UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

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

For the quarterly period ended September 30, 2005

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

For the transition period from _____________ to ______________

Commission file number __________________________________

FREEDOM FINANCIAL GROUP, INC.

(Exact name of small business issuer as specified in its charter)

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

3058 East Elm Street, Springfield, Missouri 65802

(Address of principal executive offices)

(417) 886-6600

(Issuer's Telephone Number)

(Former name, former address and former fiscal year, if changed since last report)

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes x No o

APPLICABLE ONLY TO CORPORATE ISSUERS

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

As of November 10, 2005, 9,965,759 shares of Common Stock, $0.0001 par value were outstanding.

Transitional Small Business Disclosure Format: Yes o No x

1

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		3
ITEM 1.	Financial Statements	3
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
ITEM 3.	Controls and Procedures	31
PART II. - OTHER INFORMATION		32
ITEM 1.	Legal Proceedings	32
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
ITEM 3.	Defaults Upon Senior Securities	32
ITEM 4.	Submission of Matters to a Vote of Security Holders	32
ITEM 5.	Other Information	32
ITEM 6.	Exhibits and Reports on Form 8-K	33
INDEX TO EXHIBITS		33

2

PART I. FINANCIAL INFORMATION

ITEM 1.  Financial Statements

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders

Freedom Financial Group, Inc.

Springfield, Missouri

We have reviewed the accompanying consolidated balance sheet of Freedom Financial Group, Inc. as of September 30, 2005, and the related consolidated statements of operations for the three-month and nine-month periods ended September 30, 2005 and 2004, and changes in stockholders’ equity and cash flows for the nine-month periods ended September 30, 2005 and 2004. These interim financial statements are the responsibility of the Company’s management.

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

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

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2004 and the related consolidated statements of operations, stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated January 21, 2005 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2004 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ BKD, LLP

Springfield, Missouri

October 28, 2005

3

FREEDOM FINANCIAL GROUP, INC.

Consolidated Balance Sheets

	Unaudited
	September 30,		December 31,
	2005		2004
Assets
Cash and cash equivalents	$	2,943,551	$	8,779,211
Finance receivables, net		9,107,947		4,090,708
Notes receivable, net		16,618		77,398
Property and equipment, net		276,962		294,305
Other assets		269,027		69,303
Total assets	$	12,614,105	$	13,310,925

Liabilities and Stockholders’ Equity

Liabilities
Accounts payable	$	16,315	$	218,954
Accrued expenses		38,762		18,091
Accrued compensation costs		21,901		62,507
Dealer holdbacks		106,205		90,578
Dealer reserves		39,848		44,119
Reorganization costs payable		—		5,000
Total liabilities		223,031		439,249

Stockholders’ Equity
Redeemable convertible preferred stock, $0.0001 par value; 8,994,357 shares authorized, issued and outstanding		13,798,817			13,798,817
Common stock, $0.0001 par value; 36,000,000 shares authorized; 9,965,759 shares issued and outstanding		997			997
Retained earnings (deficit)		(2,355,722	)		(1,731,382	)
Accumulated other comprehensive income		946,982			803,244
Total stockholders’ equity		12,391,074			12,871,676
Total liabilities and stockholders’ equity	$	12,614,105		$	13,310,925

See Notes to Condensed Consolidated Financial Statements.

4

FREEDOM FINANCIAL GROUP, INC.

Consolidated Statements of Operations

Unaudited

	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2005			2004			2005			2004
Revenues
Interest income	$	613,821		$	307,115		$	1,604,761		$	739,629
Recovery of charged-off finance receivables		22,620			32,383			100,650			129,811
Other income		21,668			25,806			72,571			71,313
Total revenues		658,109			365,304			1,777,982			940,753
Provision for Credit Losses		233,559			74,032			431,847			162,573
Net Revenues After Provision for Credit Losses		424,550			291,272			1,346,135			778,180
Operating Expenses		586,618			502,707			1,973,210			1,450,626
Operating Loss		(162,068	)		(211,435	)		(627,075	)		(672,446	)
Nonoperating Income
Gain on settlement of pending claim		—			955,973			—			955,973
Other		1,586			—			2,735			—
Income (Loss) Before Income Taxes		(160,482	)		744,538			(624,340	)		283,527
Provision for Income Taxes		—			—			—			—
Net Income (Loss)	$	(160,482	)	$	744,538		$	(624,340	)	$	283,527
Basic Income (Loss) Per Share	$	(0.02	)	$	0.07		$	(0.06	)	$	0.03
Diluted Income (Loss) Per Share	$	(0.02	)	$	0.04		$	(0.06	)	$	0.01

See Notes to Condensed Consolidated Financial Statements.

5

FREEDOM FINANCIAL GROUP, INC.

Consolidated Statements of Stockholders’ Equity

Unaudited

	Redeemable										Accumulated
	Convertible										Other
	Preferred		Common Stock					Retained			Comprehensive
	Stock		Shares			Amount		Earnings			Income		Total
Balance, December 31, 2004	$	13,798,817		9,965,759		$	997	$	(1,731,382	)	$	803,244	$	12,871,676
Net loss		—		—			—		(624,340	)		—		(624,340	)
Foreign currency translation adjustment		—		—			—		—			143,738		143,738
Comprehensive loss		—		—			—		—			—		(480,602	)
Balance, September 30, 2005	$	13,798,817		9,965,759		$	997	$	(2,355,722	)	$	946,982	$	12,391,074
Balance, December 31, 2003	$	13,798,817		9,965,759		$	997	$	(1,747,658	)	$	550,436	$	12,602,592
Net income		—		—			—		283,527			—		283,527
Foreign currency translation adjustment		—		—			—		—			78,788		78,788
Comprehensive income		—		—			—		—			—		362,315
Cancellation of stock issued in error		—		(1,726	)		—		—			—		—
Balance, September 30, 2004	$	13,798,817		9,965,759		$	997	$	(1,464,131	)	$	629,224	$	12,964,907

See Notes to Condensed Consolidated Financial Statements.

6

FREEDOM FINANCIAL GROUP, INC.

Consolidated Statements of Cash Flows

Unaudited

	For the Nine Months Ended September 30,
	2005			2004
Operating Activities
Net income (loss)	$	(624,340	)	$	283,527
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation		43,326			42,710
Provision for credit losses		431,847			162,573
Deferred discount income		(491,606	)		(300,352	)
Recovery of charged-off finance receivables		162,183			108,812
Gain on settlement of pending claims		—			(955,973	)
Changes in
Other assets		(58,957	)		(26,141	)
Accounts payable and accrued expenses		(223,300	)		(43,911	)
Reorganization costs payable		(5,000	)		(15,000	)
Net cash used in operating activities		(765,847	)		(743,755	)
Investing Activities
Purchase of finance receivables		(8,933,881	)		(3,478,349	)
Principal collected on finance receivables		3,953,024			2,350,550
Payments of dealer reserves		(14,692	)		(12,589	)
Payments of dealer holdbacks		(134,069	)		(114,585	)
Principal collected on notes receivable		60,780			32,247
Purchase of property and equipment		(18,184	)		(41,016	)
Proceeds from sale of property and equipment		2,000			—
Net cash used in investing activities		(5,085,022	)		(1,263,742	)
Financing Activities
Settlement proceeds from previously pending claims		—			6,955,973
Payment of deferred financing fees		—			(25,000	)
Net cash provided by financing activities		—			6,930,973
Effect of Exchange Rate Changes on Cash and Cash Equivalents		15,209			14,919
Net Increase (Decrease) in Cash and Cash Equivalents		(5,835,660	)		4,938,395
Cash and Cash Equivalents, Beginning of Period		8,779,211			4,280,766
Cash and Cash Equivalents, End of Period	$	2,943,551		$	9,219,161

See Notes to Condensed Consolidated Financial Statements.

7

FREEDOM FINANCIAL GROUP, INC.

Notes to Condensed Consolidated Financial Statements

Unaudited

Note 1:  General

The accompanying unaudited condensed consolidated financial statements of Freedom Financial Group, Inc. (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for reporting on Form 10-QSB. Accordingly, certain information and footnotes required by generally accepted accounting principles for complete financial statements have been omitted. These interim statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2004 and notes thereto included in the Company’s Form 10-SB/A filed with the Securities and Exchange Commission on September 28, 2005.

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

Note 2:  Basis of Presentation

The consolidated financial statements include the accounts of Freedom Financial Group, Inc. (FFG), successor by merger to Stevens Financial Group, Inc. (SFG) and SFG’s wholly owned subsidiaries, SFC Funding Corporation (SFC) and SFC Automobile Receivables Trust 2000A (SFC Trust) and FFG’s wholly owned Canadian subsidiary, T.C.G. - The Credit Group Inc. (TCG), formerly Sinclair Credit Group Co., all of which collectively comprise a single reporting segment, the “Company.” All significant intercompany transactions have been eliminated in consolidation.

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

8

Note 3:  Finance Receivables and Allowance for Credit Losses

Finance receivables consist of the following at September 30, 2005 and 2004, respectively:

	2005		2004
Automobiles	$	7,764,086	$	2,183,510
Equipment leases		816,096		999,724
Bulk food		811,964		962,070
Home appliances		265,966		274,800
Other		471,068		485,736
Total finance receivables		10,129,180		4,905,840
Less
Unearned discount		630,890		518,899
Allowance for credit losses		390,343		296,233
		1,021,233		815,132
Net finance receivables	$	9,107,947	$	4,090,708

Approximately 36% and 63% of the above finance receivables as of September 30, 2005 and 2004, respectively, are Canadian in origin.

Amounts contractually receivable (including principal and interest) under our finance receivables at September 30, 2005, were as shown in the following table. The Company expects our actual collections to differ significantly from the amounts presented below as a result of prepayments, delinquent payments, partial payments and nonpayments.

2005	$	1,717,123
2006		5,145,012
2007		3,500,359
2008		2,266,141
2009		644,196
2010		12,889
Total	$	13,285,720

Activity in the allowance for credit losses related to finance receivables for the three months ended September 30, 2005 and 2004, respectively, was as follows:

	2005			2004
Balance, beginning of period	$	317,934		$	282,232
Provision charged to expense		233,559			74,032
Losses charged off		(332,569	)		(65,244	)
Recoveries of previously charged off amounts		158,851			30,603
Effect of foreign currency translation		12,568			8,118
Balance, end of period	$	390,343		$	329,741

9

Activity in the allowance for credit losses related to finance receivables for the nine months ended September 30, 2005 and 2004, respectively, was as follows:

	2005			2004
Balance, beginning of period	$	296,233		$	196,698
Provision charged to expense		431,847			162,573
Losses charged off		(652,492	)		(142,696	)
Recoveries of previously charged off amounts		304,384			110,557
Effect of foreign currency translation		10,371			2,609
Balance, end of period	$	390,343		$	329,741

The Company’s nonearning finance receivables totaled $66,916 at September 30, 2005. The Company provided an allowance for credit losses related to these receivables of $60,224.

Note 4:  Commitments

The Company had outstanding commitments to purchase finance receivables totaling approximately $1,910,000 as of September 30, 2005. These commitments generally expire between 20 and 30 days after they are issued if unused. Typically the Company funds approximately 25% of its outstanding commitments.

Note 5:  Income (Loss) Per Share

Basic earnings per share is computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except the denominator is increased to include the number of additional common shares that would have been outstanding if dilutive potential common shares had been issued. Since the effect of converting the shares of redeemable preferred stock would be antidilutive for the three months and nine months ended September 30, 2005, respectively (due to the net losses for those periods), basic and diluted loss per share amounts for those periods are based on the weighted average number of common shares outstanding.

So long as any preferred stock is outstanding, no dividend or distribution shall be declared or paid on any shares of common stock.

10

Loss per share for the three months ended September 30, 2005, was computed as follows:

				Weighted
				Average		Per Share
	Loss			Shares		Amount
Net loss	$	(160,482	)		9,965,759
Basic and diluted loss per share						$	(0.02	)

Basic and diluted earnings per share for the three months ended September 30, 2004, were computed as follows:

			Weighted
			Average		Per Share
	Income		Shares		Amount
Net income	$	744,538		9,965,759
Basic earnings per share					$	0.07
Effect of presumed conversion of convertible preferred stock		—		8,994,357
Diluted earnings per share	$	744,538		18,960,116	$	0.04

Loss per share for the nine months ended September 30, 2005, was computed as follows:

	Loss			Weighted Average Shares		Per Share Amount
Net loss	$	(624,340	)		9,965,759
Basic and diluted loss per share						$	(0.06	)

Basic and diluted earnings per share for the nine months ended September 30, 2004, were computed as follows:

			Weighted
			Average		Per Share
	Income		Shares		Amount
Net income	$	283,527		9,966,332
Basic earnings per share					$	0.03
Effect of presumed conversion of convertible preferred stock		—		8,994,357
Diluted earnings per share	$	283,527		18,960,689	$	0.01

11

Note 6:  Operating Expenses

The components of operating expenses for the three months ended September 30, 2005 and 2004, respectively, are as follows:

	2005		2004
Salaries and benefits	$	351,014	$	272,730
Professional fees		91,887		40,428
Bankruptcy reorganization costs		—		71,941
Other		143,717		117,608
	$	586,618	$	502,707

The components of operating expenses for the nine months ended September 30, 2005 and 2004, respectively, are as follows:

	2005		2004
Salaries and benefits	$	1,137,288	$	814,595
Professional fees		380,355		155,194
Pending claims related legal fees		—		57,328
Bankruptcy reorganization costs		—		90,818
Other		455,567		332,691
	$	1,973,210	$	1,450,626

12

Note 7:  Foreign Operations

The Company’s foreign operations, all of which are in Canada, are conducted through its wholly owned subsidiary, T.C.G. - The Credit Group Inc. based in Winnipeg, Manitoba. Total assets, net of valuation allowances, associated with foreign operations were $4,126,787 at September 30, 2005.

Total revenues, income (loss) before taxes and net income (loss) from foreign operations for the three months ended September 30, 2005 and 2004, respectively, were as shown below. Income (loss) before income taxes and net income (loss) reflect interest charges on amounts due to FFG of $74,699 and $47,689 for the three months ended September 30, 2005 and 2004, respectively. Income (loss) before income taxes and net income (loss) also reflect management and accounting fees charged to TCG by FFG for certain administrative services performed by FFG on TCG’s behalf of $24,000 for each of the three month periods ended September 30, 2005 and 2004. These interest charges and management and accounting fees eliminate in consolidation.

	2005			2004
Total revenues	$	258,613		$	214,342
Income (loss) before income taxes		(47,103	)		21,064
Net income (loss)		(47,103	)		21,064

Total revenues, income (loss) before taxes and net income (loss) from foreign operations for the nine months ended September 30, 2005 and 2004, respectively, were as shown below. Income (loss) before income taxes and net income (loss) reflect interest charges on amounts due to FFG of $202,732 and $134,472 for the nine months ended September 30, 2005 and 2004, respectively. Income (loss) before income taxes and net income (loss) also reflect management and accounting fees charged to TCG by FFG for certain administrative services performed by FFG on TCG’s behalf of $72,000 for each of the nine month periods ended September 30, 2005 and 2004. These interest charges and management and accounting fees eliminate in consolidation.

	2005			2004
Total revenues	$	730,245		$	582,048
Income (loss) before income taxes		(81,743	)		67,709
Net income (loss)		(81,743	)		67,709

13

Note 8:  Comprehensive Income

The components of comprehensive income for the three months and nine months ended September 30, 2005 and 2004 are as follows:

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2005			2004		2005			2004
Net income (loss)	$	(160,482	)	$	744,538	$	(624,340	)	$	283,527
Foreign currency translation adjustment		207,653			186,400		143,738			78,788
Comprehensive income (loss)	$	47,171		$	930,938	$	(480,602	)	$	362,315

Note 9:  Additional Cash Flow Information

The Company made no cash payments for interest or income taxes during the three month and nine month periods ended September 30, 2005 and 2004, respectively.

Note 10:  Subsequent Event

On October 10, 2005 the Company entered into an agency agreement with an investment bank to act as the Company’s exclusive placement agent in assisting the Company to raise additional debt and/or equity capital. The Company has agreed to pay the investment bank a nonrefundable advisory fee of $60,000, $10,000 of which was paid on October 10, 2005. The remaining $50,000 is payable in monthly installments of $10,000 each over the next five months. The Company has also agreed to pay the investment bank a transaction fee equal to the greater of (i) 8% of the aggregate gross proceeds raised from the sale of securities plus 1.5% of the aggregate gross proceeds of a commercial loan transaction or (ii) $250,000. This transaction fee shall be reduced by the amount of any advisory fee previously paid to the investment bank. The Company is also required to issue warrants pursuant to which the investment bank shall have the right to purchase securities of the Company having an aggregate value equal to the greater of (i) 10% of the value of the securities issued or (ii) the amount of the transaction fee.

14

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

FORWARD-LOOKING STATEMENTS

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

Readers are referred to the caption “Risk Factors” appearing at the end of Item 1, Description of Business in our registration statement on Form 10-SB/A, filed on September 28, 2005, for additional factors that may affect our forward-looking statements. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Form 10-QSB might not occur. We undertake no obligation to update or revise our forward-looking statements, whether as a result of new information, future events or otherwise.

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

Overview

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

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

15

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

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

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

December 31, 2003	17%
December 31, 2004	45%
March 31, 2005	61%
June 30, 2005	72%
September 30, 2005	77%

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

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

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

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

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

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

16

Recent Developments

Pursuant to a vote of the Company’s Board of Directors on July 21, 2005, the Company is no longer acquiring Installment Contracts in bulk purchase transactions. The Board has directed the Company’s management to focus its efforts and resources on expanding the Company’s point-of-sale automobile financing program. Several factors were considered by the Board in reaching this decision, among them: (a) the increasing volume of point-of-sale Installment Contracts being purchased by the Company; (b) the Company’s inability to consistently consummate bulk transaction purchases; (c) the desire to conserve cash for purchasing point-of-sale Installment Contracts; and (d) the lack of profits generated from the bulk purchase line of business.

On October 10, 2005 the Company entered into an agency agreement with an investment bank to act as the Company’s exclusive placement agent in connection with a transaction involving the following (a “Transaction”): (a) the private placement by the Company of equity, equity-related or debt securities, or (b) obtaining a secured or unsecured commercial loan. Securities offered in the private placement will not be registered under the Securities Act of 1933 (the “1933 Act”), and the private placement is to be effected in reliance upon applicable exemptions from the registration requirements set forth in the 1933 Act, as amended, and the regulations promulgated thereunder, and such securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. The terms of the securities have not yet been determined.

The Company has agreed to pay to the investment bank (a) a nonrefundable “Advisory Fee” of $60,000 (of which $10,000 was paid at the signing of the agreement and the balance is payable in five monthly installments of $10,000 each), and (b) upon the closing of a Transaction, a “Transaction Fee” equal to the greater of (i) 8% of the aggregate gross proceeds raised from the sale of securities in a private placement plus 1.5% of the aggregate gross proceeds of a commercial loan transaction, or (ii) $250,000. The amount of the Advisory Fee paid to the investment bank will be credited against the amount of any Transaction Fee payable to the investment bank upon the closing of a Transaction. The Company has also agreed to reimburse the investment bank for reasonable expenses, which shall not exceed $20,000 without the prior consent of the Company.

In addition, upon the closing of a Transaction, the Company is required to issue warrants pursuant to which the investment bank shall have the right to purchase securities of the Company having an aggregate value equal to the greater of (a) 10% of the value of the securities issued in the Transaction or (b) the amount of the Transaction Fee. The warrants shall be non-cancelable and shall have: (a) an exercise price per share equal to the common equivalent price per share of securities sold in the offering; (b) a term of five years; (c) the same rights and privileges as the securities issued in the Transaction, and (d) a “net issuance” or cashless exercise feature and standard anti-dilution protections.

17

The agency agreement is for an initial term of twelve months or until the consummation of a Transaction, which ever occurs first. Either party may terminate the agency agreement at any time, with or without cause, upon thirty days’ prior written notice. Notwithstanding any expiration or termination of the agreement, the investment bank shall be entitled to the full amount of any Transaction Fee or warrants in the event a Transaction is consummated at any time within eighteen months from the date of such expiration or termination. The agreement contains certain confidentiality and indemnification provisions, and provides for arbitration in the event of certain disputes between the parties.

Critical Accounting Policies, Judgments and Estimates

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

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

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

18

Selected Financial Data

The following table presents selected unaudited summary information regarding our results of operations for the three and nine months ended September 30, 2005 and 2004. This table should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto, included herein.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Consolidated Summary of Operations:
Interest income	$	613,821		$	307,115		$	1,604,761		$	739,629
Recovery of charged-off finance receivables		22,620			32,383			100,650			129,811
Other income		21,668			25,806			72,571			71,313
Total revenues		658,109			365,304			1,777,982			940,753
Provision for credit losses		233,559			74,032			431,847			162,573
Net revenues after provision for credit losses		424,550			291,272			1,346,135			778,180
Operating expenses		586,618			502,707			1,973,210			1,450,626
Operating loss		(162,068	)		(211,435	)		(627,075	)		(672,446	)
Non-operating income		1,586			955,973			2,735			955,973
Income (loss) before income taxes		(160,482	)		744,538			(624,340	)		283,527
Income taxes		—			—			—			—
Net loss	$	(160,482	)	$	744,538		$	(624,340	)	$	283,527
Basic earnings per share	$	(0.02	)	$	0.07		$	(0.06	)	$	0.03
Diluted earnings per share	$	(0.02	)	$	0.04		$	(0.06	)	$	0.01
Other Selected Data:
Installment Contracts acquired during the period (total principal amount)	$	3,171,617		$	1,915,500		$	9,750,545		$	4,220,070
Purchase price of Installment Contracts acquired	$	3,002,790		$	1,636,978		$	9,058,592		$	3,600,409
Percentage of dollar amount paid to principal balance acquired		94.7	%		85.5	%		92.9	%		85.3	%
Number of Installment Contracts acquired during the period		469			536			1,642			1,287
Average principal balance acquired	$	6,763		$	3,574		$	5,938		$	3,279
Acquisition cost per acquired Installment Contract (including overhead)	$	635			Not available		$	571			Not available
Monthly servicing cost per Installment Contract (including overhead)	$	20.93			Not available		$	28.19			Not available

19

The following table presents selected unaudited summary information regarding our financial condition as of September 30, 2005 and December 31, 2004. This table should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto, included herein.

	September 30, 2005		December 31, 2004
Consolidated Summary of Financial Condition:
Installment Contracts receivable, net	$	9,107,947	$	4,090,708
Total assets	$	12,614,105	$	13,310,925
Total liabilities	$	223,031	$	439,249
Total stockholders' equity	$	12,391,074	$	12,871,676

Results of Operations

Interest Income

Our interest income totaled $613,821 and $1,604,761 for the three months and nine months ended September 30, 2005, respectively, compared to $307,115 and $739,629 for the three months and nine months ended September 30, 2004, respectively.

The following tables present information relative to the average balances and interest rates of our interest earning assets for the three and nine months ended September 30, 2005 and 2004, respectively:

	For the Three Months Ended September 30, 2005 and 2004
	2005						2004
	Average		Interest				Average		Interest
	Balance		Income		Yield		Balance		Income		Yield
Installment Contracts	$	8,748,961	$	585,368		26.76%	$	3,274,370	$	281,249		34.36%
Cash and cash equivalents		3,617,994		27,682		3.06%		6,188,289		19,839		1.28%
Notes receivable		15,389		771		20.04%		191,835		6,027		12.57%
Total	$	12,382,344	$	613,821		19.83%	$	9,654,494	$	307,115		12.72%

20

	For the Nine Months Ended September 30, 2005 and 2004
	2005						2004
	Average		Interest				Average		Interest
	Balance		Income		Yield		Balance		Income		Yield
Installment Contracts	$	6,930,311	$	1,490,134		28.67%	$	2,712,946	$	682,545		33.55%
Cash and cash equivalents		5,648,626		110,912		2.62%		4,810,425		39,557		1.10%
Notes receivable		47,233		3,715		10.49%		202,989		17,527		11.51%
Total	$	12,626,170	$	1,604,761		16.95%	$	7,726,360	$	739,629		12.76%

The decrease in yield on our Installment Contracts is primarily the result of changes in the mix of our portfolio. Throughout 2004 and the first nine months of 2005 our portfolio of Installment Contracts has been increasingly comprised of contracts acquired through our point-of-sale automobile financing programs. These contracts typically have lower yields than the other types of contracts in our portfolio, among them, automobile contracts acquired in bulk purchase transactions, small ticket leases, loans secured by home appliances and other consumer goods and loans for bulk food purchases. Our total interest yield has increased as Installment Contracts have comprised a higher percentage of our total interest earning assets.

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

	For the Three Months Ended September 30, 2005 Compared to the Three Months Ended September 30, 2004
	Volume			Rate			Total
Increase (decrease) in interest income:
Installment Contracts	$	350,453		$	(46,334	)	$	304,119
Cash and cash equivalents		(3,355	)		11,199			7,844
Notes receivable		(14,872	)		9,615			(5,257	)
Total Interest Income	$	332,226		$	(25,520	)	$	306,706

21

	For the Nine Months Ended September 30, 2005 Compared to the Nine Months Ended September 30, 2004
	Volume			Rate			Total
Increase (decrease) in interest income:
Installment Contracts	$	890,893		$	(83,306	)	$	807,587
Cash and cash equivalents		7,960			63,397			71,357
Notes receivable		(12,375	)		(1,437	)		(13,812	)
Total Interest Income	$	886,478		$	(21,346	)	$	865,132

Provision for Credit Losses

Our consolidated provision for credit losses totaled $233,559 and $431,847 for the three and nine months ended September 30, 2005, respectively, compared to $74,032 and $162,573 for the three and nine months ended September 30, 2004, respectively. These increases are a result of the increase in the size of our portfolio of Installment Contracts. As the Company continues to acquire Installment Contracts, and our average contracts receivable outstanding increases, we expect the charge to our earnings for credit losses will likewise increase.

Operating Expenses

Our operating expenses totaled $586,618 and $1,973,210 for the three and nine months ended September 30, 2005, respectively, compared to $502,707 and $1,450,626 for the three and nine months ended September 30, 2004, respectively. A summary of these expenses follows:

	Three Months Ended September 30,
	2005		2004		Percent Change
Salaries and benefits	$	351,014	$	272,730		28.7	%
Professional fees		91,887		40,428		127.3	%
Bankruptcy reorganization costs		—		71,941		-100.0	%
Other		143,717		117,608		22.2	%
Total	$	586,618	$	502,707		16.7	%

22

	Nine Months Ended September 30,
	2005		2004		Percent Change
Salaries and benefits	$	1,137,288	$	814,595		39.6	%
Professional fees		380,355		155,194		145.1	%
Bankruptcy reorganization costs		—		90,818		-100.0	%
Pending claims - legal fees		—		57,328		-100.0	%
Other		455,567		332,691		36.9	%
Total	$	1,973,210	$	1,450,626		36.0	%

Salaries and benefits increased primarily as a result of an increase in the number of persons employed by the Company during the three and nine month periods ended September 30, 2005 compared to the three and nine month periods ended September 30, 2004, respectively.  The Company employed approximately 26 and 20 full-time employees at September 30, 2005 and September 30, 2004, respectively. This increase in the number of employees was necessitated by the Company’s growth during calendar year 2004 and during the first nine months of 2005.  As the Company continues to grow we expect our salaries and benefits costs to increase, but anticipate that as a percentage of total revenues for these costs to decrease.

The increases in professional fees are attributable to increases in legal and accounting fees primarily resulting from services rendered in connection with the Company’s initial registration with the United States Securities and Exchange Commission.  We incurred bankruptcy reorganization costs during 2004 which did not recur in 2005 as a result of the reorganization activities concluding in 2004. We also incurred legal fees during 2004 in connection with our claims against FFTC and BancInsure which did not recur in 2005 as a result of the Company reaching a settlement of those claims during the third quarter of 2004. (See Part I, Item 1, under the heading Emergence From Chapter 11 Reorganization in the Company’s registration statement on Form 10-SB/A, filed on September 28, 2005.) Other operating costs, which include, among other items, occupancy costs, licenses and taxes, depreciation, insurance, postage, supplies, communications, travel and stockholder relations increased primarily as a result of the Company’s growth during calendar year 2004 and the first nine months of 2005.

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

Beginning January 1, 2005 the Company began classifying its operating expenses as either acquisition costs, servicing costs or administrative costs. Acquisition costs include all direct marketing, business development and underwriting expenses, and an allocation of certain overhead costs. Servicing costs include all direct collections and servicing expenses and an allocation of certain overhead costs. Administrative costs include all general administrative expenses and all other costs not specifically identified as, or allocated to, acquisition or servicing costs. Using these classifications the Company began determining its average acquisition cost per acquired Installment Contract and its average monthly servicing cost per serviced Installment Contract.

The Company’s average acquisition cost over the three months ended September 30, 2005 was approximately $635 per acquired Installment Contract. This average acquisition cost is significantly impacted by the Company’s book-to-look ratio. For the nine months ended September 30, 2005, the Company’s book-to-look ratio in our U.S. point-of sale automobile financing program was 5.87%. Management is attempting to increase this ratio, and thereby reduce our average acquisition cost, by training our Customers to send the Company only those credit applications that have a high probability of being approved by us. (The Company collectively refers to all automobile dealerships, sales merchants and lease brokers from whom it acquires Installment Contracts as “Customers”.)

23

The Company’s average monthly servicing cost per serviced Installment Contract during the three months ended September 30, 2005 was $20.93 per contract. Management anticipates that this average servicing cost per contract will decrease as the size of the portfolio of Installment Contracts increases due to efficiency gains and economies of scale. The Company does not pay affiliates to engage in collection efforts.

While the Company does not formally track our response time for responding to credit applications submitted by dealers or our response time for funding a loan package submitted by a dealer, we monitor these on a daily basis. Our goal is reduce these response times to better serve the needs of our Customers. We believe that reducing these response times will also reduce our overall costs of underwriting and funding. The Company is evaluating certain monitoring mechanisms that will allow us to precisely document and better monitor these times. We anticipate installing such mechanisms sometime during 2006.

Nonoperating Income

During the three and nine months ended September 30, 2004, the Company recognized a $955,973 gain on the settlement of a bankruptcy-related claim which is reflected as nonoperating income in the Company’s consolidated statements of operations.

Financial Condition

Installment Contracts Portfolio

The Company acquired Installment Contracts with outstanding principal balances totaling $3,171,617 and $9,750,545 during the three and nine months ended September 30, 2005, respectively.  We invested cash of approximately $3,039,000 and $9,083,000, respectively, (including payments of dealer reserves and dealer holdbacks) to acquire these contracts.  As a result of these acquisitions, our portfolio of Installment Contracts, net of allowances for credit losses, increased from $4,090,708, net of an allowance for credit losses of $296,233, at December 31, 2004 to $9,107,947, net of an allowance for credit losses of $390,343, at September 30, 2005.

All of the Company’s Installment Contracts are held for investment and are recorded at their outstanding principal balances adjusted for unamortized purchase discounts and an allowance for credit losses. Discounts on purchased Installment Contracts are recognized as income over the respective contractual terms using methods that approximate the interest method. A summary of our Installment Contracts portfolio as of September 30, 2005 and December 31, 2004, respectively, follows:

24

	September 30, 2005						December 31, 2004
	United States		Canada		Total		United States		Canada		Total
Automobiles	$	6,521,997	$	1,242,089	$	7,764,086	$	1,963,446	$	220,064	$	2,183,510
Equipment leases		—		816,096		816,096		—		999,724		999,724
Bulk food		—		811,964		811,964		—		962,070		962,070
Home appliances		—		265,966		265,966		—		274,800		274,800
Other		—		471,068		471,068		—		485,736		485,736
Total		6,521,997		3,607,183		10,129,180		1,963,446		2,942,394		4,905,840
Less
Unearned discount		426,248		204,642		630,890		297,190		221,709		518,899
Allowance for credit losses		188,968		201,375		390,343		139,921		156,312		296,233
Net	$	5,906,781	$	3,201,166	$	9,107,947	$	1,526,335	$	2,564,373	$	4,090,708

Asset Quality

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

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

We calculate delinquency based on the number of days payments are contractually past due. The following table sets forth information with respect to the delinquency of our portfolio of Installment Contracts as of September 30, 2005 and December 31, 2004, respectively:

	September 30, 2005
	United States				Canada				Total
	Amount		Pct.		Amount		Pct.		Amount		Pct.
Installment Contracts	$	6,521,997		100%	$	3,607,183		100%	$	10,129,180		100%
Period of delinquency:
30 - 59 days	$	380,242		5.83%	$	41,706		1.16%	$	421,948		4.17%
60 - 89 days		78,498		1.20%		26,864		0.74%		105,362		1.04%
90 - 119 days		29,722		0.46%		37,193		1.03%		66,915		0.66%
Total	$	488,462		7.49%	$	105,763		2.93%	$	594,225		5.87%

25

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

The following tables set forth information with respect to actual credit loss experience in our portfolio of Installment Contracts for the three and nine months ended September 30, 2005 and 2004, respectively:

	Three Months Ended September 30, 2005									Three Months Ended September 30, 2004
	United States			Canada			Total			United States			Canada			Total
Installment Contracts, net of unearned discounts, end of period	$	6,095,749		$	3,402,541		$	9,498,290		$	1,239,463		$	2,450,203		$	3,689,666
Installment Contracts, net of unearned discounts, average during the period (1)	$	5,571,111		$	3,177,850		$	8,748,961		$	1,014,166		$	2,260,205		$	3,274,371
Gross charge-offs	$	249,738		$	82,831		$	332,569		$	38,651		$	26,593		$	65,244
Recoveries		125,881			32,970			158,851			—			30,603			30,603
Net charge-offs	$	123,857		$	49,861		$	173,718		$	38,651		$	(4,010	)	$	34,641
Net charge-offs as a % of avg. contracts during the period, annualized		8.89	%		6.28	%		7.94	%		15.24	%		(0.71	)%		4.23	%
(1) - Average is based on month-end balances

26

	Nine Months Ended September 30, 2005									Nine Months Ended September 30, 2004
	United States			Canada			Total			United States			Canada			Total
Installment Contracts, net of unearned discounts, end of period	$	6,095,749		$	3,402,541		$	9,498,290		$	1,239,463		$	2,450,203		$	3,689,666
Installment Contracts, net of unearned discounts, average during the period (1)	$	4,091,902		$	2,838,409		$	6,930,311		$	626,025		$	2,086,921		$	2,712,946
Gross charge-offs	$	484,203		$	168,289		$	652,492		$	42,962		$	99,736		$	142,698
Recoveries		219,159			85,225			304,384			—			110,557			110,557
Net charge-offs	$	265,044		$	83,064		$	348,108		$	42,962		$	(10,821	)	$	32,141
Net charge-offs as a % of avg. contracts during the period, annualized		8.64	%		3.90	%		6.70	%		9.15	%		(0.69	)%		1.58	%
(1) - Average is based on month-end balances

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

Our allowance for credit losses was $390,343 at September 30, 2005 compared to $296,233 at December 31, 2004. As a percentage of our outstanding net Installment Contracts, our allowance for credit losses was 4.11% at September 30, 2005 and 6.75% at December 31, 2004.

During the nine months ended September 30, 2005, our net Installment Contracts increased $5,111,349. This increase was the result of a $5,440,351 increase in automobile-secured contracts offset by a $329,002 decrease in all other Installment Contracts. The $5,440,351 increase in automobile-secured Installment Contracts was comprised of a $4,609,422 increase in Installment Contracts acquired through our U.S. point-of-sale program and a $1,010,858 increase in Installment Contracts acquired through our Canadian point-of-sale program, offset by a $179,929 decrease in Installment Contracts acquired through bulk purchases.

As a result of the increases in automobile-secured Installment Contracts in our U.S. and Canadian portfolios from December 31, 2004 to September 30, 2005, we provided for a specific increase to our allowance for credit losses through a charge to earnings. This increase in our allowance for credit losses was partially offset by a specific reduction to our allowance for loan losses to account for the improvement in Installment Contract delinquencies from December 31, 2004 to September 30, 2005. As of December 31, 2004, delinquent accounts, defined as accounts 30 or more days contractually past due, totaled 6.92% of our outstanding Installment Contracts. As of September 30, 2005, delinquent accounts totaled 5.87% of our outstanding Installment Contracts.

27

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

During the nine months ended September 30, 2005, we experienced net charge-offs of $348,108, which represented 6.70% of our average outstanding Installment Contracts during the period. During the year ended December 31, 2004, we experienced net charge-offs of $98,177, which represented 3.22% of our average outstanding Installment Contracts during the year. To account for this increase in charge-offs, we provided for a specific increase to our allowance for credit losses.

Based on the analyses we performed related to our allowance for credit losses as described above and as described in this Item 2, MANAGEMENT’S DISCUSSION AND ANALYSIS, under the heading Critical Accounting Policies and Judgments, we believe that our allowance for credit losses is adequate to cover probable losses that can be reasonably estimated as of September 30, 2005.

The following tables set forth the activity in the allowance for credit losses for the three and nine months ended September 30, 2005 and 2004, respectively:

	Three Months Ended September 30, 2005									Three Months Ended September 30, 2004
	United States			Canada			Total			United States			Canada			Total
Balance at beginning of period	$	153,954		$	163,980		$	317,934		$	157,287		$	124,945		$	282,232
Charge-offs		(249,738	)		(82,831	)		(332,569	)		(38,651	)		(26,593	)		(65,244	)
Recoveries		125,881			32,970			158,851			—			30,603			30,603
Net charge-offs		(123,857	)		(49,861	)		(173,718	)		(38,651	)		4,010			(34,641	)
Provision for credit losses		158,871			74,688			233,559			63,237			10,795			74,032
Effect of foreign currency translation		—			12,568			12,568			—			8,118			8,118
Balance at end of period	$	188,968		$	201,375		$	390,343		$	181,873		$	147,868		$	329,741

28

	Nine Months Ended September 30, 2005									Nine Months Ended September 30, 2004
	United States			Canada			Total			United States			Canada			Total
Balance at beginning of period	$	139,921		$	156,312		$	296,233		$	32,463		$	164,235		$	196,698
Charge-offs		(484,203	)		(168,289	)		(652,492	)		(42,962	)		(99,736	)		(142,698	)
Recoveries		219,159			85,225			304,384			—			110,557			110,557
Net charge-offs		(265,044	)		(83,064	)		(348,108	)		(42,962	)		10,821			(32,141	)
Provision for credit losses		314,091			117,756			431,847			192,372			(29,799	)		162,573
Effect of foreign currency translation		—			10,371			10,371			—			2,611			2,611
Balance at end of period	$	188,968		$	201,375		$	390,343		$	181,873		$	147,868		$	329,741

Liquidity and Capital Resources

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

The Company’s growth strategy requires the Company to increase its acquisitions of Installment Contracts. We intend to acquire Installment Contracts with principal balances totaling between $15,000,000 and $18,000,000 (roughly, between 2,500 and 3,000 Installment Contracts) during the next twelve months. We expect to pay between 92% and 96% of the outstanding principal balance for these Installment Contracts, or a total of $13,800,000 to $17,280,000. We expect to fund these acquisitions from a combination of internally generated cash flow, bank lines of credit and additional equity capital. We can give no assurance that we will be able to secure such additional financing on terms acceptable to us.

The Company began 2005 with $8,779,211 cash on hand and had cash on hand of $2,943,551 at September 30, 2005. Operating activities provided cash of $6,432 during the three month period ended September 30, 2005 and used cash of $765,847 during the nine months ended September 30, 2005. Operating activities do not include payments made by the Company to acquire Installment Contracts or the collection of principal on these Installment Contracts. We invested cash of approximately $3,039,000 and $9,083,000 (including payments of dealer reserves and dealer holdbacks) to acquire Installment Contracts during the three and nine month periods ended September 30, 2005, respectively. We collected principal payments on our Installment Contracts of approximately $1,438,000 and $3,953,000 during the three and nine month periods ended September 30, 2005, respectively.

The Company has no material commitments for capital expenditures as of September 30, 2005. However, the Company anticipates making significant investments in its accounting, servicing and underwriting software systems over the next three to twelve months. The Company expects to spend approximately $160,000 upgrading these systems. We believe these investments will serve to strengthen our internal controls, allow us to quicken our response time to our Customers, provide management with improved reporting tools and fulfill our software needs for the foreseeable future.

29

During the second quarter of 2005 the Company had received an indication of interest (although not a formal commitment) from a lending institution to provide the Company with a $5,000,000 revolving line of credit, to be secured by our Installment Contracts. During the third quarter of 2005 the lending institution informed the Company of its decision, based in part on the limited operating history of the Company, to not extend a line of credit to the Company at this time. Subsequently we have engaged an investment banking firm to assist us in securing debt and/or equity capital. This agreement is more fully described above under the heading Recent Developments. We can give no assurances that the Company will be successful in obtaining additional financing (either debt or equity) on terms acceptable to us.

Each and every calendar quarter, the Company is required to redeem approximately 320,000 outstanding shares of preferred stock, if, at the sole determination of the Company’s Board of Directors, the Company’s funds allow such redemption, taking into account the Company’s current and future cash requirements. Given the Company's anticipated liquidity needs, no preferred stock redemptions have been made to date and none are planned in the near term. Management and the Board of Directors believe that by operating the business and investing available cash in Installment Contracts they can provide a greater long-term return to preferred shareholders than would be available through immediate liquidation of the business and redemption of the preferred shares.

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

Off-Balance Sheet Arrangements

The Company, in its ordinary course of business, commits to purchase certain Installment Contracts from its Customers. Each commitment is essentially an “offer” by the Company to purchase a specific Installment Contract that the Company has pre-approved, and Customers generally have between 20 and 30 days to “accept” the offer by selling to the Company the pre-approved Installment Contract. The Company had outstanding commitments to acquire Installment Contracts totaling approximately $1,910,000 as of September 30, 2005. Typically, the Company funds approximately 25% of its outstanding commitments. The Company had no other off-balance sheet arrangements as of September 30, 2005.

30

ITEM 3.  Controls and Procedures

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

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2005.

There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

31

PART II. - OTHER INFORMATION

ITEM 1.  Legal Proceedings

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

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

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

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

None.

ITEM 3.  Defaults Upon Senior Securities

Not applicable.

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

None.

ITEM 5.  Other Information

None.

32

ITEM 6.  Exhibits and Reports on Form 8-K

INDEX TO EXHIBITS

Exhibit
Number	Description
2.1*	Corrected Trustee’s Amended Plan of Reorganization
2.2*	Disclosure Statement for Trustee’s Amended Plan of Reorganization
3.1*	First Amended and Restated Certificate of Incorporation
3.1.1*	Certificate of Amendment to Certificate of Incorporation
3.2*	Bylaws
3.2.1*	Amendment to Bylaws
4.1*	Amended and Restated Trust Agreement of Freedom Financial Group I Statutory Trust
10.1*	Employment Agreement with Jerald L. Fenstermaker
10.2*	Investment Banking Agreement with Milestone Advisors, LLC
10.3*	Unanimous Consent of the Board of Directors Adopting Executive Management Stock Bonus Plan
10.4*	Office Lease - 3058 East Elm
10.5**	Purchase and Sale Agreement, dated April 7, 2003, between Freedom Financial Group, Inc. (as Seller) and The Cadle Company (as Buyer)
10.6**	Commercial Real Estate Purchase Contract, dated May 9, 2003, between Freedom Financial Group, Inc. (as Seller) and New Life Church of God (as Buyer)
10.7**	Real Estate Sale Contract, dated June 4, 2003, between Donald D. Bass and Don W. Bass (as Buyers) and Freedom Financial Group, Inc. (as Seller)
10.8**	Application and Order by Bankruptcy Court Approving Employment of Biltmore Associates
11.1	Statement Re: Computation of Per Share Earnings - See Note 5 to Condensed Consolidated Financial Statements
14.1***	Code of Ethics
31.1	Certification of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications of the Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002

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

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

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

In a Current Report on Form 8-K, filed by the Company on October 12, 2005 (and described under the heading Recent Developments in ITEM 2 herein), the Company reported that on October 10, 2005 the Company entered into an agency agreement with an investment bank to act as the Company’s exclusive placement agent in assisting the Company in raising new debt and/or equity capital.

33

SIGNATURES

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

	FREEDOM FINANCIAL GROUP, INC.
Date: November 11, 2005	By:	/s/ Jerald L. Fenstermaker
		Jerald L. Fenstermaker, President and Chief Executive Officer
Date: November 11, 2005	By:	/s/ Daniel F. Graham
		Daniel F. Graham, Chief Financial Officer

34