


                                                                                                      2005    2004
                                                                                                      ----    ----
SUPPLEMENTAL CASH FLOW DATA:
---------------------------

Cash interest paid                                                                                    $ 50    $  32

Income taxes paid                                                                                     $--      $--

</TABLE>

<TABLE>
<CAPTION>
<S>                                                                            <C>

                                                                                              2005
                                                                                              ----

ACQUISITIONS OF BUSINESSES, NET OF CASH ACQUIRED:


Fair value of assets acquired                                                  $                               204

Liabilities assumed                                                                                            (18)
                                                                               -----------------------------------
Fair value of assets acquired                                                                                  186
                                                                               -----------------------------------
Stock issued                                                                                                   186

Fair value of net assets acquired (other than goodwill)                                                        (15)
                                                                               -----------------------------------
Goodwill                                                                       $                               171
                                                                               ===================================
Cash acquired in purchase of business                                          $                                 6
                                                                               ===================================
</TABLE>

                                      15


<PAGE>





                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 10. STOCKHOLDERS' DEFICIT

PREFERRED STOCK - The Company's certificate of incorporation authorizes a series
of 5,000,000 shares of preferred stock with a par value of $0.0001 and with such
rights, privileges and preferences, as the board of directors may determine.

On March 26, 2003, the Company's  board of directors  authorized the issuance of
3,000 shares of preferred stock, par value $0.0001 per share, and designated the
shares as Series E Preferred Shares (the "Series E Preferred"). The stated value
of each share of the Series E  Preferred  is $1,000 per share;  has a  mandatory
dividend  of 4% of the stated  value,  per annum and shall be payable on January
1st of each year and is payable in either shares of the  Company's  common stock
or cash;  has no voting  rights;  and is not  convertible.  On March  26,  2003,
certain of the Company's executive officers converted certain accrued salary and
benefits into 659 shares of Series E Preferred.

At  September  30, 2005 and  December  31,  2004,  the Company had 659 shares of
Series E Preferred Stock issued and outstanding. The cumulative dividend payable
under this Series E Preferred  Stock was $60 and $47 at  September  30, 2005 and
December 31, 2004, respectively.

COMMON STOCK - On February 28, 2005, the Company  completed a private  placement
financing transaction pursuant to which it sold 17,207,791 units (at $0.0308 per
unit)  to  several  accredited  investors  for an  aggregate  purchase  price of
$530,000.  Each unit  consisted of one share of common stock,  par value $0.0001
per share (the "Common Stock"),  and one warrant to purchase one share of Common
Stock at $0.04 per share expiring on December 31, 2007.

On July 1, 2005, we issued 650,000 restricted shares valued at $32 (or $0.05 per
restricted  share) to a  consultant  for  services to be rendered  over the next
thirty-six  months.  These restricted shares vest ratably over a thirty-six (36)
month period.

On July 29, 2005, we issued  650,000  restricted  shares valued at $32 (or $0.05
per restricted  share) to a consultant for services to be rendered over the next
thirty-six  months.  These restricted shares vest ratably over a thirty-six (36)
month period.

STOCK PURCHASE WARRANTS - As part of our convertible notes offering completed in
2003,  we issued  detachable  warrants to purchase up to 75,800 shares of common
stock at a rate of $0.25 per share.  The warrants are  exercisable  at a rate of
$0.25 per share for a period of three years.  On January 31,  2005,  we extended
the exercise period to December 31, 2006 and reduced the exercise price to $0.05
per share as part of a restructuring of this debt.


                                      16


<PAGE>






                 PARAGON FINANCIAL CORPORATION AND SUBSIDIARIES
       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (Dollars in thousands, except share and per share amounts)

NOTE 10. STOCKHOLDERS' DEFICIT - (continued)

On February 28, 2005, we issued warrants to purchase up to 17,207,791  shares of
our common stock with an exercise  price of $0.04 per share as part of the units
offered as part of our private placement financing  transaction.  These warrants
expire on December 31, 2007.

On September 1, 2005, we issued warrants to purchase up to 460,000 shares of our
common  stock with an  exercise  price of $0.04 per share as part of our private
placement of convertible debt securities.  These warrants expire on December 31,
2006.

STOCK-BASED  COMPENSATION  - As of September 30, 2005,  there were stock options
outstanding for the purchase of 29,744,250 shares of the Company's common stock.
There were  3,372,500 and 5,922,000  stock options  granted during the three and
nine months ended September 30, 2005,  respectively.  There were 10,590,00 stock
options  forfeited  during the three and nine months ended  September  30, 2005,
respectively.

The following  table shows the pro forma net loss as if the fair value method of
SFAS No. 123 had been used to account for stock-based  compensation  expense for
the nine months ended September 30, 2005 and 2004 (dollars in thousands,  except
per share amounts):
<TABLE>
<CAPTION>
<S>                           <C>                                  <C>


                                             2005                                 2004
                                       ---------------                     ---------------
Net loss                      $                              (603) $                              (896)

Stock-based employee
   compensation expense
   determined under fair
   value method for all
   awards, net of related
   tax effects                                                174                                1,178
                              -----------------------------------  -----------------------------------

Pro forma net loss            $                              (777) $                            (2,074)
                              ===================================  ===================================
Net loss per share:

      Basic and diluted, as
         reported             $                             (0.01) $                             (0.01)

      Pro forma basic and
         diluted              $                             (0.01) $                             (0.02)
                              ===================================  ===================================
</TABLE>


NOTE 11. RESTATEMENT

In connection with a Comment Letter received by the Company in 2006, the Company
determined  that  the  consolidated  financial  statements  for the  year  ended
December 31, 2004, should be revised in light of such comment letter and changes
in the Company's  operational  activities  subsequent to December 31, 2004. As a
result,  the Company took an impairment  charge of $822 in  connection  with the
value of its goodwill,  and adjusted its deferred  income tax assets  through an
increase in the deferred income tax valuation  allowance of an additional  $414,
leaving the carrying value of deferred income tax assets at $0.

As a result, we restated our previously issued consolidated  balance sheet as of
December 31, 2004, and the consolidated statements of operations,  comprehensive
loss, cash flows, and  stockholders'  deficiency for the year ended December 31,
2004, and the related footnotes  thereto.  Accordingly,  the balance sheet as of
December 31, 2004, as shown on Page 3 of this  Quarterly  Report on Form 10-Q/A,
was derived  from the  restated  consolidated  balance  sheet as of December 31,
2004.



                                      17



<PAGE>






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

The following discussion should be reviewed in conjunction with our consolidated
financial  statements  and the  related  notes and other  financial  information
appearing elsewhere in this report. In addition to historical  information,  the
following  discussion and other parts of this document  contain  forward-looking
information that involves risks and  uncertainties.  Please refer to the section
below  entitled  "Forward-Looking  Statements".  Our actual results could differ
materially  from those  anticipated by such  forward-looking  information due to
factors  discussed  under the section  entitled  "Risk  Factors  That May Affect
Future Results" and elsewhere in this report.

Forward-Looking Statements

Certain  information  contained  in this  report  may  include  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995,  and is subject  to the safe  harbor  created  by that act.  We caution
readers that certain  important  factors may affect our actual results and could
cause such  results to differ  materially  from any  forward-looking  statements
which may be deemed to have been made in this Report or which are otherwise made
by or on behalf of us. For this purpose, any statements contained in this Report
that are not statements of historical  fact may be deemed to be  forward-looking
statements.  Without  limiting the  generality of the  foregoing,  words such as
"may,"  "will,"  "expect,"  "believe,"  "explore,"   "consider,"   "anticipate,"
"intend,"  "could,"  "estimate,"  "annualized,"  "plan,"  or  "continue"  or the
negative  variations  of those words or comparable  terminology  are intended to
identify  forward-looking  statements.  Factors  that  may  affect  our  results
include, but are not limited to the risks and uncertainties associated with:

o    our ability to raise  capital  necessary to sustain our  operations  and to
     implement our business plan,

o    our  ability  to  obtain  regulatory  permits  and  approvals  to  continue
     operating in the financial services

o    our  ability  to  identify  and  complete   acquisitions  and  successfully
     integrate the businesses we acquire, if

o    changes in the real estate market,  interest  rates, or the general economy
     of the markets in which we

o    our ability to employ and retain qualified management and employees,

o    changes in government regulations that are applicable to our businesses,

o    general  volatility of the capital  markets and the maintenance of a market
     for our shares,

o    changes in the demand for our services,

o    the degree and nature of our competition,

o    our ability to generate sufficient cash to pay our creditors, and

o    disruption  in the economic and  financial  conditions  primarily  from the
     impact of past terrorist  attacks in the United  States,  threats of future
     attacks,  police and military  activities  overseas,  and other disruptive
     worldwide political events.

We are also subject to other risks  detailed from time to time in our Securities
and Exchange Commission filings. Any one or more of these  uncertainties,  risks
and other  influences  could  materially  affect our results of  operations  and
whether  forward-looking  statements made by us ultimately prove to be accurate.
Our actual results,  performance,  and achievements could differ materially from
those expressed or implied in these forward-looking  statements. We undertake no
obligation to publicly update or revise any forward-looking statements,  whether
from new information, future events, or otherwise.

                                    18

<PAGE>




Overview

We were  incorporated in Delaware in August 1999 and are  headquartered in Ponte
Vedra Beach,  Florida. We are a retail mortgage broker in the one-to-four family
residential  mortgage  market.  We conduct business in the states of Florida and
South Carolina from our 8 offices.

Our business  relies on our ability to originate  mortgage loans at a reasonable
cost. The mortgage  industry is generally  subject to seasonal trends,  and loan
origination  volumes in our industry have  historically  fluctuated from year to
year and are  affected by such  external  factors as home  values,  the level of
consumer  debt and the  overall  condition  of the  economy.  In  addition,  the
premiums  we  receive  from  the  secondary  market  for  our  loans  have  also
fluctuated,  also  influenced by the overall  condition of the economy and, more
importantly,  the interest rate environment.  As a consequence,  the business of
originating and selling loans is cyclical.

Loan Originations
-----------------

As of September 30, 2005, we originated loans through our offices in Florida and
South Carolina.

Critical Accounting Policies

We have established  various accounting policies which govern the application of
accounting  principles generally accepted in the United States of America in the
preparation of our financial statements.  Certain accounting policies require us
to make significant estimates and assumptions that may have a material impact on
certain  assets  and  liabilities,  as well  as our  operating  results,  and we
consider these to be critical accounting policies. The estimates and assumptions
we use are based on historical  experience and other factors which we believe to
be reasonable under the circumstances. Actual results, particularly goodwill and
loss of our discontinued  segment,  could differ materially from these estimates
and  assumptions,  which could have a material  impact on the carrying  value of
assets and liabilities and our results of operations.

We believe the following are critical  accounting policies that require the most
significant  estimates and assumptions that are subject to significant change in
the preparation of our consolidated financial statements:

Loan Origination Fees
---------------------

Origination  fees are  comprised  of points and other fees  charged on  mortgage
loans  originated  by our loan  officers  and brokered  through  other banks and
financial  institutions.  Points and fees are primarily a function of the volume
of mortgage loans originated by our loan officers.

Loan Production Costs
---------------------

We also measure and monitor the cost to originate our loans.  Such costs include
the  costs of  credit,  appraisals,  and  other  direct  costs  associated  with
originating a mortgage loan, net of fees we receive from borrowers.  Commissions
paid to our loan  officers are included in the Salaries,  commissions,  benefits
and stock-based compensation caption on our statement of operations.

Income Taxes
------------

We file a consolidated  federal income and combined state franchise tax returns.
We utilize the asset and liability method of accounting for income taxes,  under
which  deferred  income  taxes are  recognized  for the future tax  consequences
attributable  to the  differences  between  the  financial  statement  values of
existing  assets and  liabilities  and their  respective  tax bases.  We measure
deferred tax assets and  liabilities  using enacted tax rates we expect to apply
to taxable income in the years in which those temporary differences are expected
to be  recovered  or settled.  We  recognize  the effect on deferred  taxes of a
change in tax rates in income in the period that includes the enactment date.

In  determining  the possible  realization  of deferred tax assets,  we consider
future  taxable income from the following  sources:  (a) the reversal of taxable
temporary  differences,  (b) future operations  exclusive of reversing temporary
differences,  and (c) tax  planning  strategies  that,  if  necessary,  would be
implemented  to  accelerate  taxable  income into periods in which net operating
losses might otherwise expire.

                                      19

<PAGE>





Goodwill and Impairment
-----------------------

Goodwill  represents the excess of the purchase price over the fair value of the
net assets  acquired  in a purchase  business  combination.  Goodwill  and other
intangible assets are stated on the basis of cost.

Long-lived assets,  including certain identifiable intangibles and goodwill, are
reviewed for impairment  annually or whenever events or changes in circumstances
indicate  that  the  carrying  amount  of  the  asset  in  question  may  not be
recoverable  including,  but not  limited to, a  deterioration  of profits for a
business segment that has long-lived  assets, and when other changes occur which
might impair recovery of long-lived assets.

Discontinued Operations
-----------------------

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets" (SFAS 144), a
component  classified  as held for sale is reported in  discontinued  operations
when the following  conditions are met: (a) the operations and cash flows of the
component have been (or will be) eliminated  from the ongoing  operations of the
entity as a result of the disposal  transaction and (b) the entity will not have
any significant  continuing involvement in the operations of the component after
the disposal  transaction.  In a period in which a component of an entity either
has been disposed of or is classified as held for sale, the income statement for
current and prior periods  reports the results of  operations of the  component,
including any gain or loss  recognized in accordance with SFAS 144 paragraph 37,
in  discontinued  operations.  The  results  of  discontinued  operations,  less
applicable  income  taxes  (benefit),  are  reported as a separate  component of
income  before  extraordinary  items and the  cumulative  effect  of  accounting
changes  (if  applicable).  The  assets  and  liabilities  of a  disposal  group
classified  as held for sale is presented  separately in the asset and liability
sections, respectively, of the statement of financial position.

Results of Operations

Three Months Ended September 30, 2005 Compared with Three Months Ended September
30, 2004

Loan Originations. Loan originations increased $17,360, or 83.2%, to $38,213 for
the three  months  ended  September  30, 2005  compared to $20,854 for the three
months ended  September  30, 2004. We closed 231 loans in the three months ended
September  30, 2005  compared to 111 loans for the three months ended  September
30, 2004. The increase in loan  originations is due to our acquisition of FCM in
January  2005 as well as  additional  loan  volume  from  our new  locations  in
Jacksonville, Florida.

Revenues

Loan  origination  fees. Loan origination fees increased $210, or 43.8%, to $689
for the three months  ended  September  30, 2005  compared to $479 for the three
months ended September 30, 2004. The increase in loan  origination  fees was due
to our  acquisition of FCM in January 2005. The average  revenue per closed loan
decreased  30.9% in the three months ended  September  30, 2005  compared to the
three months ended  September  30,  2004.  The number of loans closed  increased
108.1% in the three  months  ended  September  30, 2005 as compared to the three
months ended September 30, 2004.  Expressed as a percentage of loan  origination
volume, origination fees were 1.8% and 2.3% for the three months ended September
30, 2005 and 2004, respectively.

Operating Expenses

Salaries,   commissions,   benefits  and  stock-based  compensation.   Salaries,
commissions,  benefits and stock-based  compensation increased $88, or 21.6%, to
$495 for the three  months  ended  September  30, 2005  compared to $407 for the
three months ended  September  30, 2004.  This increase was due to the salaries,
commissions and benefits  associated with our acquisition of FCM in January 2005
and for our new branches in Jacksonville, Florida.

Loan production costs. Loan production costs increased $7, or 100.0%, to $14 for
the three months ended  September  30, 2005  compared to $7 for the three months
ended  September 30, 2004.  This increase was due to the higher loan  production
costs associated with our FCM acquisition.

                                       20
<PAGE>





General  and  administrative  expenses.   General  and  administrative  expenses
increased $196, or 145.2%, to $331 for the three months ended September 30, 2005
compared to $135 for the three months ended  September  30, 2004.  This increase
was primarily due to increased  expenses at our  corporate  location  associated
with our revised business plan as well as the operating expenses incurred at our
recently acquired subsidiary, FCM, and our new offices in the three months ended
September 30, 2005.

Operating loss. The operating loss increased by $81, or 115.7%,  to $151 for the
three months ended September 30, 2005 compared to $70 for the three months ended
September 30, 2004. This decrease was due primarily to factors discussed above.

Interest expense.  Interest expense increased $8, or 19.5%, to $49 for the three
months  ended  September  30, 2005  compared to $41 for the three  months  ended
September 30, 2004. This increase was due primarily to the beneficial conversion
feature associated with the convertible notes we issued on September 1, 2005.

Net loss.  The net loss  increased  $89, or 80.2%,  to $200 for the three months
ended  September 30, 2005 compared to $111 for the three months ended  September
30, 2004. This decrease was primarily due to the factors discussed above.

Nine Months Ended  September 30, 2005 Compared with Nine Months Ended  September
30, 2004

Loan Originations. Loan originations increased $10,102, or 14.0%, to $82,315 for
the nine months ended September 30, 2005 compared to $72,213 for the nine months
ended September 30, 2004. We closed 495 loans in the nine months ended September
30, 2005 compared to 428 loans for the nine months ended September 30, 2004. The
increase in loan  originations  is due to our acquisition of FCM in January 2005
as well as  additional  loan  volume  from our new  locations  in  Jacksonville,
Florida.

Revenues

Loan origination fees. Loan origination fees decreased $229, or 13.5%, to $1,469
for the nine months  ended  September  30, 2005  compared to $1,698 for the nine
months  ended  September  30,  2004.  This  decrease was due to a decline in the
average  revenue  per loan of $1,  or  25.2%,  to $3 for the nine  months  ended
September 30, 2005  compared to $4 in the nine months ended  September 30, 2004.
This  decrease  was due  primarily to  competition  in the  marketplace  as loan
originators become more aggressive in pricing loans in a declining mortgage loan
market.

Operating Expenses

Salaries,   commissions,   benefits  and  stock-based  compensation.   Salaries,
commissions,  benefits and stock-based compensation decreased $649, or 36.5%, to
$1,127 for the nine months ended  September  30, 2005 compared to $1,776 for the
nine months ended  September  30,  2004.  This  decrease was due  primarily to a
reduction of salaries, benefits and non-cash stock based compensation of $382 at
our  corporate  office as well as  reductions  in  commissions  paid to our loan
officers  on loans  originated  in the nine  months  ended  September  30,  2005
compared to the nine months ended September 30, 2004.

Loan production costs. Loan production costs decreased $23, or 42.6%, to $31 for
the nine months  ended  September  30, 2005  compared to $54 for the nine months
ended  September  30, 2004.  This decrease was due to a higher pull through rate
from application to closing in the nine months ended September 30, 2005 compared
to the nine months ended September 30, 2004.

General  and  administrative  expenses.   General  and  administrative  expenses
increased  $193, or 33.4%,  to $771 for the nine months ended September 30, 2005
compared to $578 for the nine months ended  September 30, 2004.  The increase in
general and administrative  expenses in the nine months ended September 30, 2005
as  compared to 2004 is due to our  acquisition  of FCM,  effective  February 1,
2005, and the additional  branches opened by both FCM and PHF in the nine months
ended September 30, 2005.

Operating  loss. The operating loss decreased by $250, or 35.2%, to $460 for the
nine months ended  September 30, 2005 compared to $710 for the nine months ended
September 30, 2004. This decrease was due primarily to factors discussed above.

                                       21
<PAGE>





Interest expense. Interest expense increased $59, or 70.2%, to $143 for the nine
months  ended  September  30, 2005  compared  to $84 for the nine  months  ended
September  30,  2004.  This  increase  was  due  primarily  to  interest  on the
subordinated  notes  issued to PGNF on May 31,  2004 as part of our  disposal of
PGNF.

Net loss from continuing  operations.  The net loss from  continuing  operations
decreased  $191, or 24.1%,  to $603 for the nine months ended September 30, 2005
compared to $794 for the nine months ended September 30, 2004. This decrease was
primarily due to the factors discussed above.

Loss from discontinued operations. The net loss from discontinued operations was
$3,640 in the nine months ended September 30, 2004 and relates to the operations
of PGNF which were disposed of June 1, 2004.  Total revenues of our discontinued
operations  were $3,046 for the nine months  ended  September  30,  2004.  Total
expenses of our  discontinued  operations  were $6,584 for the nine months ended
September 30, 2004.  Total expenses of our  discontinued  operations  include an
impairment  charge of $2,582 in the nine months ended September 30, 2004 for the
reduction in carrying  value of PGNF. We incurred a non-cash loss of $102 on the
disposal of PGNF in the nine months ended September 30, 2004.

Net loss. The net loss decreased  $3,831,  or 86.4%, to $603 for the nine months
ended  September 30, 2005 compared to $4,434 for the nine months ended September
30, 2004. This decrease was primarily due to the factors discussed above.

Liquidity and Capital Resources

Our primary  source of  liquidity  is from fees earned by  originating  mortgage
loans. Our mortgage  origination  operations require continued access to cash to
fund ongoing  administrative,  operating,  and tax expenses as well as providing
cash to fund our corporate  operations.  Our corporate operations require access
to cash to fund ongoing  administrative  expenses,  our acquisition program, tax
expenses  as  well  as  interest  and  principal  payments  under  our  existing
indebtedness.

At September 30, 2005, we had cash and cash  equivalents of  approximately  $133
and fees  receivable  of $67 with  which to satisfy  our  ongoing  mortgage  and
corporate operations' current liabilities of $2,882. We are currently seeking to
improve  our  liquidity  by  converting  past  due  vendor  balances  and  other
liabilities to common stock as well as raising the necessary capital to continue
as a going concern.

On August 8, 2005,  our Board of  Directors  authorized  the  issuance  of up to
$250,000 in 12% convertible  debentures with 1,000,000  detachable warrants in a
private placement.  Under this  authorization,  the conversion price of the debt
and the exercise  price of the warrants is equal to the closing  market price of
our common stock on the closing date. To date, we have placed $115 in face value
of these notes.  In accordance with EITF 98-05 and 00-27, we allocated $9 to the
value of the warrants based upon the relative fair values of the securities.  In
addition,  we determined that the convertible  note had a beneficial  conversion
feature and recorded $9 as interest  expense in the three months ended September
30, 2005 for the value of the beneficial conversion feature. If all of the notes
are purchased,  the holders could convert their notes into  5,000,000  shares of
our common stock based upon a conversion  price of $0.05 per share.  To date, we
have placed $115 in notes as part of this private placement.

In October 2005, we retained the services of an investment  banking firm seeking
to raise  capital to implement  our 2006  business  plan.  While we expect to be
successful in our efforts, we can provide no assurance at this time that we will
be, or if we are, that such financing will not be dilutive to our shareholders.

The  performance of our operating  subsidiaries  continued to improve during the
three  months  period  ended  September  30, 2005 as  compared  to the  previous
quarters  in 2005  both in terms of loan  production  and  profitability.  While
improved, their performance is still below expectation for the nine months ended
September 30, 2005. Due to this poor operating performance, as well as the costs
associated with our being publicly  traded,  we are  experiencing  difficulty in
meeting  the  liquidity  requirements  of our  corporate  operations  as well as
servicing  its  existing   obligations.   Unless  our  subsidiaries'   operating
performance  improves,  or we are able to  acquire  other  profitable  financial
services operations,  we will be required to raise additional equity capital the
terms of which might be substantially dilutive to our existing shareholders.  We
continue  reviewing  our  corporate  operating  expenses,   seeking  to  acquire
profitable  financial  services  operations  producing  positive cash flow,  and
renegotiating the terms of our existing  indebtedness with major creditors,  but
there  can be no  assurances  that we will be  able  to  secure  the  additional
capital,  reduce our corporate operating expenses,  renegotiate the terms of our
existing  indebtedness,  or acquire  profitable  financial  services  operations
required to continue  funding our corporate  operations  and continue as a going
concern.

                                       22

<PAGE>





Below is a summary of our actions to date attempting to restructure our debt.

Short-term  debt.  On June 4, 2003,  we entered into a revolving  line of credit
with a commercial bank in the amount of $250,000.  This revolving line of credit
had an interest rate of prime,  is secured by a general lien on our assets,  and
is  guaranteed  by our  current and former  subsidiaries.  The  commercial  bank
demanded  repayment of this credit  facility on September  13, 2004. We were not
able to meet this  demand,  and,  as  discussed  elsewhere,  we  entered  into a
standstill  agreement  with this bank whereby the maturity  date of the note was
extended to December 1, 2005,  the interest rate increased from the bank's prime
rate to its prime rate plus 4%, and required principal  reduction payments of $5
per month through December 1, 2005.

Convertible debentures. On March 6, 2003, we completed a private offering of 379
units  consisting of (i) a $1 convertible  promissory note due December 31, 2003
with interest  payable  quarterly at a stated interest rate of 15% per annum and
(ii) a warrant to  purchase  shares of common  stock,  exercisable  at $0.25 per
share,  for each $5.00 in principal of the  promissory  note issued in the unit.
The holder  has the right to convert  the  outstanding  principal  amount of the
convertible  promissory  note (or any portion  thereof),  together  with accrued
interest thereon, into shares of our common stock at a conversion price of $0.25
per share,  subject to standard  anti-dilution  adjustments  as specified in the
note.  In  2005,  we  repaid  principal  of $30 to  certain  holders  of our 15%
convertible  notes. The remaining holders have agreed to amend the maturity date
of the  convertible  notes to  December  31, 2006 and reduce the  interest  rate
thereon to 10% in  consideration  for a  reduction  in the  strike  price of the
warrants to $0.05 per share. The convertible  notes require  quarterly  interest
payments on March 31, June 30,  September  30, and December 31 of each year.  We
are currently in default under the revised terms of these  promissory  notes for
the non-payment of the quarterly interest.

Subordinated  promissory notes to PGNF (a formerly related party). In July 2005,
the owner of our former  subsidiary  PGNF did an  assignment  for the benefit of
creditors and closed the business. PGNF is the holder of subordinated promissory
notes with a face value of $1,531 and accrued  interest of $83. We are currently
in default under the terms of these promissory notes. Our attempts at having the
assignee convert this debt into equity have been rejected.

In addition to the above, we continue to explore  additional ways to enhance our
liquidity and reduce our insolvency risk.

Future Accounting Pronouncements

There  are   currently  no   pronouncements   issued  that  are   scheduled  for
implementation  during 2005 that are expected to have any significant  impact on
the accounting policies of the Company.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Impact of Inflation
-------------------

Inflation affects us most significantly in the area of loan originations and can
have a substantial  effect on interest rates.  Interest rates normally  increase
during periods of high  inflation and decrease  during periods of low inflation.
Profitability  may be directly affected by the level and fluctuation in interest
rates that affect our ability to earn a spread between interest  received on its
loans  and the  costs of its  borrowings.  Our  profitability  is  likely  to be
adversely  affected during any period of unexpected or rapid changes in interest
rates. A substantial  and sustained  increase in interest rates could  adversely
affect  our  ability  to  originate  loans  and  affect  the  mix of  first  and
second-lien  mortgage loan products.  Generally,  first-lien mortgage production
increases  relative  to  second-lien  mortgage  production  in  response  to low
interest  rates  and  second-lien  mortgage  production  increases  relative  to
first-lien   mortgage   production   during  periods  of  high  interest  rates.
Fluctuating  interest rates may also affect the net interest income earned by us
resulting  from the  difference  between  the yield to us on loans held  pending
sales and the interest paid by us for funds borrowed.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

                                       23
<PAGE>








Tabular Disclosure of Contractual Obligations

The following  table  presents our  contractual  obligations as of September 30,
2005:
<TABLE>
<CAPTION>
<S>                                      <C>                     <C>                    <C>                      <C>

                                                                     Payment Due By Period
                                                                     ---------------------

                                          Total            Less than One Year        1 to 3 Years           3 to 5 Years
                                         -----            ------------------        ------------           ------------
Subordinated debt due
formerly related party                    $1,531                  $ 1,531                 $-----                   $---
Short-term debt                           $  186                  $   186                 $-----                   $---
Note payable for                          $   25                  $    25                 $-----                   $---
Convertible notes                         $  455                  $   349                 $  106                   $---
Notes payable                             $   26                  $    26                 $-----                   $---
Note payable,                             $    8                  $     8                 $-----                   $---
Operating leases                          $  112                  $    52                 $   60                   $---

                          ---------------------- ----------------------- ---------------------- ----------------------
The fair vallue of our
contractual obligations
approximate the
carrying value                           $2,343                  $2,177                   $166                     $---
                          ====================== ======================= ====================== ======================
</TABLE>

The fair value of our contractual obligations approximates their carrying value.

Market Risk
-----------

Our market risk is the risk of economic loss resulting  from adverse  changes in
market prices of mortgage  loans and interest  rates.  When interest rates rise,
applications  in process with locked-in  rates  decrease in value.  This risk of
loss can be  reflected  in  diminished  current  market  values  and/or  reduced
potential income in future periods.

When  interest  rates  decline,  customers  may  withdraw  their  mortgage  loan
applications.  In those  instances,  we may be required  to reduce our  interest
rates to meet the market  demands.  When interest rates rise,  fallout may occur
due to customers that are not locked into a rate withdrawing their applications,
and, as a result, we may suffer a reduction in the volume of loan  originations.
We may be  required  to reduce our fees to entice  these  customers  in order to
close their loans.

We do not  maintain a trading  account nor are we subject to  currency  exchange
risk or commodity price risk.  Responsibility for monitoring  interest rate risk
rests with senior management.  Senior management  regularly reviews our interest
rate risk  position and adopts  balance  sheet  strategies  that are intended to
optimize  operating  earnings while  maintaining  market risk within  acceptable
guidelines.

While we monitor  interest  rates and may, from time to time,  employ a strategy
designed to hedge some of the risks  associated  with changes in interest rates,
no assurance can be given that our results of operations and financial condition
will not be adversely affected during periods of fluctuations in interest rates.
There were no open hedging positions at September 30, 2005.

                                       24

<PAGE>




Item 4. Control and Procedures.

We carried out an evaluation,  under the supervision and with the  participation
of the our management,  including our Chief Executive Officer, or CEO, and Chief
Financial  Officer,  or CFO, of the effectiveness of the design and operation of
the  Company's  disclosure  controls and  procedures as of the end of the period
covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the CEO
and CFO have concluded that our disclosure controls and procedures are effective
to ensure that  material  information  is recorded,  processed,  summarized  and
reported  by our  management  on a timely  basis in  order  to  comply  with our
disclosure  obligations  under the  Securities  Exchange Act of 1934 and the SEC
rules thereunder.

There were no significant changes in the Company's internal controls or in other
factors during the third quarter of 2005 that have materially  affected,  or are
reasonably likely to materially affect, the Company's internal controls.


                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Refer to Part I, Footnote 8 - Commitments and  Contingencies for a discussion of
our ongoing  litigation.  In addition to the specific items  discussed  therein,
from time to time, we become  involved in a variety of mortgage  lending related
claims and other  matters  incidental to its business in addition to the matters
described  above. In our opinion,  the resolution of any of these matters is not
expected  to  have a  material  adverse  effect  on our  consolidated  financial
position and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On  July 1,  2005,  we  issued  650,000  restricted  shares  valued  at $32 to a
consultant for services to be rendered over the next  thirty-six  months.  These
restricted shares vest ratably over a thirty-six (36) month period.

On July 29,  2005,  we  issued  650,000  restricted  shares  valued  at $32 to a
consultant for services to be rendered over the next  thirty-six  months.  These
restricted shares vest ratably over a thirty-six (36) month period.

Item 3. Defaults Upon Senior Securities.

As we disclosed in Part I, Footnote 8 - Commitments and Contingencies, we are in
default under certain of our promissory  notes with our creditors.  As explained
therein,  we are attempting to negotiate  extensions and other  forbearance with
these creditors.

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

There were no matters submitted to a vote of security holders during the quarter
ended September 30, 2005.

Item 5. Other Information.

None

Item 6. Exhibits and Reports on Form 8-K.

(a)  Exhibits: The following exhibits are hereby filed as part of this Quarterly
     Report on Form 10-Q.


Exhibit   Description
Number
------    -----------

31.1 Certification  of  Principal  Executive  Officer  pursuant  to Form of Rule
     13a-14(a),  as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
     2002, dated October 10, 2008*

31.2 Certification  of  Principal  Financial  Officer  pursuant  to Form of Rule
     13a-14(a),  as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
     2002, dated October 10, 2008 *

32.1 Certification  pursuant to 18 U.S.C.  Section 1350, as Adopted  Pursuant to
     Section 906 of the Sarbanes-Oxley Act of 2002, dated October 10, 2008*

32.2 Certification  pursuant to 18 U.S.C.  Section 1350, as Adopted  Pursuant to
     Section 906 of the Sarbanes-Oxley Act of 2002, dated October 10, 2008*

*      Filed herewith
(b) Reports of Forms 8-K

      None.

                                       25
<PAGE>



                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


PARAGON FINANCIAL CORPORATION
(KNA NEW MARKET LATIN AMERICA, INC.)

BY:  /s/ PHILIP J. RAUCH
     -------------------
     Philip J. Rauch
     Chief Financial Officer
     Dated: October 10, 2008

                                       26