FIRST NATIONS FINANCIAL SERVICES CO, POS AM, 1997-10-27

FIRST NATIONS FINANCIAL SERVICES CO
POS AM, 1997-10-27
ASSET-BACKED SECURITIES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 27, 1997
REGISTRATION NO. 333-1612
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
__________
FIRST NATIONS FINANCIAL SERVICES COMPANY

(Exact name of Registrant as specified in its charter)
__________
<TABLE>
<CAPTION>

<S> <C> <C>
DELAWARE . . . . . . . . . . . . S.I.C. 6159 76-0481583
(State or other jurisdiction of. (Primary Standard Industrial (IRS Employer
incorporation or organization) . Classification Code Number) Identification Number)
</TABLE>

FIRST NATIONS FINANCIAL SERVICES COMPANY
CHRISTIANA EXECUTIVE CAMPUS
NEWARK, DELAWARE 19713-4314
TEL: (302) 2922100
(Address, including zip code, and telephone number including area code
of Registrant's principal executive offices and place of business)
__________
GARY N. PELEHATY, PRESIDENT
FIRST NATIONS FINANCIAL SERVICES COMPANY
CHRISTIANA EXECUTIVE CAMPUS
NEWARK, DELAWARE 19713-4314
TEL: (302) 2922100
(Name and address of Agent for Service)

COPIES TO:

ROBERT L. SONFIELD, JR., ESQ.
SONFIELD & SONFIELD
770 SOUTH POST OAK LANE
HOUSTON, TEXAS 77056
TEL: (713) 877-8333
__________
Approximate date of commencement of proposed sale to the public:
As soon as practicable on or after the Registration Statement becomes
effective.
If any of the Securities registered on this form are to be offered on a
delayed or continuous basis
pursuant to Rule 415 of the Securities Act of 1933, check the following box:
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<CAPTION>

CALCULATION OF REGISTRATION FEE

DOLLAR PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED BEING REGISTERED PER NOTE OFFERING PRICE FEE
- --------------------------------
<S> <C> <C> <C> <C>
3 month unsecured notes 100%
6 month unsecured notes 100%
1 year unsecured notes 100%
18 month unsecured notes 100%
2 year unsecured notes 100%
30 month unsecured notes 100%
3 year unsecured notes 100%
4 year unsecured notes 100%
5 year unsecured notes 100%
7 year unsecured notes 100%
10 year unsecured notes 100%
All unsecured notes $ 50,000,000 100% $ 50,000,000 $ 17,241
================================
</TABLE>

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

CROSS REFERENCE SHEET
<TABLE>
<CAPTION>

ITEMS AND CAPTION IN FORM SB-2 CAPTION IN PROSPECTUS
---------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Front of Registration Statement and Outside
Front Cover Page of Prospectus . . . . . . . . Front Cover Page of Registration Statement;
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus . . . . . . . . . . . . . . . . . . Inside Front and Outside Back Cover Page
of Prospectus
3. Summary Information and Risk Factors . . . . . Summary of the Offering; Risk Factors;
Management's Plan of Operation
4. Use of Proceeds. . . . . . . . . . . . . . . . Use of Proceeds
5. Determination of Offering Price. . . . . . . . Not Applicable
6. Dilution . . . . . . . . . . . . . . . . . . . Not Applicable
7. Selling Security-Holders . . . . . . . . . . . Not Applicable
8. Plan of Distribution . . . . . . . . . . . . . Plan of Distribution
9. Legal Proceedings. . . . . . . . . . . . . . . Business of the Company - Legal
Proceedings
10. Directors, Executive Officers
Promoters and Control Persons. . . . . . . . . Management
11. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . Beneficial Ownership of Securities
12. Description of Securities. . . . . . . . . . . Outside Cover Page; Summary of the
Offering Description of the Notes and the
Indenture
13. Interest of Named Experts and Counsel. . . . . Not Applicable
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities Management - Limitations on Liability and
Indemnification of Officers and Directors
15. Organization Within Last Five Years. . . . . . Certain Relationships and Related
Transactions
16. Description of Business. . . . . . . . . . . . Business of the Company
17. Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . Management's Plan of Operation
18. Description of Property. . . . . . . . . . . . Business of the Company - Properties;
Financial Statements
19. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . Management; Certain Relationships and
Related Transactions
20. Market for Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . Market for Common Equity
21. Executive Compensation . . . . . . . . . . . . Management
22. Financial Statements . . . . . . . . . . . . . Financial Statements
23. Changes in and Disagreements With
Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>

$50,000,000
SENIOR SUBORDINATED, FIXED RATE TERM NOTES
(RANGING IN TERM FROM THREE (3) MONTHS TO TEN (10) YEARS)
($1,000 MINIMUM)

[First Nations Financial Services Company S.M. LOGO]

First Nations Financial Services Company (the "Company"), is offering up
to $50,000,000 in principal amount of unsecured senior subordinated notes (the
"Notes") pursuant to an Indenture between the Company and Norwest Bank
Minnesota, N.A., as Trustee (the "Trustee").
The Company has the right to reject any subscription for Notes, in whole
or in part, for any reason. Subscriptions are irrevocable upon receipt by the
Company. In the event a subscription is not accepted by the Company, the
payment accompanying such subscription will be refunded to the subscriber
forty-eight (48) hours after receipt by the Company without deduction of any
costs and without interest. No minimum amount of Notes must be sold. The
Company has the right to withdraw or cancel the Offering of the Notes at any
time. In the event of such withdrawal or cancellation, Notes previously sold
will remain outstanding until maturity and any pending subscriptions will be
irrevocable. See "Plan of Distribution."
The Notes are offered on a continuous "best-efforts" basis by the Company
and are subordinated to all Senior Debt of the Company (as hereinafter
defined), which includes the debt of the Company and its subsidiaries. See
"Summary of the Offering-Subordination of Notes." There is no limitation on
the amount of Senior Debt the Company may incur. Therefore, an unlimited
amount of the Company debt may rank senior to the Notes. See "Risk
Factors-Subordination of Notes to Other Debt," page 7. The Notes will be
issued in registered form in the minimum amount of $1,000 with the following
maturities: three (3) months, six (6) months, one (1) year, eighteen (18)
months, two (2) years, thirty (30) months, three (3) years, four (4) years,
five (5) years, seven (7) years or ten (10) years. Interest rates will vary
depending upon the maturity of the Note and will be specified in a supplement
to this Prospectus. THE NOTES MAY BE EXTENDED, AT THE OPTION OF THE COMPANY,
FOR A TERM EQUAL TO THE ORIGINAL TERM UNLESS THE HOLDER REQUESTS REPAYMENT
WITHIN SEVEN DAYS PRIOR TO THE ORIGINAL MATURITY DATE. SEE "DESCRIPTION OF
THE NOTES AND THE INDENTURE."
It is presently anticipated that there will be no secondary market for
the Notes. If any such market were to develop, there can be no assurance that
it would provide the holders of the Notes with liquidity of investment. The
Notes will not be transferable without the prior written consent of the
Company. Such consent will be withheld in the event that the Company
determines that such transfer might result in a violation of any state or
Federal securities or other applicable law.

PAYMENT OF PRINCIPAL OR INTEREST ON THE NOTES IS NOT GUARANTEED BY ANY
GOVERNMENTAL OR PRIVATE INSURANCE FUND OR ANY OTHER ENTITY. THE COMPANY'S
REVENUES FROM OPERATIONS, INCLUDING THE SALE OF LOANS FROM ITS PORTFOLIO TO
THIRD PARTY INVESTORS, THE COMPANY'S WORKING CAPITAL, AND CASH GENERATED FROM
ADDITIONAL DEBT FINANCING REPRESENT THE COMPANY'S SOURCES OF FUNDS FOR THE
REPAYMENT OF PRINCIPAL AT MATURITY AND THE PAYMENT OF CURRENT INTEREST ON THE
NOTES.

THE NOTES ARE SPECULATIVE SECURITIES AND AN INVESTMENT HEREUNDER SHOULD
BE UNDERTAKEN ONLY AFTER CAREFUL EVALUATION OF THE RISK FACTORS AND THE OTHER
INFORMATION SET FORTH UNDER "RISK FACTORS" BEGINNING AT PAGE 7.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
______________________________

THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF NOTES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT SETTING FORTH THE INTEREST RATES THEN
BEING OFFERED ON THE NOTES.

Price to Public(1) Underwriting Proceeds to the Company (2)(3)
Commissions and Discounts(2)
-----------------------------
<S> <C> <C> <C>
Per Note 100% 0% 100%
Total. . $ 50,000,000 $ -0- $ 50,000,000
======== =================== ============================= ===============================
</TABLE>

See footnotes on following page.
Prospectus Date October ___, 1997
2
(1) The Notes will be issued at their face principal value, without
discount.

(2) The Company has not entered into any agreement with a member firm of
the National Association of Securities Dealers, Inc. ("NASD") to assist in the
sales of the Notes and, therefore, is not presently obligated to pay any
commissions in connection with the sale of the Notes. In the event the
Company enters into an agreement with an NASD member firm, the Company may pay
the member firm, as agent, an estimated commission ranging from .5% to 6% of
the sale price of any Note sold by such broker-dealer. The Company may agree
to indemnify the broker-dealer against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. It is also likely
that any such agreement by the Company with a broker-dealer will include
reimbursement to the broker-dealer for any out-of-pocket expenses incurred in
connection with the offer and sale of the Notes, based upon a percentage of
the amount of Notes sold. See "Plan of Distribution."

(3) Before deducting other expenses incurred in connection with the
Offering payable by the Company estimated at approximately $160,000 before
considering broker-dealer fees as reflected on Page 22.

AVAILABLE INFORMATION"AVAILABLEINFORMATION"

The Company has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement on Form SB-2, relating to the Notes
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement including the exhibits and schedules
thereto. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement. For further information
with respect to the Company and the Notes, reference is made to such
Registration Statement, including the exhibits and schedules thereto. The
Registration statement, including the exhibits and schedules thereto, may be
inspected without charge at the Commission's office, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of all or any part of such
material may be obtained from the Commission upon payment of fees prescribed
by the Commission. The Commission maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of such web site is
http://www.sec.gov.

The Company intends to furnish its Noteholders with annual reports
containing audited annual financial statements and quarterly reports for the
first three fiscal quarters of each fiscal year containing unaudited interim
financial information.

NOTICE TO RESIDENTS OF NORTH CAROLINA

This offering is open to residents of the State of North Carolina only
after a minimum of $900,000 of Notes have been sold.

NOTICE TO RESIDENTS OF OREGON

This offering is open only to residents of the State of Oregon who are
accredited investors within the meaning of OAR 441-35-010 and Section 2(15) of
the Securities Act of 19933 (including SEC Rule 215 adopted thereunder).

30
SUMMARY OF THE OFFERING"SUMMARYOFTHEOFFERING"

This summary is qualified in its entirety by reference to the detailed
information, financial statements and notes thereto appearing elsewhere in
this Prospectus, and the exhibits and documents referred to herein. Except as
the context otherwise requires in this Prospectus, the term Company refers to
First Nations Financial Services Company. Each prospective investor should
carefully review the entire Prospectus and all exhibits and documents referred
to herein and therein and carefully consider the information set out under the
heading "Risk Factors."

THE COMPANY

First Nations Financial Services Company was organized as a Delaware
corporation November 16, 1995 and the address of its principal executive
offices and telephone number at such address is included in the Supplement to
this Prospectus.

The Company has identified two interrelated segments of the financial
services industry to which it is committed to become a significant
participant. The first segment of the industry upon which the Company
presently focuses and concentrates its resources is commercial and business
lending, which includes real estate and equipment financing. The second
segment of the Company's business development strategy is the sale and
securitization of loans originated in its other line of business.

Because the Company cannot accurately predict the amount and timing of
proceeds from the sale of Notes, the commercial lending segment is the only
line of business in which the Company intends to direct its resources until a
minimum of $5,000,000 of the net proceeds from the sale of Notes has been
invested.

The Company's present focus is limited to commercial lending structured
in such a manner and in a location where it presently holds the necessary
license or that does not require any kind of licensing. This phase will
expand to commercial and business lending that requires additional licenses
when the necessary licenses are acquired. Management does not believe the
present lack of licenses in some states materially adversely affects the
Company's ability to do business and does not know of any impediment or
disqualification for the issuance of any required licenses in the future. See
"Business of the Company-Government Regulation and Licensing."

SECURITIES OFFERED

$50,000,000 in principal amount of unsecured, subordinated, term notes
(the "Notes") issued by the Company pursuant to an Indenture between the
Company and the Trustee (the "Indenture"). The Notes are unsecured,
subordinated debt obligations of the Company. The Notes are subordinated to
the Senior Debt of the Company and are not insured, guaranteed or secured by
any lien on any assets of the Company. There are no sinking fund provisions
applicable to the Notes. The Company is not a commercial bank, savings or
thrift institution and is not subject to state or federal statues or
regulations applicable to such institutions with regard to insurance, the
maintenance of reserves, the quality or condition of its assets or other
matters. The Notes offered hereunder are not CDs. Payment of principal and
interest on the Notes is not guaranteed by any governmental or private
insurance fund or any other entity. The Notes are to be issued in registered
form and are non-negotiable. No rights of ownership in a Note may be
transferred without the prior written consent of the Company (which consent
shall not be unreasonably withheld.) See "Description of the Notes and the
Indenture."

The Notes are offered with fixed maturities ranging from three (3) months
to ten (10) years. Individual Notes will be issued as subscriptions are
accepted. The Notes are offered in minimum denominations of $1,000.
Purchasers will be able to choose any of the following terms: three (3)
months, six (6) months, one (1) year, eighteen (18) months, two (2) years,
thirty (30) months, three (3) years, four (4) years, five (5) years, seven (7)
years or ten (10) years.

The interest rate payable on the Notes offered hereby will be fixed by
the Company from time to time based on market conditions and the Company's
financial requirements. Once determined, the rate of interest payable on a
Note will remain fixed for the original term of the Note. The actual rate
payable on a Note will be determined based upon the length of the term.

Interest on Notes with terms twelve (12) months or less will be paid at
maturity. Persons investing in Notes of longer duration will have the option
of having interest paid monthly, quarterly, semi-annually, annually or upon
maturity. All interest on the Notes will be compounded daily. Payment of
interest will be by check mailed to the holder of the Note. Holders of Notes
with terms of 12 months or greater will have the ability to change their
interest payment election once during the term of the Note.

Notes with terms of six (6) months or less will not be subject to
redemption or prepayment prior to maturity, all other Notes will be subject to
early repayment, at the election of the original holder only, upon the
occurrence of a Total Permanent Disability of such holder (as hereinafter
defined) or by his or her estate after such holder's death. In the case of a
Note jointly held, only where the joint holders are spouses will the election
apply if one or the other holder dies or becomes disabled. Otherwise, holders
will have no right to demand early repayment. See "Description of the Notes
and the Indenture - Redemption by the Holder upon Death or Total Permanent
Disability."

The Notes are non-negotiable instruments. The Notes will be issued in
fully registered form. Transfers of record ownership of Notes may be made
only with the prior written consent of the Company, which consent will not be
unreasonably withheld. Such consent will be withheld in the event that the
Company determines that such transfer might result in a violation of any state
or federal securities or other applicable law.

Seven (7) days prior to the expiration of the applicable term of a Note,
if the Company does not notify the holder of its intention to repay the Note
it will be extended for an identical term, unless, within seven (7) days after
the relevant maturity date, the holder requests repayment. Notices will be
delivered to the holder regarding upcoming maturity dates. As a courtesy, the
Company provides a request for repayment form with such notice. Use of such
form by a holder is not a condition of repayment. Requests for repayment may
also be made to the Company by letter or telephone. Any such Notes which are
so extended will be extended at the interest rate then being offered by the
Company, for newly issued Notes of like term and denomination.

SUBORDINATION OF NOTES

The notes are subordinated to all Senior Debt of the Company. As of the
date of this Prospectus, there was no Senior Debt outstanding. There is no
limitation on the amount of Senior Debt the Company may incur. Senior Debt is
defined for this purpose to include any indebtedness (whether outstanding on
the date hereof or hereafter created) incurred in connection with borrowings
by the Company (including its subsidiaries) from a bank, trust company,
insurance company, or from any other institutional lender, whether such
indebtedness is or is not specifically designated by the Company as being
"Senior Debt" in its defining instruments. See "Description of Notes and
Indenture."

USE OF PROCEEDS

The net proceeds from the sale of the Notes will be utilized by the
Company for its general corporate purposes. See "Use of Proceeds."

RISK FACTORS

An investment in the Notes involves a high degree of risk including the
lack of guarantee by any governmental or private insurance or any other
entity. See "Risk Factors."

<PAGE>

TAX STATUS

In the opinion of special tax counsel for the Company, the Notes will be
characterized as debt for federal income tax purposes. See "Material Income
Tax Consequences" for additional information concerning the application of
federal tax laws.

ERISA CONSIDERATIONS

If the Notes are considered to be indebtedness without substantial equity
features under a regulation issued by the United States Department of Labor,
the acquisition or holding of Notes by or on behalf of a Benefit Plan will not
cause the assets of the Company to become plan assets, thereby preventing the
application of certain prohibited transaction rules of the Employee
Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986
that otherwise could possibly be applicable. The Company believes that the
Notes should be treated as indebtedness without substantial equity features
for purposes of such regulation.

HIGHLIGHTS OF TERMS OF NOTES"HIGHLIGHTSOFTERMSOFNOTES"

EIGHTEEN & THIRTY MONTHS & ONE, TWO,
THREE AND SIX MONTHS THREE, FOUR, FIVE, SEVEN & TEN YEARS
----------------------------------------- ----------------------------------------------

<S> <C> <C>
Notes. . . . . . . . Unsecured, Subordinated Fixed Same as three and six month notes.
Term Notes

Denomination of. . . Minimum purchase: $1,000 per Note Same as three and six month notes.
Initial Purchase . . any amount in excess thereof.
and Additional
Purchases

Annual Interest Rate Fixed upon issuance. Purchasers will Fixed upon issuance. Purchasers will elect
elect a term length and the interest rate a term length and the interest rate
applicable to such Note will be based applicable to such Note will be based upon
upon the term length chosen. the term length chosen.

Payment of Interest. Interest will be compounded daily and Interest will be compounded daily and, at
paid at maturity. the election of the holder, paid at maturity,
monthly, quarterly, semi-annually or
annually.

Redemption by. . . . May be redeemed by the holder only at May be redeemed by the original holder
the Holder . . . . . maturity. upon the occurrence of a Total Permanent
Disability, or by the holder's estate after
death, at the principal amount plus accrued
interest. Otherwise, the holder will have no
right to cause redemption prior to maturity.
(For joint holders, see "Description of the
Notes and the Indenture.")

Redemption by. . . . Not redeemable until maturity. Five, Seven & Ten Year Notes redeemable
the Company with 10% premium, others not redeemable
until maturity.

Form . . . . . . . . In fully registered form and non- Same as three and six month notes.
negotiable. Not transferable without the
Company's prior written consent.

Automatic Extension. If the Company does not notify the Same as three and six month notes.
holder of its intention to repay the Note
at least seven (7) days prior to maturity
or it is not redeemed by holder within
seven (7) days after its maturity date,
Note will be extended automatically
for a period equal to the original term.
Notes to be extended will be extended at
a fixed rate equal to the rate then being
offered on a newly-issued Notes of like
tenor, term and denomination at their
respective maturity dates.
</TABLE>

<PAGE>
RISK FACTORS"RISKFACTORS"

Investors should consider, among other things, the following factors in
connection with the purchase of the Notes.

ABSENCE OF INSURANCE AND REGULATION

The Notes are not insured by any governmental or private agency and they
are not guaranteed by any public or private entity. Likewise, the Company is
not regulated or subject to examination as commercial banks and thrift
institutions are. The Company is not a commercial bank, savings or thrift
institution. The Company is dependent upon proceeds from the continuing sale
of Notes to conduct its ongoing operations. The Company's revenues from
operations, including the sale of loans from its portfolio to third party
investors, the Company's working capital and cash generated from additional
debt financing represent the source of funds for repayment of principal at
maturity and the ongoing payment of interest on the Notes.

SUBORDINATION OF NOTES TO ALL OTHER DEBT

The Notes will be subordinated in claim and right to all "Senior Debt" of
the Company. Senior Debt is defined for this purpose to include any
indebtedness (whether outstanding on the date hereof or thereafter created)
incurred in connection with borrowings by the Company (including its
subsidiaries) from a bank, trust company, insurance company, or from any other
lender, whether such indebtedness is or is not specifically designated by the
Company as being "Senior Debt" in its defining instruments. If the Company
were to become insolvent, such Senior Debt of the Company would have a
priority of right to payment in connection with the liquidation of the Company
and its assets. The Indenture does not provide any protection to the
Noteholders in the event of a highly leverage transaction, reorganization,
restructuring, merger or similar transaction that creates Senior Debt which
has a priority of right to payment over payments to Noteholders. There can be
no assurance that any holder of the Company's indebtedness would be repaid
upon a liquidation of the Company. The instruments creating any Senior Debt
may contain provisions for acceleration in the event of a change of control of
the Company.

ABSENCE OF SINKING FUND

The Notes are unsecured obligations of the Company and no sinking fund
(i.e. funds contributed on a regular basis to a separate account to repay the
Notes) exists for the benefit of Noteholders.

LACK OF RATINGS OF THE NOTES

It is not a condition to the issuance of the Notes that they be rated by
any Rating Agency. Therefore, purchasers of Notes will not have access to an
assessment of the credit quality of the Notes from an independent third party.

LIMITED LIQUIDITY -- LACK OF TRADING MARKET

The Notes are non-negotiable and are therefore not transferable without
the prior written consent of the Company (which consent shall not be
unreasonably withheld). Due to the length of the term of certain Notes, the
non-negotiable nature of the Notes, and the lack of a market for the sale of
the Notes, even if the Company permits a transfer, investors may be unable to
liquidate their investment even if circumstances would otherwise warrant such
a sale. See "Description of the Notes and the Indenture."

RISKS OF MAKING LOANS SECURED BY REAL PROPERTY

The Company intends to make most of its loans based on independent
appraiser estimates of the fair market value of the real estate offered to
collateralize its loans and, if possible, obtain personal guarantees and
additional collateral from the Borrower. Current internal credit guidelines
of the Company for business loans to be kept in its portfolio provide for a
maximum overall loan to value ratio of up to 90% of the appraised value of the
real estate collateral. It is possible that the actual resale value of
property collateralizing such loans may decrease below appraised estimates of
value. While the Company presently intends to maintain an overall loan to
appraised value ratio in its loan portfolio which the Company believes to be
conservative, there can be no assurance that the market value of the real
estate underlying such loans will at any time be equal to or in excess of the
outstanding principal amount of such loans. Such a decrease could result in
some or all of such loans being under collateralized, presenting a greater
risk of non-payment in the event of a default. See "Business of the Company."

GENERAL LENDING RISKS

The Company will market loans, in part, to borrowers who, for one reason
or another, are not able, or do not wish, to obtain financing from sources
such as commercial banks. To the extent that such loans may be considered to
be of a riskier nature than loans made by traditional sources of commercial
financing, holders of the Notes of the Company may be deemed to be at greater
risk than if the Company's business loans were made to other types of
borrowers. The Company is subject to the risk that a general downturn in the
economy will adversely affect the Company's lending business and its portfolio
to a greater extent than if its loans were made to more credit worthy
borrowers. See "Business of the Company" and "Management's Plan of
Operation."

RELIANCE ON MANAGEMENT

The success of the Company's operations is totally dependent upon the
management, lending, credit analysis and business skills of the senior level
management of the Company. Mr. Gary N. Pelehaty, President and Chief
Executive Officer as well as Mr. Philip deMena have significant prior
experience in the financial services, lending industry and real estate.
However, if either of them were for some reason unable to perform his or their
duties or were, for any reason, to leave the Company, there can be no
assurance that the Company would be able to find capable replacements. The
Company has entered into an employment, noncompetition and nondisclosure
agreement with Mr. Pelehaty and Mr. deMena and has key man life insurance on
Mr. Pelehaty. The Company anticipates adding additional senior level managers
as the business activity increases. The Company intends to execute an
employment, confidentiality and noncompetition agreement with each new
executive.

MANAGEMENT DISCRETION OVER SUBSTANTIAL AMOUNTS OF THE PROCEEDS OF THE OFFERING
AND POSSIBLE USE OF FUTURE UNSPECIFIED ACQUISITIONS

The net proceeds from the sale of the Notes will be utilized for general
corporate purposes, including possible unspecified acquisitions of related
businesses or assets. No specific allocation of such proceeds has been made
as of the date of this Prospectus and management will have broad discretion in
allocating the proceeds of the Offering.

SIGNIFICANT COST ASSOCIATED WITH EXPANSION STRATEGY

Until the Company receives proceeds from the sale of a significant amount
of the Notes, invests the proceeds and receives a return on the investment,
the Company's source of funds for advertising, marketing and promotion will be
limited. Therefore, the Company may expend significant cash in the early
months after the date of this Prospectus to cover its cost of developing the
business. See "Risk Factors - No Minimum Offering - Risk of Sale of Small
Amount of Notes" and "Management's Plan of Operation - Plan of Operation of
Next 12 Months."

SMALL AMOUNT OF EQUITY CAPITAL AT RISK

If all of the Notes are sold, the Company will have debt in the amount of
Fifty Million Dollars ($50,000,000) and only approximately One Million Dollars
($1,000,000) in equity which has been provided by the shareholders of the
Company. Therefore, substantially all the risk of loss will be borne by the
Noteholders because for every One Dollar ($1.00) at risk by the shareholders
of the Company Fifty Dollars ($50.00) is at risk by the Noteholders. See
"Management's Plan of Operation - Sources of Capital and Liquidity."

CONFLICTS OF INTEREST

The Company has the right to enter into direct transactions with its
officers, directors, securityholders or affiliates as well as investments in
which officers, directors, securityholders or affiliates have a direct or
indirect pecuniary interest. The Company has adopted a policy not to enter
into any such transactions unless approved by a majority of the entire Board
of Directors, not including any interested director or supported by an
independent appraisal. See "Certain Relationships and Related Transactions."

COMPETITION

Other lenders against which the Company competes have substantially
greater resources, higher lending limits, name recognition and greater
experience, as well as more established customer bases and established market
presence than the Company. The future profitability of the Company will
depend upon its ability to compete in the marketplace of which there can be no
assurance. See "Business of the Company."

ENVIRONMENTAL CONCERNS

In the course of its business, the Company may acquire in the future,
properties securing loans which are in default. Under various federal, state
and local environmental laws, ordinances and regulations, a current or
previous owner or operator of real estate may be required to investigate and
clean up hazardous or toxic substances or chemical releases at such property,
and may be held liable to a governmental entity or to third parties for
property damage, personal injury and investigation and cleanup costs incurred
by such parties in connection with the contamination. Such laws typically
impose cleanup responsibility and liability under such laws has been
interpreted to be joint and several unless the harm is divisible and there is
a reasonable basis for allocation of responsibility. The costs of
investigation, remediation or removal of such substances may be substantial,
and the presence of such substances, or the failure to properly remediate such
property, may adversely affect the owner's ability to sell or rent such
property or to borrow using such property as collateral. Persons who arrange
for the disposal or treatment of hazardous or toxic substances also may be
liable for the costs of removal or remediation of such substances at the
disposal or treatment facility, whether or not the facility is owned or
operated by such person. In addition, the owner or former owners of a
contaminated site may be subject to common law claims by third parties based
on damages and costs resulting from environmental contamination emanating from
such property.

In appropriate cases, the Company intends to mitigate this risk by
requiring a Phase I Environmental Assessment Report covering any real estate
which is the subject of a proposed investment. The consultant performing the
assessment is expected to provide a report of his examination of relevant
public records, physical inspection of the site, interviews with the owner,
former owners and others with personal knowledge of prior use of the property
to determine it is present and former use.

DEPENDENCE ON DEBT FINANCING

For its continuing operations, the Company is dependent upon borrowings
such as that represented by the Notes. At the present time, the Company
intends to utilize the proceeds of the sale of the Notes offered hereunder to
finance its lending activities and as working capital and has no other
resources of borrowing or credit facilities. The Company's ability to
continue to operate and to expand its operations in the future is dependent
upon the Company's access to such sources of debt financing.

NO MINIMUM OFFERING - RISK OF SALE OF SMALL AMOUNT OF NOTES

The offering is not conditioned upon the sale of a minimum principal
amount of the Notes. Therefore, purchases of Notes are irrevocable whether or
not the offering is successful. In the event only a small portion of the
maximum offering amount of $50 million of Notes is sold, the performance of
individual loans in the pool will have a greater effect on the ability of the
Company to pay the Notes than if a large portion of the offered Notes are sold
and the Company's investment performance were spread over a larger financial
base. It will also be more difficult for the Company to balance the
maturities between the Notes and its investments with a smaller base of
investments. In addition, although most of the expenses of the Company will
generally vary with the amount of loans or Notes, relatively small amounts of
fixed fees and expenses payable by the Company and for on-going banking,
accounting and legal services may not vary in proportion with the amount of
loans and may be relatively higher if only a small portion of the Notes are
sold than if a large portion of the Notes are sold. If the fixed expenses are
higher than expected, the Company's ability to repay may be adversely
affected.

Until the Company receives the proceeds from the sale of Notes its
lending and investment activities will be limited to its equity capital in the
approximate amount of $1,000,000. In the event, less than $5,000,000 of Notes
are sold prior to the expiration of the term of the offering, management is
likely to determine that an attempt to sale additional Notes are not cost
effective and therefore should be terminated. The offering will terminate one
year after the date of the this Prospectus or at the time management
determines that continuation of the offering is no longer feasible, whichever
occurs first. Such determination will be made based upon the relative amount
of proceeds received from the sale of Notes measured against the cost
associated with the offering of Notes. In such event, management will attempt
to structure its investments so as to pay off the outstanding Notes at
maturity and not attempt to renew their term or sell additional Notes. In
such event, the Noteholders would not have the opportunity to reinvest the
principal proceeds from maturity notes into newly issued Notes of the Company.

CONTINGENT RISKS

Although the Company will attempt to sell substantially all loans which
it originates on a nonrecourse basis, there is no assurance that such attempt
will be successful. It is likely that the Company will retain some degree of
risk on substantially all loans sold. During the period of time that loans
are held pending sale, the Company is subject to the various business risks
associated with the lending business including the risk of borrower default,
the risk of foreclosure and the risk that a rapid increase in interest rates
would result in a decline in the value of loans to potential purchasers. In
addition, the obligations in connection with the Company's securitizations or
sale require the Company to commit to repurchase or replace loans which do not
conform to the representations and warranties made by the Company at the time
of sale. When borrowers are delinquent in making monthly payments on loans
included in a sale or securitization trust, the Company may be required to
advance interest payments with respect to such delinquent loans to the extent
that the Company deems such advances ultimately recoverable. These advances
will require funding from the Company's capital resources but have priority of
repayment from the succeeding month's collections.

In the ordinary course of its business, the Company will be subject to
claims made against it by borrowers and private investors arising from, among
other things, losses that are claimed to have been incurred as a result of
alleged breaches of fiduciary obligations, misrepresentations, errors and
omissions of employees, officers and agents of the Company (including its
appraisers), incomplete documentation and failures by the Company to comply
with various laws and regulations applicable to its business. Any claims
asserted in the future may result in legal expenses or liabilities which could
have a material adverse effect on the Company's results of operations and
financial condition. See "Management's Plan of Operation."

ECONOMIC CONDITIONS AND RELATED UNCERTAINTIES

Financial service companies are affected, directly and indirectly, by
economic conditions, and by governmental policies. Economic downturns could
result in decreased demand for credit, declining real estate values and the
delinquency of outstanding loans. Any material decline in real estate values
reduces the ability of borrowers to use real estate equity to support
borrowing. Because of the Company's focus on borrowers who are unable or
unwilling to obtain financing from sources such as commercial banks, the
actual rates of delinquencies, foreclosures and losses on such loans could be
higher under adverse economic conditions than those experienced in the
commercial lending business generally. The Company's operations are dependent
to a large degree on net interest income which is the difference between
interest and fee income from loans and interest expense on borrowings. The
Company's ability to generate net income is dependent upon its ability to make
loans at rates in excess of and for amounts at least equivalent to its
outstanding indebtedness including the indebtedness of the Notes. The
Company's profitability will be affected by fluctuations in interest rates.
For example, any future rise in interest rates, while increasing the income
yield on the Company's assets, may adversely affect loan demand and the cost
of funds. Conversely, any future decrease in interest rates may reduce the
amounts which the Company may earn on its assets, but increased loan demand
and reduce the cost of funds. Management does not expect any one particular
factor to affect the Company's results of operations. However, a downtrend in
several areas could have an adverse impact on the Company's profitability.

REGULATORY RISK

The Federal Real Estate Settlement Procedures Act ("RESPA") and
Regulation X, the Home Mortgage Disclosure Act and the Federal Debt Collection
Practices Act, as well as other federal and state statutes and regulations
affecting the Company's activities. The Company is also subject to
examinations by state regulatory authorities with respect to originating,
processing, underwriting, selling, securitizing and servicing loans. These
rules and regulations, among other things, impose licensing obligations on the
Company, prohibit discrimination, regulate assessment, collection, foreclosure
and claims handling, payment features, mandate certain disclosures and notices
to borrowers and, in some cases, fix maximum interest rates, and fees.
Failure to comply with these requirements can lead to, termination or
suspension of licenses, certain rights of rescission for mortgage loans, class
action lawsuits and administrative enforcement actions.

Although the Company intends to design systems and procedures to
facilitate compliance with these requirements and believes that it will be in
compliance in all material respects with applicable local, state and federal
laws, rules and regulations, there can be no assurance that more restrictive
laws, rules and regulations will not be adopted in the future that could make
compliance more difficult or expensive.

RISK OF NO UNDERWRITER

The interest rates of the Notes have been arbitrarily determined by the
Company without the concurrence of an underwriter, or other unrelated third
party, and bear no direct relationship to the Company's assets, book value,
net worth or any other established criteria of value. Among the factors
considered in such determination were the history of and prospects for the
industry in which the Company competes, estimates of the business potential of
the Company, the present state of its development, its financial conditions,
risks associated with the commercial financing industry in general, interest
rates in general during the time of the offering and demand for similar
securities of comparable companies. See "Sale of Small Amount of Notes"
above.

USE OF PROCEEDS"USEOFPROCEEDS"

The net proceeds from the sale of the Notes (estimated to be
approximately $44,840,000 net of estimated offering expenses (but before fees
paid to broker-dealers) if all of the Notes offered hereby are sold) will be
utilized by the Company for its general corporate purposes. Corporate general
purposes may include working capital needs, financing of future growth,
origination or acquisition of a commercial and business loan portfolio, as
well as other finance related activities; and possible future acquisitions of
related businesses or assets. Because the Notes are offered on a continuous
basis, corporate general purposes may include replacement of some or all of
the Company's Senior Debt or repayment of maturing Notes.

The precise amounts and timing of the application of such proceeds will
depend upon many factors, including, but not limited to, the amount of any
such proceeds, actual funding requirements and the availability of other
sources of funding. Until such time as the proceeds are utilized, they may be
invested in short and long-term investments, including treasury bills,
commercial paper, certificates of deposit, securities issued by U.S.
government agencies, money market funds and repurchase agreements, depending
on the Company's cash flow requirements. The Company's loan and investment
policies permit significant flexibility as to the types of such loan and
investments that may be made by the Company. These investments will be
accomplished through an account with an unaffiliated broker-dealer. During
the lapse of time between when an order is executed by the broker-dealer and
the trade is settled by the Company an unsettled balance will exist with the
broker-dealer. Therefore, the Company may maintain daily unsettled balances
with the broker-dealers. While the Company may from time to time consider
potential acquisitions, the Company as of the date of this Prospectus had no
commitments or agreements with respect to any material acquisitions. See
"Management's Plan of Operation-Plan of Operation for next 12 Months."

DESCRIPTION OF THE NOTES AND THE
INDENTURE"DESCRIPTIONOFTHENOTESANDTHEINDENTURE"

The Notes will be issued pursuant to an Indenture (the "Indenture")
between the Company and the Trustee. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (the "Trust Indenture Act"), in effect on the
date the Indenture is qualified thereunder. The Notes are subject to all such
terms, and holders of Notes are referred to the Indenture and the Trust
Indenture Act for a statement thereof. The following includes a summary of
certain provisions of the Indenture, a copy of which is available from the
Company. The summary does not purport to be complete and is qualified in its
entirety by reference to the Indenture, including the definitions therein of
certain terms used below.

The Notes will be general unsecured, subordinated term notes,
subordinated in right of payment to the prior payment in full of all Senior
Debt (as defined) of the Company, whether outstanding on the date of the
Indenture or thereafter incurred, and are offered by the Company at maturities
ranging from three (3) months to ten (10) years. The term of each Note will
be chosen by the purchaser of such Note upon subscription.

The Notes are not secured by any collateral or lien. There are no
provisions for a sinking fund applicable to the Notes.

FORM AND DENOMINATIONS

The Notes will be issued in fully registered form. The Notes are not
negotiable instruments, and no rights of record ownership therein can be
transferred without the prior written consent of the Company. Ownership of a
Note may be transferred on the Company register only by written notice to the
Company signed by the owner(s) or such owner's duly authorized representative
on a form to be supplied by the Company and with the prior written consent by
the Company (which consent shall not be unreasonably withheld). The Company
may also, in its discretion, require an opinion from such Noteholder's counsel
that the proposed transfer will not violate any applicable laws. See "Summary
of the Offering." A Note may be purchased in the minimum amount of $1,000 or
any amount in excess thereof. Separate purchases may not be accumulated to
satisfy the minimum denomination requirement.

INTEREST

The interest rates payable on the Notes offered hereby will be
established by the Company from time to time based on market conditions and
the Company's financial requirements. The Company constantly reevaluates its
interest rates based on such analysis. Once determined, the rate of Interest
payable on a Note will remain fixed for the original term of the Note and will
not vary. The Interest rate payable on a Note will be determined based upon
the maturity date and term established for such Note upon subscription.

Interest on Notes will be computed on the basis of an actual calendar
year and will compound daily. Interest on Notes with terms of less than
twelve (12) months will be paid at maturity. Purchasers of Notes with terms
of one (1) year or greater may elect to have interest paid monthly, quarterly,
semi-annually, annually or at maturity. This election may be changed one time
by the holder during the term of these longer term Notes. Requests to change
such election are required to be made to the Company in writing. No specific
form of change of election is required to be submitted to the Company. Any
interest not otherwise paid on an interest payment date will be paid at
maturity.

The Company has the right to change from time to time, in its discretion,
the interest rates it offers on the Notes based on numerous factors other than
length of term to maturity. Once determined, the rate of interest payable on
a Note will remain fixed for the original term of the Note and will not vary.
Such factors may include, but are not limited to, the desire to attract new
investors; Notes in excess of certain principal amounts; Notes purchased for
IRA and Keogh accounts; rollover investments; and Notes beneficially owned by
persons residing in particular geographic localities. The Company does not
intend to offer variable interest rate Notes to investors. However, the
Company may make a decision to change interest rates in the future based on
its fund raising objectives including, but not limited to, the attraction of
new investors and the encouragement of the rollover of Notes by current
holders, circumstances in the financial markets and the economy and other
factors, including, but not limited to, any additional costs incurred by the
Company in selling Notes in a particular jurisdiction which may at the time be
relevant to the Company's operations.

INTEREST ACCRUAL DATE

Interest on the Notes will accrue from the date of purchase, which is
deemed to be, for accepted subscriptions, the date funds are cleared and
available to the Company, if received prior to 2:00 p.m. on a business day or
the next business day if the Company receives such funds on a non-business day
or after 2:00 p.m. on a business day. For this purpose, the Company's
business days will be deemed to be Monday through Friday except for legal
holidays.

INTEREST WITHHOLDING

In the event an investor does not provide the Company with a fully
executed Form W-8 or Form W-9, the Company will withhold 31% of any interest
paid. Otherwise, no interest will be withheld, except on accounts held by
foreign business entities. It is the Company's policy that no sale will be
made to anyone refusing to provide a fully executed Form W-8 or Form W-9.

AUTOMATIC EXTENSION

At least seven (7) days prior to a Note's stated maturity date, the
Company will notify the registered holder of such maturity date and the
interest rate payable during any renewed term. If at such time, the Company
does not notify the holder of its intention to repay, subject to the holder's
demand for repayment, the term of such Note will be automatically extended.
If, within seven (7) days after a Note's maturity date, the holder thereof has
not demanded repayment of such Note, and the Company has notified the holder
of its intention to extend such Note, such Note shall be extended for the same
term identical to the term of the original Note. The Notes will continue to
renew as described herein absent some action permitted under the Indenture and
the Notes by either the holder or the Company. Interest shall continue to
accrue from the first day of such renewed term. Such Note, as renewed, will
continue in all its provisions, including provisions relating to payment,
except that the interest rate payable during any renewed term shall be the
interest rate which is then being offered by the Company on similar Notes
being offered as of the renewal date. The Company intends to continuously
offer similar Notes. Therefore, the interest rate upon renewal will be the
rate specified by the Company for similar Notes on or before the maturity
date, or the Note's current rate if no such rate is specified. If the Company
gives notice to a Noteholder of the Company's intention to repay a Note at
maturity no interest will accrue after the date of maturity. Otherwise, if a
Noteholder requests repayment within seven (7) days after its maturity date,
the Company will pay interest during the period after its maturity date and
prior to repayment at the lower of (i) the lowest interest rate then being
paid on debt securities being offered by the Company to the general public or
(ii) the rate being paid on such Note immediately prior to its maturity. As a
courtesy the Company provides a request for repayment form with such notice.
Use of such form by a holder is not a condition of repayment. However,
requests for repayment must be made to the Company in writing.

REDEMPTION BY THE COMPANY

The Company will have no right to prepay any Note except Notes with a
maturity of five years or more. The redemption price of Notes with a maturity
of five years or more is the unpaid principal balance plus interest accrued to
the date of redemption and a redemption premium in the amount of 10% of the
unpaid principal. The holder has no right to require the Company to prepay
any Note prior to its original or extended maturity date except as described
below. Any exercise of the Company's right of redemption will comply with all
applicable regulations under the federal securities laws including Exchange
Act Rule 14e-1.

REDEMPTION BY THE HOLDER UPON DEATH OR TOTAL PERMANENT DISABILITY

A Note may be redeemed at the election of the holder following his Total
Permanent Disability, as established to the satisfaction of the Company, or by
his estate following his death. The redemption price, in the event of such a
death or disability, will be the principal amount of the Note, plus interest
accrued and not previously paid, to the date of redemption. If a Note is held
by joint record owners, the election to redeem will apply when either record
owner dies or becomes subject to a Total Permanent Disability. The Company
may modify the foregoing policy on redemption after death or disability.
However, no such modification will affect the right of redemption applicable
to any then outstanding Note. Should the Company modify such policy at a
future date, written notice of such modification will be sent to all owners of
those outstanding Notes which were purchased while the policy was in effect
(but such notice will not affect the right to redeem such outstanding Notes
after the owner's death or disability).

For the purpose of determining the right of a holder to demand early
repayment of a Note, Total Permanent Disability shall mean a determination by
a physician chosen by the Company that the holder, who was gainfully employed
on a full time basis at the time of purchase, is unable to work on a full time
basis, defined as working at least forty hours per week, during the succeeding
twenty-four months.

LOANS TO NOTEHOLDERS

At the request of any Noteholder, the Company has the right, but not the
obligation, to make a loan secured by a pledge of the Noteholder's Note. The
amount of the loan may be as much as the principal balance of the Note for a
term and at an interest rate to be negotiated between the Company and the
Noteholder.

SUBORDINATION

The indebtedness evidenced by the Notes, and any interest thereon, are
subordinated to all "Senior Debt" of the Company. Senior Debt is defined for
this purpose to include any indebtedness (whether outstanding on the date
hereof or thereafter created) incurred in connection with borrowings by the
Company (including its subsidiaries) from a bank, trust company, insurance
company, or from any other lender, whether such indebtedness is or is not
specifically designated by the Company as being "Senior Debt" in its defining
instruments. Any indebtedness of the Company other than that described as
Senior Indebtedness, will have rights upon liquidation or dissolution
equivalent to that of the Noteholders. The instruments creating any Senior
Debt may contain provisions for acceleration in the event of a change of
control of the Company.

For a discussion of the Company's status as a holding company and the
lack of insurance or guarantees in support of the Notes see "Risk
Factors--Lack of Guarantees and--Possible Characterization of the Company as
Holding Company."

In the event of any liquidation, dissolution or any other winding up of
the Company, or any receivership, insolvency, bankruptcy, readjustment,
reorganization or similar proceeding under the Federal Bankruptcy Code or any
other applicable federal or state law relating to bankruptcy or insolvency, or
during the continuation of any Event of Default (as described below), no
payment may be made on the Notes until all Senior Debt has been paid. In any
such event, holders of Senior Debt may also submit claims on behalf of
Noteholders and retain the proceeds for their own benefit until they have been
fully paid, and any excess will be turned over to the Noteholders. If any
distribution is nonetheless made to Noteholders, the money or property
distributed to them must be paid over to the holders of the Senior Debt to the
extent necessary to pay Senior Debt in full.

EVENTS OF DEFAULT

The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on the
Notes (whether or not prohibited by the subordination provisions of the
Indenture); (ii) default in payment when due of principal on the Notes
(whether or not prohibited by the subordination provisions of the Indenture);
(iii) failure by the Company to observe or perform any covenant, condition or
agreement with respect to the liquidation, consolidation or merger or other
change in control of the Company; (iv) failure by the Company for 60 days
after notice to comply with certain other agreements in the Indenture or the
Notes; and (v) certain events of bankruptcy or insolvency with respect to the
Company.

If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Notes may
declare all of the Notes to be due and payable immediately; provided, however,
that so long as any Senior Debt is outstanding, such declaration shall not
become effective until the earlier of (i) the day which is five (5) Business
Days after the receipt by representatives of Senior Debt of such written
notice of acceleration or (ii) the date of acceleration of any Senior Debt.
In the case of an Event of Default arising from certain events of bankruptcy
or insolvency with respect to the Company all outstanding Notes will become
due and payable without further action or notice. Holders of the Notes may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, holders of at least 25% in aggregate principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from holders of Notes notice of
any continuing Default or Event of Default (except a Default or Event of
Default relating to the payment of principal or interest) if it determines
that withholding notice is in their interest.

The holders of 25% in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes.

The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

AMENDMENT, SUPPLEMENT AND WAIVEr

Except as provided herein, the Indenture or the Notes may be amended or
supplemented with the consent of the holders of at least a majority in
principal amount of the Notes then outstanding, and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the holders of at least 25% in aggregate principal amount of
the then outstanding Notes.

Without the consent of each holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting holder of Notes) (i)
reduce the principal amount of Notes whose holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Note, (iii) reduce the rate of or change the time for
payment of interest on any Note, (iv) waive a Default or Event of Default in
the payment of principal or premium, if any or interest on the Notes (except a
rescission of acceleration of the Notes by the holders of at least 25% in
aggregate principal amount of the Notes and a waiver of the payment default
that resulted from such acceleration), (v) make any Note payable in money
other than that stated in the Notes, (vi) make any change in the provisions of
the Indenture relating to waivers of past Defaults or the rights of holders of
Notes to receive payments of principal of or interest on the Notes, (vii) make
any change to the subordination provisions of the Indenture that adversely
affects holders of Notes or (viii) make any change in the foregoing amendment
and waiver provisions.

Notwithstanding the foregoing, without the consent of any holder of
Notes, the Company and/or the Trustee may amend or supplement the Indenture or
the Notes to cure any ambiguity defect or inconsistency; to provide for
assumption of the Company's obligations to holders of the Notes in the case of
a merger or consolidation; to make any change that would provide any
additional rights or benefits to the holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such holder,
including an increase in the aggregate dollar amount of Notes which may be
outstanding under the Indenture; to modify the Company's policy to permit
redemptions of Notes upon the death or Total Permanent Disability of any
holder of Notes (but such modification shall not adversely affect any then
outstanding Notes); or to comply with requirements of the Commission in order
to effect or maintain the qualification of the Indenture under the Trust
Indenture Act.

CONCERNING THE TRUSTEE

The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions with the Company. However, if the Trustee acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Securities and Exchange Commission for permission to continue as Trustee
or resign.

The holders of 25% in aggregate principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of Notes, unless such holder shall have
offered to the Trustee security and indemnify satisfactory to it against any
loss, liability or expense.

PLACE AND METHOD OF PAYMENT

Principal and interest on the Notes will be payable at the principal
executive office of the Company, as it may be established from time to time,
or at such other place as the Company may designate for that purpose. As of
the date of this Prospectus the Company has designated the Trustee as the
Paying Agent. Payments may be made at the option of the Company by check or
draft mailed to the person entitled thereto at his address appearing in the
register which the Company maintains for that purpose.

NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS

No director, officer, employee, incorporator or shareholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Notes, the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each holder of the Notes by
accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver
may not be effective to waive liabilities under the federal securities laws
and it is the view of the Securities and Exchange Commission that such a
waiver is against public policy.

REPORTS

The Company will publish annual reports containing audited financial
statements and quarterly reports containing unaudited financial information
for the first three quarters of each fiscal year. Copies of such reports will
be sent to Noteholders upon written request to the Company.

SERVICE CHARGES

The Company has the right to assess service charges for replacing lost or
stolen Notes (for which an affidavit from the holder will be required),
changing the registration of any Note when such change is occasioned by a
change in name of the holder or a transfer (whether by operation of law or
otherwise) of the Note by the holder to another person.

VARIATIONS BY STATE

The Notes are offered with fixed maturities ranging from 3 months to 10
years. Interest rates will be fixed by the Company from time to time. All of
the maturities may not be offered in all states because of state securities
laws. Therefore, individual purchasers may not have a selection of all Notes.

BUSINESS OF THE COMPANY"BUSINESSOFTHECOMPANY"

First Nations Financial Services Company was organized as a Delaware
corporation on November 16, 1995.

OVERVIEW

The Company has identified two interrelated segments of the financial
services industry to which it is committed to become a significant
participant. The first segment of the industry upon which the Company will
focus and concentrate its resources is commercial and business lending, which
includes real estate and equipment financing. The second component of the
Company's overall strategy is the sale and securitization of loans originated
in its other two lines of business.

PRIMARY BUSINESS

The Company's present focus is limited to commercial and business loans.
See "Business of the Company-Commercial and Business Loans." The Company's
lending activities during this phase are structured in such a manner and in a
geographic location that does not require any kind of licensing. This phase
will expand to commercial and business lending that does require licenses
when, and only when, the necessary licenses are acquired. Management does not
believe the present lack of licenses will materially adversely affect the
Company's ability to do business and does not know of any impediment or
disqualification for the issuance of any licenses which may be required in the
future. See "Business of the Company-Government Regulation and Licensing."

The Company has received preliminary expressions of interest to finance
approximately $5 Million of projects ranging from $500,000 to $3.5 Million
each. If the Company successfully closes one or more of the possible
projects, the anticipated interest rate payable by the borrower will be 10% or
more and the borrower will pay to the Company a loan origination fee of not
less than 1% of the original principal as well as the costs of document
preparation, appraisal cost, title insurance premiums, attorneys fees and
other third party expenses. See "Management's Plan of Operation-Plan of
Operation for Next 12 Months."

COMMERCIAL AND BUSINESS LOANS

The Company intends to make loans to owners of businesses who the Company
determines has the business purpose, motivation, cash flow and collateral
required to repay the obligation.

Collateral. The Company intends to make commercial loans to
corporations, partnerships, sole proprietors and other entities. All loans
will be collateralized by one or more of the following: (i) a first mortgage
lien on a principal residence or some other parcel of real property, (ii) a
junior mortgage lien on a parcel of real property, (iii) marketable
securities, or (iv) other real or personal property. Commercial lending may
also take the form of the lease of equipment or a loan secured by other
personal property. Real Property eligible for collateral, includes single
family residence, office and apartment buildings, mixed use buildings,
unimproved land, motels, hotels and restaurant buildings owned by the
borrower, a principal of the borrower, or a guarantor of the borrower. The
Company intends to, generally, further collateralize its loans by obtaining a
lien on the borrower's other tangible and intangible assets by filing
appropriate Uniform Commercial Code financing statements and, if possible,
obtain personal guarantees from the Borrower.

The Company intends to make loans for various business purposes
including, but not limited to, working capital, business expansion, equipment
or real estate acquisition and debt-consolidation.

Strategy. The Company markets its business loans through existing
personal relationships with management and members of the Board of Directors.

Lending Policies and Practices. Summarized below are certain of the
lending policies and practices which the Company follows. Such policies and
practices will be altered, amended and supplemented as conditions warrant.
The Company has the right to make changes in its day to day practices and
policies in its sole discretion.

The Company keeps its interest and other charges competitive with the
lending rates of other lenders. Generally, loans are made at fixed rates for
fixed terms ranging from approximately one to fifteen years. Generally, the
Company intends to compute interest due on its outstanding loans by the simple
interest method. Generally, the Company intends to require that title
insurance be obtained in connection with its loans and to permit borrowers to
prepay such loans. Where permitted by applicable law, the Company may impose
a prepayment penalty. Whether a prepayment penalty is imposed and the amount
of such penalty, if any, is negotiated between the Company and the individual
borrower prior to consummation of the loan.

Generally, the Company makes a loan collateralized by residential real
estate only if the overall loan to value ratio (based on independent appraised
fair market value) on the properties collateralizing the loans is less than
ninety (90%) percent. Generally, the Company makes a loan collateralized by
commercial real estate where the overall loan to value ratio (based on
independent appraised fair market value) is less than ninety (90%) percent.
Occasionally, exceptions to these maximum levels may be made if other
collateral is available or if there are other compensating factors.

Servicing of Loans. Generally, the Company is not responsible for
servicing loans. The Company subcontracts servicing of the loans in its
portfolio or loans which will be securitized in accordance with specific
servicing procedures. In servicing its loans, the Company, itself or through
a subcontractor, initiates the collection process one day after a borrower
misses a monthly due date. When a loan becomes forty-five (45) to sixty (60)
days delinquent, it is transferred to loan work-out personnel. The work-out
personnel attempt to reinstate a delinquent loan, seek a payoff, or
occasionally enter into a loan modification agreement with the borrower to
avoid foreclosure. If a borrower declares bankruptcy, the matter is
immediately referred to counsel.

Purchase of Existing Loans. In the normal course of business, the
Company may purchase business/commercial loan portfolios from individuals,
banks, other commercial lenders and other sources of commercial loans. Any
loans so purchased would be collateralized by real estate located in the
Company's market area. Each such individual loan would be reviewed by an
executive officer of the Company prior to acquisition to see if the loan and
all related matters conform to the Company lending procedures and policies.

Competition. As a commercial lender, the Company competes against many
other lenders, many of which have larger capitalization and better name
recognition. The Company will have significant competition in the equipment
leasing industry. The Company competes with banks, leasing and financial
companies with greater resources, capitalization and name recognition
throughout its market area. Other companies participating in the equipment
leasing industry will have the ability to enter into leases which contemplate
the payment of funds sufficient to recover the lessor's investment in the
equipment plus a profit over the term of the lease which does not give the
lessee any option to purchase the equipment. Competitors may also lease
equipment under renewable leases which do not contemplate full recovery of the
lessor's original costs during their initial term. Therefore, competitors
have many ways in which to compete which are not available to the Company.
See "Risk Factors-Competition."

Leasing. Generally, the Company's leases are of two types: (i) finance
leases which have a term of twelve (12) months or more and provide a purchase
option exercisable by the lessee at $1.00 at the termination of the lease and
(ii) fair market value or true leases which have a similar term but provide a
purchase option exercisable by the lessee at the fair market value of the
equipment at the termination of the lease.

Strategy. The Company intends to primarily obtain its business leasing
customers through equipment manufacturers, brokers and vendors with whom
directors or management have a relationship.

Leasing Policies and Practices. Generally, the Company's interest rate
and other terms and conditions of its leases are competitive with the leasing
terms of other leasing companies in the area. The leases will be for terms of
twelve (12) to sixty (60) months and structured with purchase options whose
exercise prices range from $1.00 to the fair market value of the equipment at
the time of the lease termination.

All of the leases will be secured by the leased equipment or, in some
cases, other or additional collateral. However, creditworthiness and
financial strength of the lessee are an important criteria to be utilized by
the Company in determining to enter into a lease arrangement with a specific
lessee. It is anticipated that in the future, the Company may develop
relationships with third party purchasers of leases and will sell a portion of
the leases it makes to such third parties. The sale of leases to third party
purchasers may or may not require the Company to retain the servicing rights
to such leases.

The above policies and practices may and will be altered, amended and
supplemented as conditions and circumstances warrant. The Company has the
right to make changes in its day to day practices and policies in its sole
discretion.

Service Area. The Company intends to market and originate business
equipment leases throughout the United States. The Company will conduct its
business operations from the Company's main offices. As markets develop in
other areas, the Company may open additional offices within or outside its
present service area.

SECURITIZATION OF LOANS

The Company anticipates that it will build portfolios of business and
commercial loans (which include business leases) and enter into
securitizations of all or part of these portfolios. The Company believes that
a securitization program provides a number of benefits by allowing the Company
to create an additional profit center, diversify its funding base, provide
liquidity and lower its cost of funds.

The diversification of its funding base through securitization is an
objective of the Company. Generally, a securitization involves the transfer
by the Company of loans representing a series of loans to a single purpose
trust in exchange for certificates issued by the trust. The certificates
represent an undivided ownership interest in the loans transferred to the
trust. Typically, the certificates will consist of a class of senior
certificates, a class of subordinated certificates and a residual interest.
In connection with the securitization, the senior certificates are sold to
investors and the subordinate certificates and residual interest are typically
retained by the Company. As a result of the sale of the senior certificates,
the Company will receive a cash payment representing a substantial portion of
the principal balance of the loans held by the trust. The senior certificates
will entitle the holder to be repaid the principal of its purchase price and
the certificates will bear interest at a stated rate of interest. The stated
rate of interest will typically be substantially less than the interest rate
required to be paid by the borrowers with respect to the underlying loans. As
a consequence, the Company is able to receive cash for a portion of its
portfolio and to pay the principal and interest required by the senior
certificate with the cash flows from the underlying loans owned by the trust.
However, since the interest in the loans held by the Company (the subordinate
certificate and the residual interest) is subordinate to the senior
certificate, the Company retains a portion of the risk that the full value of
the underlying loans will not be realized. Additionally, the holder of the
senior certificates will receive certain additional payments on account of
principal in order to reduce the balance of the senior certificates in
proportion to the subordinate certificate held by the Company. The additional
payments of principal are designed to increase the senior certificate holder's
protection against loan losses by preserving the availability of the
subordination provided by the subordinate certificates. In the typical
subordination structure, the Company, as the holder of the residual interest
in the trust will be entitled to receive all of the remaining interest in the
loans at the time of the termination of the trust.

In order to securitize pools of loans, the Company believes it will be
necessary to aggregate similar loans, into a common offering. The Company
expects that the minimum dollar amount necessary to effectively justify the
origination and offering costs is in the range of $7.5 million for a private
offering and $25 million for a public offering. The Company expects to enter
into the securitization market during the first quarter of 1999 and is
conditioned on the Company's ability to develop the necessary business
reputation and industry relationships.

In order to successfully securitize its loans, the Company, must develop
a reputation in the financial community and with the commercial rating
agencies as having the ability to acquire and service, or arrange for the
servicing, of loans which are intended to become a part of the securitized
pool. In addition, the Company must develop relationships with one or more
banks or trust companies which are qualified to act as owner trustee and
indenture trustee in order to qualify for participation in the securitization
market. Any successful securitization of loans is, therefore, dependent upon
assembling the several necessary participants including the indenture trustee,
credit enhancement facility, owner trustee and the underwriter or placement
agent who will ultimately sell the securitized instrument into the capital
markets. The ability to demonstrate expertise in the necessary functions to
securitization and to attract the necessary industry participants may be an
expensive and time consuming process for a Company whose management team has
no experience in these matters. However, based upon preliminary discussions
by the Company with representatives of the several necessary participants, the
Company's forecast of entry into the securitization market during the first
quarter of its second year of operations is reasonable.

GOVERNMENT REGULATION AND LICENSING

Rules and Regulations. The Company's motor vehicle lending business will
be subject to numerous federal and state consumer protection laws and related
regulations which impose substantial requirements upon lenders and servicers
involved in consumer finance.

Licensing. The Company does not need any government approval or licenses
for its present primary business, commercial lending, in the states in which
it presently proposes to operate. Furthermore, the Company does not and will
not need federal or local government approval or licenses for the purchase or
securitization of the commercial loans. However, as the geographic coverage
of the Company's commercial lending business increases in the future some
states will require licensing for the Company to offer some of its mortgage
banking services. In such event the Company will seek to acquire such
licenses.

As of the date of this Prospectus, the Company is licensed as a mortgage
lender in the State of Florida and has not applied for any licenses in any
other state. Management of the Company does not believe the lack of licenses
will materially adversely affect the Company's ability to do business because
there are ample investment opportunities in unlicensed activities. Management
does not know of any impediments, disqualification or other reason why the
Company will not qualify for any licenses it may need in the future.

EMPLOYEES

The executive officers of the Company devote substantially all their time
to operations of the Company for no compensation until the Company's cash flow
is adequate to cover market level compensation. Bookkeepers, secretaries,
administrative assistants and support staff are presently employed by William
T. Juliano, or one of his affiliates, and he will make their services
available without cost to the Company until cash flow from operations will
cover their costs. See "Management - Executive Compensation" and
"Management's Plan of Operation." The Company believes its relationship with
the employees is good.

PROPERTY

The Company presently does not hold title to any real estate.

The Company has filed an application for registration of its name and
logo as a service mark with the U.S. Patent and Trademark Office. The
application is pending.

LEGAL PROCEEDINGS

The Company is not a party to any pending or threatened legal
proceedings.

MANAGEMENT'S PLAN OF OPERATION"MANAGEMENT'SPLANOFOPERATIONS"

PLAN OF OPERATION - OVERVIEW

Management of the Company has extensive experience in investing and
examining funds and lending. The Company's objective is to become a
significance participant in three interrelated segments of the financial
services industry. The Company believes that it can achieve its objective by
its commitment to servicing a market niche which is not adequately serviced by
commercial banks or traditional lending sources. In servicing its market, the
Company will stress the importance of identifying profitable lending
opportunities and quick closing.

The income generated from the Company's loan portfolio is used to pay
principal and interest on the Notes, related operating costs and expenses of
the Company. The earnings on the loans and other assets owned by the Company
and the interest cost of the Notes will determine the Company's results of
operations in the future. The Company believes there are no changes, trends
or anomalies which will materially adversely affect the anticipated
delinquency and loss experience of the loans.

PLAN OF OPERATION FOR NEXT 12 MONTHS

Until the Company receives proceeds from the sale of Notes, invests the
proceeds and receives a return on the investment, the Company's only source of
funds for advertising, marketing and promotion will be its limited equity
capital and the income derived from its investment. Therefore, the Company
will expend significant cash and incur additional losses in the early months
of operation to cover its cost of developing and operating the business.

During the first 12 months following the date of this Prospectus the
Company anticipates that proceeds from the sale of Notes will begin slowly and
increase as the Company's marketing plan takes effect. Although no assurances
can be given, the Company's first year forecast assumes total proceeds from
the sale of Notes in the range of $35,000,000. Without regard to the amount
of Notes sold, management believes that the Company has sufficient resources
to pay its operating expenses for the first 12 months of operations because
the Company's executive office and the furniture and equipment located in the
space is furnished by Mr. Juliano without cost to the Company. See "Business
of the Company - Property." The executive officers of the Company will devote
substantially all their time to operations without compensation until the
Company's cash flow is adequate to cover market level compensation and all
other operating expenses. See "Business of the Company - Employees."

The Company will initially sell Notes only through its employees.
However, the Company is likely to engage the services of one or more
broker-dealers during the first year of operations. In order to arrive at its
forecasted Note sales for the first 12 months, management had preliminary
discussions with several small broker-dealers and examined the amount of
similar debt instruments sold by two comparable issuers. The sales of other
issuers was discounted substantially to account for the differences in
experience at raising funds. Management believes its estimates are realistic
and conservative. A part of the Company's plan to sell the Notes is direct
personal contact with selected broker-dealers in the states where the offering
is registered. The broker-dealers will be selected based upon their number of
registered representatives and access to financial products comparable to the
Notes offered by the Company. Management believes that it will fill a need
for broker-dealers identified by its selection process because each have a few
clients for whom the Notes are suitable investments and do not otherwise have
the ability to participate in a similar offering.

The following forward-looking table is the Company's present best
reasonable estimate of the possible use of different increments of proceeds
from the offering. Numerous uncertainties exist in estimating the amount and
use of future proceeds. The accuracy of any estimate is a result of the
quality of available market data, interpretation of the data, and business
judgment. Actual results after the date of an estimate may indicate the need
to revise the estimate. The quantity, quality, yield and category of
available loans and other investments cannot be accurately predicted and
changes with general economic conditions and interest rates. Accordingly, the
actual use of proceeds set forth in the following table may be materially
different from the actual use of proceeds.

Time after date of this Prospectus
----------------------------------

Type Investment Three Months Six Months Nine Months One Year
- --------------------- ---------- ---------- ---------- ----------- ----------- ----------- ----------- -----------
Case 11 Case 22 Case 1 Case 2 Case 1 Case 2 Case 1 Case 2
---------- ---------- ---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial loans
and leases3 . . . . . $2,600,000 $5,000,000 $5,000,000 $ 9,850,000 $ 9,350,000 $20,050,000 $16,050,000 $33,100,000

Securitization. . . . -0- -0- -0- -0- -0- -0- -0- -0-

General and
Administrative Costs4
-0- -0- -0- 50,000 50,000 50,000 50,000 50,000

Offering expenses
sales commissions
5%5 . . . . . . 150,000 275,000 250,000 525,000 500,000 1,075,000 850,000 1,750,000
other offering
expense . . . . 138,000 138,000 -0- -0- -0- -0- -0- -0-

Uninvested proceeds . 112,000 87,000 50,000 75,000 100,000 325,000 50,000 100,000
---------- ---------- ---------- ----------- ----------- ----------- ----------- -----------

Total Use of
Proceeds . . $3,000,000 $5,500,000 $5,300,000 $10,500,000 $10,000,000 $21,500,000 $17,000,000 $35,000,000
========== ========== ========== =========== =========== =========== =========== ===========
</TABLE>

__________________________
1 Worst case.
2 Most likely case.
3 This category includes commercial first and second mortgage loans ranging
from $50,000 to $3,500,000 or more. See "Business of the Company- Primary
Business."
4 The executive officers of the Company will devote substantial time to
operations without compensation until the Company's cash flow is adequate to
cover market level compensation and all other operating expenses.
5Assumes sale by broker-dealers which have not yet been identified.

The Company presently has received preliminary expressions of interest to
finance projects ranging from $500,000 to $5 million each. The Company
anticipates, but is not assured, that the initial proceeds from the sale of
Notes may be used to fund the commercial real estate investment opportunities
which are tentatively available or other similar investments which do not
require any state license. In such event, the yield will be below the
Company's expected average rate of interest income but the credit will be high
quality and the origination cost will be minimal.

The Company forecasts a cost of funds in the range of 9.4% per annum,
after offering and selling expenses, and net investment yield from its total
portfolios of commercial loans after a reasonable reserve for losses,
delinquencies and servicing costs, in the range of 15.75%. Thus, the positive
spread on the Company's loan portfolio is forecasted to be approximately
6.35%, or $2,222,000 per year when the projected first year Note proceeds
(before deductions for costs reflected above and on Page 2 of this offering
document) of $35,000,000 are fully invested. After allowing for the time to
market the Notes, receive and invest the proceeds, the Company's financial
model assumes average invested proceeds for the first 12 months of $15,000,000
and net income before operating expenses of approximately $970,000. Because
the Company's staffing needs are driven by the amount of Note proceeds
received and funds available for investment, additional operations personnel
will be hired at a rate to match receipt and investment of Note sales
proceeds. However, the Company believes that salaries, general and
administrative, and other operating costs for the first 12 months at the
projected level of business should not exceed $600,000.

The Company intends to maximize its interest and fee income to be earned
on its loan portfolio by selling loans from its portfolio to unrelated third
parties and by securitizing all or a portion of its portfolio. These
transactions are intended to provide an additional source of liquidity for
lending activities.

YIELD ASSUMPTIONS

Annual rates are expected to range from a low of 10% for high quality,
low risk commercial real estate loans to 23% to 25% for substandard credit
quality commercial and business loans. The average yield on commercial loans
and leases is assumed to be 10% or more. Because the Company's initial
primary business will be limited to commercial loans and leases, the positive
spread on the Company's loan portfolio will be substantially lower than the
spread expected when the projected first year note proceeds (before deductions
for costs reflected above and on Page 2 of this offering document) of
$35,000,000 is fully invested. Annual investment yield includes reserves for
loan losses which have been calculated by examining the loan loss reserves and
actual loss experience of companies with loan portfolios similar to the loans
contemplated by the Company. Because management of the Company has limited
experience with originating, servicing and managing a loan portfolio similar
to the portfolio intended by the Company, management will continually monitor
its loans for delinquencies and potential losses in order to establish proper
reserves and predict actual losses.

SOURCES OF INCOME

The Company will derive income from four basic sources: (i) interest and
other charges paid on its loans, (ii) loan origination fees, (iii) a limited
amount of prepayment penalties, and (iv) securitization of loans. The Company
does not anticipate significant income from prepayment of loans in its
portfolio principally because of the fees payable upon prepayment. Thus, the
Company expects the asset/liability maturity risk arising out of prepayments
to be minimal even in periods of declining interest rates because of the
substantial prepayment penalties. The Company anticipates that substantially
all of its loans will be made at fixed rates. However, the Company's cost of
funds will be sensitive to changes in long and short term interest rates.
Therefore, a rise or fall in the general interest rate market will have the
effect of increasing or decreasing the spread which the Company anticipates
between the cost of funds on its short and medium term Notes and the interest
earned on its loan portfolio.

In order to minimize the interest rate risk, the Company intends to
match, to the extent possible, maturities of its loan portfolio and maturities
of the Notes. There will be no interest rate risk in connection with Notes
which mature at the same time as the same dollar amount of portfolio loans
because the obligation to pay interest and the offsetting interest income will
terminate at the same time. Therefore, proceeds from newly issued Notes at
current market interest rates may be used to fund new loans at comparable
market interest rates. To the extent that the loan maturities are of
significantly longer term than the Note maturities, the Company intends to
manage the interest rate risk by selling whole loans in the secondary loan
market or securitizing pools of loans for sale in the public or private
capital markets and reinvesting the funds in loans with maturities that match
maturities of the same dollar amount of Notes. If the Company is successful
it its interest rate management strategy, interest rate risk will be
substantially reduced or eliminated entirely. See "Business of the
Company-Securitization of Loans."

SOURCES OF CAPITAL AND LIQUIDITY

The proceeds of the sale of the Notes is the primary source of funds to
meet the Company's liquidity requirements. The proceeds of the Note sales
will be used to fund general operating and lending activities. After receipt
and investment of the Note proceeds, the Company's primary sources of
liquidity will be payments on the loans and the secondary source will be the
equity capital of the Company as of the date of this Prospectus.

The Company intends to meet its obligations to repay the Notes as they
mature with income generated from its lending activities, funds generated from
repayment of outstanding loans, extensions of maturing Notes and new debt
financing. There can be no assurance that the Company will be able to sell
the Notes at a rate that will permit growth and expansion at the expected
levels or to satisfy future debt obligations. If all of the Notes are sold,
the Company will have debt in the amount of $50,000,000 and only approximately
One Million Dollars ($1,000,000) in equity which has been provided by the
shareholders of the Company. Therefore, substantially all the risk of loss
will be borne by the Noteholders because for every $1.00 at risk by the
shareholders of the Company $50.00 is at risk by the Noteholders.

The Company will continue to invest its $1,000,000 of presently available
equity capital without regard to the amount of Notes sold. The proceeds from
the sale of any amount of Notes will increase the Company's ability to make
investments. Such additional investments will produce yields substantially in
excess of the interest payable under the terms of the Notes and the maturities
will be timed to coincide with maturities of the Notes. Therefore, the
Company believes it will be able to timely pay interest and principal on any
amount of Notes sold.

MANAGEMENT"MANAGEMENT"

EXECUTIVE OFFICERS AND DIRECTORS

The number of directors is presently fixed at five. Each of the
directors hold office for the current year and until their successors are
elected and qualify. At each annual meeting of stockholders, directors will
be elected by the holders of the Common Stock to succeed those directors whose
terms are expiring. As the Company grows and its level of activity increases,
additional independent directors, executives, management and support staff
will be added. The new hires will come from a large available pool of people
with experience in originating and servicing loans to the class of borrowers
intended to be targeted by the Company. Because of recent and continuing
consolidations in the banking industry, many executive and middle managers
with extensive operational and lending experience are available. Until the
Company reaches a size level sufficient to attract qualified independent
directors and provide director liability insurance coverage, management of the
Company will operate without outside oversight. The Company has adopted a
policy not to enter into any transactions in which any of its security holders
or affiliates have a direct or indirect pecuniary interest without approval of
a majority of the disinterested directors unless the Company is provided an
independent appraisal to establish the value of the transaction. "Certain
Relationships and Related Transactions."

The following table sets forth certain information with respect to each
of the directors and executive officers:
<TABLE>
<CAPTION>

Name Age Position
- ----------------- --- ----------------------------------------------------------
<S> <C> <C>
Gary N. Pelehaty. 44 President, Chief Executive Officer and Director

Philip deMena . . 57 Director

Thomas E. Juliano 25 Treasurer, Chief Financial Officer, Secretary and Director

Todd Beck . . . . 35 Director

</TABLE>

All officers serve at the discretion of the Board of Directors.

Gary N. Pelehaty has been an officer and director of the Company since
August 1997 and for the last five years has been President & Chief Executive
Officer, Chief Lending Officer and Compliance Officer of Peoples Savings Bank,
Bordentown, New Jersey. Mr. Pelehaty's 25 years in the banking industry
include Executive Vice President of Mercer Federal Savings Bank, Vice
President and Director of Corporate Planning and Development for Penn Federal
Savings Bank, Vice President and Chief Financial Officer for Old Borough
Savings and Loan, and Senior Accountant and Auditor for Stephen P. Radics and
Company, CPA. Mr. Pelehaty holds a Bachelor of Arts with a major in
accounting from LaSalle University, Philadelphia, Pennsylvania.

Philip deMena has been an officer and director of the Company since
October 1997 and has served as Senior Vice President of Real Estate and
Construction of HomeUSA, Inc. since May 1997. From 1995 until 1997, Mr.
deMena was Senior Vice President of Development for Papa John's U.S.A., Inc.,
a publicly traded restaurant company. From 1994 to 1995, Mr. deMena served as
Senior Vice President of Development for Kenny Rogers Roasters, Inc., a
restaurant company. Form 1988 through 1993, Mr. deMena held various positions
with Blockbusters, including Vice President - Real Estate and Construction.
Prior to that, Mr. deMena held various real estate development positions with
Kentucky Fried Chicken, a unit of Pepsico, Inc., Burger Chef System, Inc., and
British Petroleum Oil Corporation.

Thomas E. Juliano has been an officer and director of the Company since
its organization, November 16, 1995 and is a graduate of Rider University with
a Bachelor of Science in Business. Since his graduation from college in 1994,
Thomas Juliano has been engaged in the real estate operations with his father,
William T. Juliano. During 1995 he had management responsibility for all
aspects connected with the development of a retail shopping center and since
1994 has had management responsibility for the day-to-day operation of two (2)
hotels, one with 168 units and the other with 240 units.

Todd Beck has been a director of the Company since October, 1997 and has
been a practicing attorney since 1988. Mr. Beck's law practice has included
banking, environmental and toxic tort matters as well as corporate governance
and real estate transactions. Mr. Beck graduated from Cornnell Law School,
Cum Laude in May 1988 and from the University of Pennsylvania, Summa Cum
Laude. Mr. Beck is presently enrolled in the law school of Temple University
pursuing a Masters of Laws in taxation.

EXECUTIVE COMPENSATION

The Company was incorporated on November 16, 1995 and did not conduct any
operations prior to that time. No person has received compensation from the
Company since its incorporation and no compensation will be paid to the
executive officers of the Company until the Company is profitable.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Certificate of Incorporation provides that directors will
not be personally liable for monetary damages for breach of their fiduciary
duties, except for breaches of the duty of loyalty, acts or omissions not in
good faith or involving intentional misconduct or a knowing violation of law,
unlawful dividends or transactions involving an improper personal benefit.
Moreover, if Delaware law were to change in the future to permit the further
elimination or limitation the personal liability of directors, the liability
of a director of the Company would be eliminated or limited to the fullest
extent permitted by Delaware law, as so amended.

The Company's Certificate of Incorporation provides that the Company
shall, to the full extent permitted by the State of Delaware, as amended from
time to time, indemnify all persons whom they may indemnify pursuant thereto,
including advancement of expenses.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provision, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.

BENEFICIAL OWNERSHIP OF SECURITIES"BENEFICIALOWNERSHIPOFSECURITIES"

The following table sets forth certain information concerning the
directors, executive officers and the beneficial owners of all classes of
capital stock of five (5%) percent or more of the Common Stock of the Company,
the only class of voting securities of the Company.

NAME AND POSITION NUMBER OF SHARES BENEFICIALLY OWNED PERCENTAGE OF CLASS
- ------------------------------------- ------------------------------------------ --------------------

<S> <C> <C>
William T. Juliano . . . . . . . . . 1,000 Series A Cumulative Preferred Shares 100%
1235 Cherry Grove Road
Earleville, Maryland 21919

Thomas E. Juliano. . . . . . . . . . 1,000 Common Shares 100%
Chief Financial Officer,
Secretary, Treasurer and
Director
Christiana Executive Campus
220 Continental Drive, Suite 310
Newark, Delaware 19713-4313

TOTAL (All executive officers and . . 1,000 Common Shares 100%
directors as a group (1 person))
</TABLE>

(1) Under the rules of the Securities and Exchange Commission, a
person is deemed to be the beneficial owner of a security if such person has
or shares the power to vote or direct the voting of such security or the power
to dispose or direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities if that person has the right
to acquire beneficial ownership within 60 days. Accordingly, more than one
person may be deemed to be a beneficial owner of the same securities. Unless
otherwise indicated by footnote, the named individuals have sole voting and
investment power with respect to the shares of Common Stock beneficially owned
and sole investment power with respect to the shares of Preferred Stock
beneficially owned.

(2) Represents the number of shares of Common Stock beneficially
owned as of August 1, 1997 by each named person or group, expressed as a
percentage of all of the shares of such class outstanding as of such date.

CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS"CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONS"

The Company does not have any formal policy concerning the direct or
indirect pecuniary interest of any of its officers, directors, security
holders or affiliates in any investment to be acquired or disposed of by the
Company or in any transaction to which the Company is a party or has an
interest. However, the Company has adopted a policy not to enter into any
such transactions unless approved by a majority of the entire Board of
Directors, not including any interested director or supported by an
independent appraisal.

MARKET FOR COMMON EQUITY"MARKETFORCOMMONEQUITY"

There is currently no public trading market for shares of the Company's
common stock, par value $.001 (the "Common Stock"). As of the date of this
Prospectus, Thomas E. Juliano is the record and beneficial owner of all the
outstanding shares of Common Stock. The Company has never declared a dividend
on the Common Stock.

MATERIAL INCOME TAX CONSEQUENCES"MATERIALINCOMETAXCONSEQUENCES"

GENERAL

The discussion set forth below is based upon the opinion of Sonfield &
Sonfield, special federal tax counsel for the Company ("Tax Counsel") with
respect to the material income tax consequences of the purchase, ownership and
disposition of the Notes. This opinion does not purport to deal with all
aspects of federal income taxation that may be relevant to holders of the
Notes in light of their specific investment circumstances, nor to certain
types of holders subject to special treatment under the federal income tax
laws (for example, banks, life insurance companies and tax-exempt
organizations). The opinion of Tax Counsel does not discuss the tax
consequences arising under the laws of any state, foreign country or other
jurisdiction. This opinion is based upon present provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the regulations promulgated
thereunder, and judicial or ruling authority, all of which are subject to
change, which change may be retroactive. This opinion of counsel, however, is
not binding on the Internal Revenue Service (the "IRS"), and no ruling on any
of the issues discussed below will be sought from the IRS.

This information is directed to prospective purchasers who purchase Notes
in the initial distribution thereof, who are citizens or residents of the
United States, including domestic corporations and partnerships, and who hold
the Notes as "capital assets" within the meaning of Section 1221 of the Code.
Taxpayers and preparers of tax returns (including those filed by any
partnership or other Company) should be aware that under applicable Treasury
regulations a provider of advice on specific issues of law is not considered
an income tax return preparer unless the advice is (i) given with respect to
events that have occurred at the time the advice is rendered and is not given
with respect to the consequences of contemplated actions, and (ii) is directly
relevant to the determination of an entry on a tax return. Accordingly,
taxpayers should consult their own tax advisors and tax return preparers
regarding the preparation of any item on a tax return, even where the
anticipated tax treatment has been discussed herein. PROSPECTIVE INVESTORS
SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE STATE, LOCAL AND FOREIGN
TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES.

The following discussion is based in part upon the rules governing
original issue discount ("OID") that are set forth in Section 1271-1275 of the
Code and in proposed Treasury regulations issued under the OID provisions of
the Code (the "Proposed OID Regulations"). The Proposed OID Regulations are
subject to change through the adoption of final regulations.

CHARACTERIZATION AS DEBT

Based on the terms of the Notes and the transactions relating to the
loans as set forth herein, Tax Counsel is of the opinion that the Notes will
be treated as debt for federal income tax purposes. There is, however, no
specific authority with respect to the characterization for federal income tax
purposes of securities having the same terms as the Notes.

TREATMENT OF STATED INTEREST

The stated interest on the Notes will be taxable to a Noteholder as
ordinary income when received or accrued in accordance with such Noteholder's
method of tax accounting. It is not anticipated that the Notes will be issued
with OID. A holder who purchases a Note after the initial sale thereof at a
discount that exceeds a statutorily defined de minimis amount will be subject
to the "market discount" rules of the Code, and a holder who purchases a Note
at a premium will be subject to the premium amortization rules of the Code.

If any Notes were treated as being issued with OID, a Noteholder would be
required to include OID in income as interest over the term of the Notes under
a constant yield method. In general, OID must be included in income in
advance of the receipt of cash representing that income. Thus, each cash
distribution would be treated as an amount already included in income (to the
extent OID has accrued as of the date of the interest distribution and is not
allocated to prior distributions), or as a repayment of principal. This
treatment would have no significant effect on Noteholders using the accrual
method of accounting. Thus, if any Notes are treated as being issued with
OID, cash method Noteholders may be required to report income with respect to
the Notes in advance of the receipt of cash attributable to such income. Tax
Counsel is of the opinion that the Notes will not be treated as being issued
with OID.

DISPOSITION OF NOTES

If a Noteholder sells a Note, the holder will recognize gain or loss in
an amount equal to the difference between the amount realized on the sale and
the holder's adjusted tax basis in the Note. The adjusted tax basis of a Note
to a particular Noteholder will equal the holder's cost for the Note,
increased by any OID, market discount and gain previously included by such
Noteholder in income with respect to the Note and decreased by the amount of
Note premium (if any) previously amortized and by the amount of principal
payments previously received by such Noteholder with respect to such Note.
Subject to the market discount rules of the Code, any such gain or loss will
be capital gain or loss if the Note was held as a capital asset. Capital
losses generally may be used only to offset capital gains.

INFORMATION REPORTING AND BACKUP WITHHOLDING

The Company will be required to report annually to the IRS, and to each
Noteholder of record, the amount of interest paid on the Notes (and the amount
of interest withheld for federal income taxes, if any) for each calendar year,
except as to exempt holders (generally, holders that are corporations,
tax-exempt organizations, qualified pension and profit-sharing trusts,
individual retirement accounts, or nonresident aliens who provide
certification as to their status as nonresidents). Accordingly, each holder
(other than exempt holders who are not subject to the reporting requirements)
will be required to provide, under penalties of perjury, a certificate
containing the holders name, address, correct federal taxpayer identification
number and a statement that the holder is not subject to backup withholding.
Should a nonexempt Noteholder fail to provide the required certification, the
Company will be required to withhold 31 percent of the amount otherwise
payable to the holder, and remit the withheld amount to the IRS as a credit
against the holder's federal income tax liability.

TAX CONSEQUENCES TO FOREIGN NOTEHOLDERS

If interest paid (or accrued) to a Noteholder who is a nonresident alien,
foreign corporation or other non-United States person (a "foreign person") is
not effectively connected with the conduct of a trade or business within the
United States by the foreign person, the interest generally will be considered
"portfolio interest," and generally will not be subject to United States
federal income tax and withholding tax, if the foreign person (i) is not
actually or constructively a "10 percent shareholder" of the Company or a
"controlled foreign corporation" with respect to which the Company is a
"related person" within the meaning of the Code and (ii) provides an
appropriate statement, signed under penalties of perjury, certifying that the
beneficial owner of the Note is a foreign person and providing the foreign
person's name and address. If the information provided in the statement
changes, the foreign person must so inform the Company within 30 days of such
change. The statement generally must be provided in the year a payment occurs
or in either of the two preceding years. If such interest is not portfolio
interest, then it will be subject to United States federal income and
withholding tax at a rate of 31 percent, unless reduced or eliminated pursuant
to an applicable tax treaty.

Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.

If the interest, gain or income on a Note held by a foreign person is
effectively connected with the conduct of a trade or business in the United
States by the foreign person (although exempt from the withholding tax
previously discussed if the holder provides an appropriate statement), the
holder generally will be subject to United States federal income tax on the
interest, gain or income at regular federal income tax rates. In addition, if
the foreign person is a foreign corporation, it may be subject to a branch
profits tax equal to 30 percent of its "effectively connected earnings and
profits" within the meaning of the Code for the taxable year, as adjusted for
certain items, unless it qualifies for a lower rate under an applicable tax
treaty.

POSSIBLE ADVERSE CONSEQUENCES

If, contrary to this opinion of Tax Counsel, the IRS successfully
asserted that the Notes were not debt for federal income tax purposes, the
Notes might be treated as equity interests in the Company. If so, the Company
might be taxable as a corporation with the adverse consequences described
above (and the taxable corporation would not be able to deduct interest on the
Notes). Alternatively, and most likely in the view of Tax Counsel, the
Company might be a publicly traded partnership that would not be taxable as a
corporation because it would meet certain qualifying income tests.
Nonetheless, treatment of the Notes as equity interests in such a partnership
could have adverse tax consequences to certain holders, For example, income to
certain tax exempt entities (including pension funds) would be "unrelated
business taxable income", income to foreign holders generally might be subject
to tax and withholding requirements, and individual holders might be subject
to certain limitations on their ability to deduct their share of the Company
expenses.

CERTAIN STATE TAX CONSEQUENCES

Because each state's income tax laws vary, it is impossible to predict
the income tax consequences to the holders of Notes in all of the state taxing
jurisdictions in which they are already subject to tax. Noteholders are urged
to consult their own tax advisors with respect to state income and corporate
franchise tax consequences arising out of the purchase, ownership and
disposition of Notes.

ERISA CONSIDERATIONS"ERISACONSIDERATIONS"

Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, including an individual
retirement accounts and certain types of Keogh Plans (each a "Benefit Plan")
from engaging in certain transactions with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect to
such Benefit Plan. A violation of these "prohibited transaction" rules may
result in an excise tax or other penalties and liabilities under ERISA and the
Code for such persons.

Certain transactions involving the purchase of Notes might be deemed to
constitute prohibited transactions under ERISA and the Code if assets of the
Company were deemed to be assets of a Benefit Plan. Under a regulation issued
by the United States Department of Labor (the "Plan Assets Regulation"), the
assets of the Company would be treated as plan assets of a Benefit Plan for
the purposes of ERISA and the Code only if the Benefit Plan acquires an
"Equity Interest" in the Company and none of the exceptions contained in the
Plan Assets Regulation is applicable. An equity interest is defined under the
Plan Assets Regulation as an interest other than an instrument which is
treated as indebtedness under applicable local law and which has no
substantial equity features.

Although there is little guidance on the subject, the Company believes
that the Notes should be treated as indebtedness without substantial equity
features for purposes of the Plan Assets Regulation. However, without regard
to whether Notes are treated as equity interest for such purpose the
acquisition or holding of Notes by or on behalf of a Benefit Plan could be
considered to give rise to a prohibited transaction if the Company or any of
its Affiliates is or becomes a party in interest or a disqualified person with
respect to such Benefit Plan. In such case, certain exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a Note.
Included among these exemptions are: Prohibited Transaction Class Exemption
("PTCE") 90-1, regarding investments by insurance company pooled separate
accounts; PTCE 91-38 regarding investments by bank collective investment
funds; and PTCE 84-14, regarding transactions effected by "qualified
professional asset managers.

Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA) are not subject to ERISA requirements.

A plan fiduciary considering the purchase of Notes should consult its tax
and/or legal advisors regarding whether the assets of the Company would be
considered plan assets, the possibility of exemptive relief from the
prohibited transaction rules and other issues and their potential
consequences.

PLAN OF DISTRIBUTION"PLANOFDISTRIBUTION"

It is presently anticipated that the Company will initially sell Notes
only through its employees without engaging the services of a broker-dealer.
The Company will make such sales in compliance with the Securities Exchange
Act of 1934 Rule 3a4-1(a)(1),(2),(3) and (4) and either 3a4-1(a)(4)(i),(ii) or
(iii). The Company intends to solicit purchasers of Notes by appropriate
newspaper advertising in selected markets based upon population demographics
that reflect a need for fixed income investments. Employees of the Company
may not solicit orders for sale of Notes from residents of states which
require state broker licensing for the sale of Notes.

The Company will likely choose in the future to employ the services of
one or more NASD member broker-dealers for purposes of offering the Notes.
The broker-dealers will be selected by direct personal contact based upon
their number of registered representatives and access to financial products
comparable to the Notes offered by the Company. Management believes that it
will fill a need for broker-dealers identified by its selection process
because each have a few clients for whom the Notes are suitable investments
and do not otherwise have the ability to participate in a similar primary
offering.

It has been estimated by management that, if the services of a
broker-dealer are utilized to sell the Notes, the Company would pay to such
broker-dealer a commission in the range of .5% to 6% of the selling price of
Notes actually sold. It is also likely that, if the services of a
broker-dealer are utilized, the Company would agree to reimburse such entity
for its costs and expenses, up to a maximum of 1% of the selling price of
Notes actually sold. In addition, the Company may agree to indemnify any
broker or dealer utilized by the Company in connection with the offering of
Notes against liabilities, including liabilities under the Securities Act of
1933, as amended.

The Company reserves the right to reject any subscription hereunder, in
whole or in part, for any reason. Subscriptions will be irrevocable upon
receipt and acceptance by the Company. The Company expects that rejected
subscriptions will be refunded within 48 hours after the Company has received
the subscription, without deduction of any costs and without interest. Once a
subscriber's subscription has been accepted by the Company, the applicable
subscription funds will be promptly deposited for benefit of the Company. A
Note will be sent to the subscriber as soon as practicable thereafter. No
minimum number of Notes must be sold in the offering. A subscriber will not
know at the time of subscription whether the Company will be successful in
completing the sale of any or all of the Notes. The Company has the right to
withdraw or cancel of this offering at anytime. In the event of such
withdrawal or cancellation, subscriptions previously received will be
irrevocable and no subscription funds will be refunded.

VALIDITY OF THE NOTES"VALIDITYOFTHENOTES"

The validity of the Notes being offered hereby have been passed upon for
the Company by Sonfield & Sonfield, 770 South Post Oak Lane, Houston, Texas
77056-1913.

EXPERTS"EXPERTS"

The Financial Statements of First Nations Financial Services Company as
of and for the period October 16, 1995 through October 8, 1996 included in
this Prospectus, have been examined by Harper & Pearson Company, independent
certified public accountants, as set forth in their report appearing herein
and have been included in reliance upon such report and upon the authority of
such firm as experts in accounting and auditing.
F - 2

C O N T E N T S"INDEXTOBALANCESHEET"

Page
---------
<S> <C>
AUDITED FINANCIAL STATEMENTS:
Independent auditors report . . . . . . . . . F - 2
Balance Sheet . . . . . . . . . . . . . . . . F - 3
Statement of Operations . . . . . . . . . . . F - 4
Statement of Changes in Shareholders' Equity. F - 5
Statement of Cash Flows . . . . . . . . . . . F - 6
Notes to Financial Statements . . . . . . . . F - 7-9

UNAUDITED FINANCIAL STATEMENTS:
Balance Sheet . . . . . . . . . . . . . . . . F - 10
Statements of Operations. . . . . . . . . . . F - 11
Statements of Changes in Shareholders' Equity F - 12
Statements of Cash Flows. . . . . . . . . . . F - 13
Notes to Financial Statements . . . . . . . . F - 14-16

</TABLE>

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
First Nations Financial Services Company
Mount Laurel, New Jersey

We have audited the accompanying balance sheet of First Nations Financial
Services Company (a development stage company) as of October 8, 1996, and the
related statements of operations, changes in shareholders' equity and cash
flows for the period October 16, 1995 (date of inception) through October 8,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Nations Financial
Services Company at October 8, 1996, and the results of its operations and its
cash flows for the period then ended in conformity with generally accepted
accounting principles.

As more fully discussed in the notes to the financial statements, the Company
has significant transactions with a shareholder and related interests.

Houston, Texas
October 18, 1996, except for Note F, as to
which the date is February 14, 1997

F - 16
<TABLE>
<CAPTION>

FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
OCTOBER 8, 1996

ASSETS
------

<S> <C>
CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . $1,001,930
-----------

TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . 1,001,930
-----------

COMPUTER EQUIPMENT. . . . . . . . . . . . . . . . . . . . 1,990
-----------

OTHER ASSETS
Trademarks. . . . . . . . . . . . . . . . . . . . . . . 217
Organization costs. . . . . . . . . . . . . . . . . . . 107,923
-----------

108,140
-----------

$1,112,060
===========

LIABILITIES AND SHAREHOLDERS' EQUITY
- ---------------------------------------------------------

CURRENT LIABILITIES
Note payable, shareholder . . . . . . . . . . . . . . . . $ 87,503
Interest payable, shareholder . . . . . . . . . . . . . . 10,000
-----------

TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . 97,503
-----------

COMMITMENT

SHAREHOLDERS' EQUITY
6% Series A, cumulative, nonvoting, preferred shares,
$.001 par value, 1,000 shares authorized, issued
and outstanding; liquidation preference of $1,000,000 1
Common stock, $.001 par value, 2,000 shares authorized,
and 1,000 shares issued and outstanding . . . . . . . 1
Additional paid-in capital. . . . . . . . . . . . . . . 1,049,998
Deficit accumulated during the development stage. . . . (35,443)
-----------

1,014,557
-----------

$1,112,060
===========
</TABLE>

See accompanying notes.

FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
OCTOBER 16, 1995 (DATE OF INCEPTION) THROUGH OCTOBER 8, 1996

INTEREST INCOME, RELATED PARTY $ 70,000
-----------

<S> <C>
EXPENSES
Accounting fees. . . . . . . . . . . . . . . . 300
Bank charges . . . . . . . . . . . . . . . . . 409
Interest expense . . . . . . . . . . . . . . . 10,000
Legal fees . . . . . . . . . . . . . . . . . . 469
Office supplies and expenses . . . . . . . . . 760
Postage. . . . . . . . . . . . . . . . . . . . 1,828
Printing . . . . . . . . . . . . . . . . . . . 235
Professional fees. . . . . . . . . . . . . . . 307
Rent, related party. . . . . . . . . . . . . . 90,000
Telephone expense. . . . . . . . . . . . . . . 58
Travel expense . . . . . . . . . . . . . . . . 1,077
-----------

105,443
-----------

NET LOSS . . . . . . . . . . . . . . . . . . . $ (35,443)
===========

LOSS PER COMMON SHARE. . . . . . . . . . . . . $ (35.44)
===========

SHARES USED IN COMPUTING LOSS PER COMMON SHARE 1,000
===========

</TABLE>

See accompanying notes.

<PAGE>

FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
OCTOBER 16, 1995 (DATE OF INCEPTION) THROUGH OCTOBER 8, 1996

Additional
Preferred Common Paid-In Retained
Stock Stock Capital (Deficit) Total
---------- --------- ----------- ---------- -----------

<S> <C> <C> <C> <C> <C>
Sale of Stock . $ 1 $ 1 $ 1,049,998 $ -0- $1,050,000

Net Loss. . . . -0- -0- -0- (35,443) (35,443)
---------- --------- ----------- ---------- -----------

Balance -
October 8, 1996 $ 1 $ 1 $ 1,049,998 $ (35,443) $1,014,557
========== ========= =========== ========== ===========
</TABLE>

See accompanying notes.

<PAGE>

FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
OCTOBER 16, 1995 (DATE OF INCEPTION) THROUGH OCTOBER 8, 1996

<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss. . . . . . . . . . . . . . . . . . . . $ (35,443)
-----------
Adjustments to reconcile net loss to net
cash used by operating activities:
Change in operating assets and liabilities:
Interest payable, related party . . . . . 10,000
-----------

Total Adjustments . . . . . . . . . . . . 10,000
-----------

Net Cash Used by Operating Activities . . (25,443)
-----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of computer equipment. . . . . . . . . (1,990)
Payments for organization costs . . . . . . . . (107,923)
Payments for trademark. . . . . . . . . . . . . (217)
Proceeds from issuance of stock . . . . . . . . 50,000
Sale of mortgage note receivable, related party 1,000,000
-----------

Net Cash Provided by Investing Activities 939,870
-----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Note payable, shareholder . . . . . . . . . . . 87,503
-----------

Net Cash Provided by Financing Activities 87,503
-----------

NET INCREASE IN CASH. . . . . . . . . . . . . . . 1,001,930

CASH AT BEGINNING OF PERIOD . . . . . . . . . . . -0-
-----------

CASH AT END OF PERIOD . . . . . . . . . . . . . . $1,001,930
===========

NONCASH INVESTING ACTIVITY:
Note receivable obtained from related party
for paid-in capital . . . . . . . . . . . . . $1,000,000
===========

</TABLE>

See accompanying notes.

<PAGE>

FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 8, 1996

NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Nature of Operations - First Nations Financial Services Company (the Company)
- ---------------------
is a newly organized Delaware corporation with its principal executive offices
located at Plaza Office Center, 560 Fellowship Road, Mount Laurel, New Jersey
08054.

The Company's objective is to become a significant participant in the
financial services industry. The Company believes that its growth will be
sustained by its commitment to servicing a segment of the market which is not
adequately serviced by commercial banks. The Company has only recently
completed its initial capitalization and commenced operations. Because the
Company has only limited equity capital with which to operate, there are no
assurances that the Company will be successful unless the offer to sell a
significant amount of the $50,000,000 in subordinated debt is successful.

Estimates - The preparation of financial statements in conformity with
- ---------
generally accepted accounting principles requires management to make estimates
- -------
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Management estimates that the administrative costs to complete the offering
(discussed in the previous paragraph) are approximately $30,000. This amount
does not include any fees, commissions, or other costs associated with the
sale of the subordinated debt.

Fair Value of Financial Instruments - Management is of the opinion that the
- --------------------------------------
carrying value of all financial instruments is substantially equal to fair
- --
value at October 8, 1996.
- --

Cash - At October 8, 1996, the Company had on deposit with a financial
- ----
institution, cash totaling approximately $902,000 in excess of FDIC insurance
- ----
limits.

Computer Equipment - Computer equipment is stated at cost. Depreciation is
- -------------------
calculated considering the estimated useful lives of the respective assets on
- --
the straight-line method. Computer equipment is being depreciated over a
three year period. No depreciation was recorded during the period ended
October 8, 1996, as it would not be significant.

Expenditures for additions are capitalized and expenditures for maintenance
and repairs are charged to earnings as incurred.

When properties are retired or otherwise disposed of, the cost thereof and the
applicable accumulated depreciation and amortization are removed from the
respective accounts and the resulting gain or loss is reflected in earnings.

Continued

<PAGE>

FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 8, 1996

NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

Organization Costs - Organization costs include filing fees with the
- -------------------
Securities and Exchange Commission ($17,241), the National Association of
- ---------
Securities Dealers, Inc. ($5,500), Blue Sky registration fees in several
- ----
states ($14,671), legal ($55,027), accounting ($10,549) and other costs
- ----
($4,935) associated with the organization of the Company.
- ----

Of these costs, approximately $71,000 will be charged against the proceeds, if
any, of the subordinated debt discussed in Note E. Remaining capitalized
costs will be amortized over a five year period.

Income Taxes - For the period ended October 8, 1996, the Company incurred a
- -------------
net operating loss amounting to $35,443. This net operating loss carryforward
- --
will expire in the year 2011, if not previously utilized.

No tax benefit for the loss carryforward has been reported in the financial
statements. Accordingly, the tax benefit of approximately $12,000 resulting
from the utilization of the loss carryforward has been offset by a valuation
allowance of the same amount.

Statement of Cash Flows - For purposes of reporting cash flows, cash and cash
- ------------------------
equivalents includes only cash on hand and in demand deposit accounts with a
bank.

Loss Per Common Share - Loss per common share is computed using the weighted
- -----------------------
average number of shares of common stock outstanding during the period.

NOTE B MORTGAGE NOTE RECEIVABLE, RELATED PARTY

The 12% $1,000,000 mortgage note receivable assigned to the Company by Mr.
William T. Juliano in exchange for 1,000 shares of preferred stock was
receivable from Plaza Investment Corporation (Plaza), a New Jersey corporation
and was payable to Mr. William T. Juliano. Mr. Juliano is an officer and
stockholder of both the Company and Plaza. Mr. Juliano acquired the mortgage
note during December 1992 in exchange for $1,000,000 cash advanced to the then
unrelated company, Plaza.

On October 8, 1996, the Company sold for $1,000,000 cash the $1,000,000 note
receivable from Plaza Investment Corporation to Mr. Juliano.

NOTE C NOTE PAYABLE, SHAREHOLDER

Note payable, shareholder amounting to $87,503 plus accrued interest of
$10,000 was fully paid on October 9, 1996.

<PAGE>

FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 8, 1996

NOTE D LEASE COMMITMENT, RELATED PARTY

The Company presently leases, from a company owned by Mr. William T. Juliano,
office space for its executive offices as well as furniture, fixtures and
equipment at 560 Fellowship Road, Mount Laurel, New Jersey 08054. Effective
October 1, 1996, the lease commitment was renegotiated for a period commencing
on that date and expiring January 31, 1998 at a minimum annual rental of
$60,000. This agreement is not the result of arm's length negotiation. The
aggregate lease commitment for the remaining lease term is approximately
$80,000.

NOTE E SUBORDINATED DEBT

The Company intends to offer for sale up to $50,000,000 in unsecured senior
subordinated notes with varying interest rates on a best-efforts basis with
maturities ranging from three months to ten years. The notes may be extended,
at the option of the Company, for a term equal to the original term unless the
holder requests repayment within seven days prior to the original maturity
date. There is no minimum amount of the notes which must be sold. The
Company will pay commissions of up to 6% of the principal amount of each note
sold plus any out-of-pocket expenses incurred in connection with the offer and
sale of the notes.

The net proceeds from the sale of the notes will be utilized by the Company
for its general corporate purposes. Corporate general purposes may include
financing of future growth, origination or acquisition of a business loan
portfolio, origination or acquisition of loans secured by equipment, such as
automobiles, trucks, golf carts, boats and other vehicles; origination or
acquisition of a portfolio of home equity loans as well as other finance
related activities; and possible future acquisition of related businesses or
assets. The precise amounts and timing of the application of such proceeds
will depend upon many factors, including, but not limited to, the amount of
any such proceeds, actual funding requirements and the availability of other
sources of funding. Until such time as the proceeds are utilized, they may be
invested in short and long-term investments, including treasury bills,
commercial paper, certificates of deposit, securities issued by U.S.
government agencies, money market funds and repurchase agreements, depending
on the Company's cash flow requirements. The Company's investment policies
permit significant flexibility as to the types of such investments that may be
made by the Company. The Company may also maintain daily unsettled balances
with certain broker-dealers. While the Company may from time to time consider
potential acquisitions, the Company as of the date of this report had no
commitments or agreements with respect to any material acquisitions.

NOTE F SUBSEQUENT EVENTS

Effective the 13th day of February, 1997 the Company canceled its lease with a
company owned by Mr. William T. Juliano covering office space for its
executive offices as well as furniture, fixtures and equipment at 560
Fellowship Road, Mt. Laurel, New Jersey 08054. Effective on the same date Mr.
Juliano agreed to provide office space, furniture, fixtures and equipment for
the Company's executive offices at 2150 North Ocean Blvd., Boca Raton, Florida
33431 for 12 months without cost to the Company.

Effective the 12th day of February, 1997 the Company adopted October 8th as
its fiscal year end for financial reporting purposes.

FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 1997

ASSETS
CURRENT ASSETS
Cash $ 30,653
Interest receivable, related parties 620
Notes receivable, related parties 852,413
---------------------------

TOTAL CURRENT ASSETS 883,686
----------

PROPERTY AND EQUIPMENT
Furniture, fixtures and equipment 21,122
Computer equipment 19,000
---------------------------

40,122
----------

OTHER ASSETS
Trademarks 1,266
Organization costs 169,006
---------------------------

170,272
----------

$1,094,080
==========
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Note payable, shareholder $ 3,000
Note payable, other 1,000
Accounts payable 16,612
Accrued payroll taxes payable 935
---------------------------

TOTAL CURRENT LIABILITIES 21,547
----------

COMMITMENT

SHAREHOLDERS' EQUITY
6% Series A, cumulative, nonvoting, preferred
shares, $.001 par value, 1,000 shares authorized,
issued and outstanding; liquidation preference
of $1,000,000 1
Common stock, $.001 par value, 2,000 shares
authorized, and 1,000 shares issued and outstanding 1
Additional paid-in capital 1,125,928
Deficit accumulated during the development stage (53,397)
---------------------------

1,072,533
----------

$1,094,080
==========
</TABLE>

See accompanying notes.
<PAGE>
FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
OCTOBER 16, 1995 THROUGH JUNE 30, 1997
AND THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>

Inception to Three Months Nine Months
June 30, Ended June 30, Ended June 30,
------------------------ ------------------------

1997 1997 1996 1997 1996
--------- --------- --------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME,
RELATED PARTIES. . . . $131,054 $ 27,416 $ 30,000 $ 61,054 $ 40,000
--------- --------- --------- --------- ---------

EXPENSES
Accounting fees . . . 300 - - - -
Advertising 2,886 2,886 - 2,886 -
Bank charges 1,024 496 - 615 -
Equipment rental. . . 1,331 1,331 - 1,331 -
Insurance expense . . 1,956 1,756 - 1,956 -
Interest expense. . . 10,000 - - - -
Legal fees 469 - 282 - 282
License and fees. . . 2,863 866 - 2,863 -
Misc. labor 260 260 - 260 -
Office payroll
expense 3,392 3,392 - 3,392 -
Office supplies and
expense 3,116 1,782 2,756 2,356 2,892
Payroll taxes - ER. . 375 375 - 375 -
Postage 11,592 7,371 - 9,764 -
Printing 14,239 14,003 - 14,003 -
Professional fees . . 10,996 10,689 - 10,689 -
Recruitment 1,197 1,197 - 1,197 -
Rent, related party . 116,132 6,132 30,000 26,132 50,000
Telephone expense . . 1,000 891 39 943 39
Travel expense 1,323 101 - 246 -
--------- --------- --------- --------- ---------

184,451 53,528 33,077 79,008 53,213
--------- --------- --------- --------- ------

NET LOSS $(53,397) $(26,112) $ (3,077) $(17,954) $(13,213)
========= ========= ========= ========= =========

LOSS PER COMMON SHARE. . $ (53.40) $ (26.11) $ (3.08) $ (17.95) $ (13.21)
========= ========= ========= ========= =========

SHARES USED IN COMPUTING
LOSS PER COMMON SHARE. 1,000 1,000 1,000 1,000 1,000
========= ========= ========= ========= =========
</TABLE>

See accompanying notes.

<PAGE>
FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
OCTOBER 16, 1995 THROUGH SEPTEMBER 30, 1997
AND THE THREE AND SIX MONTHS ENDED JUNE 30, 1997

Additional
Preferred Common Paid-In Retained
Stock Stock Capital (Deficit) Total
-------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>

SALE OF STOCK . . . . . $ 1 $ 1 $1,049,998 $ - $1,050,000

NET LOSS. . . . . . . . - - - (35,443) (35,443)
-------- ---------- ---------- ------------ -----------

BALANCE -
SEPTEMBER 30, 1996. . 1 1 1,049,998 (35,443) 1,014,557

CONTRIBUTION OF
ADDITIONAL PAID-IN
CAPITAL . . . . . . . - - 75,930 - 75,930

NET LOSS. . . . . . . . - - - (17,954) (17,954)
-------- ---------- ---------- ------------ -----------

BALANCE - JUNE 30, 1997 $ 1 $ 1 $1,125,928 $ (53,397) $1,072,533
======== ========== ========== ============ ===========

</TABLE>

See accompanying notes.

<PAGE>
FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
OCTOBER 16, 1995 THROUGH JUNE 30, 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>

Inception to Nine Months
June 30, Ended June 30,
------------------------

1997
--------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss

Adjustments to reconcile net loss to
net cash used by operating activities:
Change in operating assets and liabilities:
Interest receivable, related party
Accounts payable
Accrued payroll taxes payable
Interest payable, related party

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture, fixtures
and equipment
Purchase of computer equipment
Payments for organization costs
Payments for trademark
Sale of mortgage note receivable,
related party
Issuance of notes receivable,
related parties

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable, shareholder
Proceeds from note payable, other
Payment of note payable, shareholder
Proceeds from issuance of stock
Contribution of additional paid-in capital

NET INCREASE IN CASH . . . . . . . . . . . . . . 30,653
CASH AT BEGINNING OF PERIOD. . . . . . . . . . . -
--------------------------------------------
CASH AT END OF PERIOD. . . . . . . . . . . . . . $ 30,653
============================================
NONCASH INVESTING AND FINANCING ACTIVITIES
Note receivable obtained from related
party for paid-in capital

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest

1997 1996
--------------------------------------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
$ (53,397) $ (17,954) $(13,213)
----------- ----------- ---------

(620) (620) -
16,612 16,612 -
935 935 -
- (10,000) -
--------------------------------------- ----------- -----------

Total Adjustments 16,927 6,927 -
----------- ----------- ---------

Net Cash Used by Operating Activities (36,470) (11,027) (13,213)
----------- ----------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:

(21,122) (21,122) -
(19,000) (17,010) (1,990)
(169,006) (61,083) (93,934)
(1,266) (1,049) (217)

1,000,000 1,000,000 -

(852,413) (852,413) -
--------------------------------------- ----------- -----------

Net Cash Provided (Used) by
Investing Activities (62,807) 47,323 (96,141)
----------- ----------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
90,503 3,000 60,608
1,000 1,000 -
(87,503) (87,503) -
50,000 - 50,000
75,930 75,930 -
--------------------------------------- ----------- -----------

Net Cash Provided (Used) by
Financing Activities 129,930 (7,573) 110,608
----------- ----------- ---------

NET INCREASE IN CASH . . . . . . . . . . . . . . 28,723 1,254
CASH AT BEGINNING OF PERIOD. . . . . . . . . . . 1,930 -
--------------------------------------- -----------
CASH AT END OF PERIOD. . . . . . . . . . . . . . $ 30,653 $ 1,254
======================================= ===========
NONCASH INVESTING AND FINANCING ACTIVITIES

$ 1,000,000 $ - $1,000,000
======================================= =========== ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
$ 10,000 $ 10,000 $ -
======================================= =========== ===========
</TABLE>

See accountants' compilation report and accompanying notes.
<PAGE>
FIRST NATIONS FINANCIAL SERVICES COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997

NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Nature of Operations - First Nations Financial Services Company (the Company)
- ---------------------
is a Delaware corporation with its principal objective to become a significant
participant in the financial services industry. The Company believes that its
growth will be sustained by its commitment to servicing a segment of the
market, which is not adequately serviced by commercial banks. The Company has
only recently completed its initial capitalization and has not commenced
significant operations. Because the Company has only limited equity capital
with which to operate, there are no assurances that the Company will be
successful unless the offer to sell a significant amount of the $50,000,000 in
subordinated debt is successful.

Basis of Presentation - The interim financial data is unaudited; however, in
- -----------------------
the opinion of management, the interim data includes all adjustments,
consisting only of normal recurring adjustments necessary for a fair statement
of the results for the interim periods. The financial statements included
herein have been prepared by the Company pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures included herein are adequate to make the information presented not
misleading.

The organization and business of the Company, accounting policies followed by
the Company and other information are contained in the notes to the Company's
financial statements filed as part of the Company's Registration Statement
Form SB-2. This report should be read in conjunction with such registration
statement.

Property and Equipment - Property and equipment are stated at cost.
- ------------------------
Depreciation is calculated considering the estimated useful lives of the
- ----------
respective assets on the straight-line method. Property and equipment will be
- -----
depreciated over a three to five year period. No depreciation was recorded
during the periods, as it would be immaterial.

Expenditures for additions are capitalized and expenditures for maintenance
and repairs are charged to earnings as incurred.

Organization Costs - Organization costs include filing fees with the
- -------------------
Securities and Exchange Commission ($17,991), the National Association of
- ---------
Securities Dealers, Inc. ($5,750), Blue Sky registration fees in several
- ----
states ($15,475), legal ($94,102), accounting ($23,508) and other costs
- ----
($12,180) associated with the organization of the Company.
- ----

Of these costs, approximately $106,000 will be charged against the proceeds,
if any, of the subordinated debt discussed in Note E. Remaining capitalized
costs will be amortized over a five year period.

Income Taxes - Since inception, the Company has incurred net operating losses
- -------------
amounting to $53,397. This net operating loss carryforward will expire in the
year 2011, if not previously utilized.

No tax benefit for the loss carryforward has been reported in the financial
statements. Accordingly, the tax benefit of approximately $18,000 resulting
from the utilization of the loss carryforward has been offset by a valuation
allowance of the same amount.

Statement of Cash Flows - For purposes of reporting cash flows, cash, and cash
- -----------------------
equivalents includes only cash on hand and in demand deposit accounts with a
bank.

Loss Per Common Share - Loss per common share is computed using the weighted
- -----------------------
average number of shares of common stock outstanding during the period.

NOTE B MORTGAGE NOTE RECEIVABLE, RELATED PARTY

On October 8, 1996, the Company sold, for $1,000,000 cash, the $1,000,000 note
receivable from Plaza Investment Corporation to Mr. Juliano.

NOTE C NOTE PAYABLE, SHAREHOLDER

Note payable, shareholder amounting to $87,503 plus accrued interest of
$10,000 was fully paid on October 9, 1996. During 1997, an additional $3,000
was loaned to the Company.

NOTE D LEASE COMMITMENT, RELATED PARTY

The Company formerly leased, from a company owned by Mr. William T. Juliano,
office space for its executive offices as well as furniture, fixtures and
equipment at 560 Fellowship Road, Mount Laurel, New Jersey 08054. Effective
October 1, 1996, the lease commitment was renegotiated for a period commencing
on that date and expiring January 31, 1998 at a minimum annual rental of
$60,000. This agreement was not the result of arm's length negotiation. Prior
to its cancellation, the aggregate lease commitment for the remaining lease
term was approximately $65,000. During 1997, this lease was cancelled with the
understanding that Mr. Juliano would provide substitute space, and furniture,
fixtures and equipment for the Company without cost to the Company until cash
flow from operations covers these costs.

NOTE E SUBORDINATED DEBT

The Company intends to offer for sale up to $50,000,000 in unsecured senior
subordinated notes with varying interest rates on a best-efforts basis with
maturities ranging from three months to ten years. The notes may be extended,
at the option of the Company, for a term equal to the original term unless the
holder requests repayment within seven days prior to the original maturity
date. There is no minimum amount of the notes that must be sold. The Company
may pay commissions of up to an approximate amount of 6% of the principal
amount of each note sold plus any out-of-pocket expenses incurred in
connection with the offer and sale of the notes up to 1% of the principal
amount of each note sold.

The Company will utilize the net proceeds from the sale of the notes for its
general corporate purposes. Corporate general purposes may include financing
of future growth, origination or acquisition of a business loan portfolio,
origination or acquisition of loans secured by equipment, such as automobiles,
trucks, golf carts, boats and other vehicles; origination or acquisition of a
portfolio of home equity loans as well as other finance related activities;
and possible future acquisition of related businesses or assets. The precise
amounts and timing of the application of such proceeds will depend upon many
factors, including, but not limited to, the amount of any such proceeds,
actual funding requirements and the availability of other sources of funding.
Until such time as the proceeds are utilized, they may be invested in short
and long-term investments, including treasury bills, commercial paper,
certificates of deposit, securities issued by U.S. government agencies, money
market funds and repurchase agreements, depending on the Company's cash flow
requirements. The Company's investment policies permit significant flexibility
as to the types of such investments that may be made by the Company. The
Company may also maintain daily unsettled balances with certain
broker-dealers. While the Company may from time to time consider potential
acquisitions, the Company as of the date of this report had no commitments or
agreements with respect to any material acquisitions.

NOTE F NOTES RECEIVABLE, RELATED PARTIES

The Company entered into demand notes receivable amounting to $852,413 with
entities related to Mr. Juliano. These notes bear interest at 12.5% per annum.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE IN CONNECTION HEREWITH SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS, EVEN WHEN ACCOMPANIED BY AN APPROPRIATE PROSPECTUS SUPPLEMENT,
DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY THE
NOTES BY ANYONE IN ANY JURISDICTIONS IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION OF
ANY OFFER TO BUY THE NOTES IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.

__________________________

TABLE OF CONTENTS

PAGE
----
<S> <C>
AVAILABLE INFORMATION
SUMMARY OF THE OFFERING
HIGHLIGHTS OF TERMS OF NOTES
RISK FACTORS
USE OF PROCEEDS
DESCRIPTION OF THE NOTES AND THE
INDENTURE
BUSINESS OF THE COMPANY
MANAGEMENT'S PLAN OF OPERATIONS
MANAGEMENT
BENEFICIAL OWNERSHIP OF SECURITIES
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
MARKET FOR COMMON EQUITY
MATERIAL INCOME TAX CONSEQUENCES
ERISA CONSIDERATIONS
PLAN OF DISTRIBUTION
VALIDITY OF THE NOTES
EXPERTS
INDEX TO BALANCE SHEET . . . . . . F -
</TABLE>

$50,000,000

FIRST NATIONS FINANCIAL SERVICES COMPANY

SENIOR SUBORDINATED, FIXED RATE TERM NOTES

PROSPECTUS

OCTOBER ___, 1997

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company is incorporated under Delaware Law. Section 145 of the
General Corporation Law of Delaware provides that:

(a) A corporation may indemnify any person, including officers
and directors, who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of another corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.

(b) A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation under the same
conditions, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.

Article FIVE of the Certificate of Incorporation of the Registrant
provides, in effect, that subject to certain limited circumstances, the
Company will indemnify its officers and directors to the extent permitted by
Delaware Law. The Company is not insured for liabilities it may incur
pursuant to Article FIVE of its Certificate of Incorporation relating to the
indemnification of officers and directors of the Company and its subsidiaries
or affiliates.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses in connection with
the offering described in this Registration Statement:
<TABLE>
<CAPTION>

<S> <C>
Securities and Exchange Commission Filing Fee . . . . . . . . $ 17,241
National Association of Securities Dealer's, Inc. Filing Fee. $ 5,500
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . $ 95,000
Accounting Fees and Expenses. . . . . . . . . . . . . . . . . $ 20,000
Printing and Engraving Expenses . . . . . . . . . . . . . . . $ 15,000
Blue Sky Fees and Expenses. . . . . . . . . . . . . . . . . . $ 15,000
Fees and expenses of Trustee (including counsel fees) . . . . $ 15,000
Miscellaneous expenses. . . . . . . . . . . . . . . . . . . . $ 27,000
--------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . $209,741
========
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

On or about February 5, 1996 the Company issued 1,000 shares of Common
Stock to Thomas E. Juliano for the cash consideration of Fifty Thousand
Dollars ($50,000). On or about the 5th day of February, 1996 the Company
issued 1,000 shares of its Series A Cumulative Preferred Stock to William T.
Juliano in exchange for a mortgage note payable to the order of William T.
Juliano in the unpaid principal amount of One Million Dollars ($1,000,000).
On the 8th day of November, 1996 Mr. Juliano purchased the mortgage note from
the Company for the cash consideration of $1,000,000 plus interest accrued to
the date of purchase.

Exemption from registration for the issuances described above was claimed
pursuant to Section 4(2) of the Securities Act of 1933, as amended, in
reliance upon the fact that such sales did not involve a public offering.
Therefore, such securities are subject to certain transfer restrictions.

ITEM 27. EXHIBITS AND FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>

<S> <C>
(A) EXHIBITS:
3.1 - Certificate of Incorporation.**
3.2 - By-Laws.**
4.1 - Trust Indenture between the Registrant and the Indenture Trustee.**
4.2 - Form of Notes (included as part of Exhibit 4.1).**
5.1 - Opinion of Sonfield & Sonfield with respect to legality of the Notes.
8.1 - Opinion of Sonfield & Sonfield with respect to tax matters (included as part of Exhibit 5.1).
10.1 - Indemnification Agreement between the Company and William T. Juliano.**
10.2 - Indemnification Agreement between the Company and Thomas E. Juliano.**
10.3 - Lease Agreement covering office space.**
10.4 - Amendment to Lease Agreement covering office space.**
23.1 - Consent of Sonfield & Sonfield (included as part of Exhibit 5.1).
23.2 - Consent of Harper & Pearson Company.
25.1 - Statement of Eligibility of Trustee.**
</TABLE>

_____________________________
** Previously filed
<TABLE>
<CAPTION>

<S> <C>
(B) AUDITED FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDED OCTOBER 8, 1996:
Independent auditor's report.
Balance Sheet
Statement of Operations
Statement of Changes Shareholders' Equity
Statement of Cash Flows
Notes to Financial Statements
Financial Statements as of and for the period ended June 30, 1997.
</TABLE>

ITEM 28. UNDERTAKINGS.

(a) The undersigned registrant will:

(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act;

(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective registration
statement; and

(iii) Include any additional or changed material
information on the plan of distribution.

(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.

(3) File a post-effective amendment to remove from registration
any of the securities that remain at the end of the offering.

(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 24 above, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.

In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the small business issuer will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

(f) The undersigned registrant will:

(1) For determining any liability under the Securities Act,
treat the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act as part of this registration statement as of
the time the Commission declared it effective.

(2) or determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.

<PAGE>
SIGNATURES

IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM SB-2 AND AUTHORIZED THIS
POST-EFFECTIVE AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
NEWARK, STATE OF DELAWARE, ON OCTOBER 21, 1997.

FIRST NATIONS FINANCIAL SERVICES COMPANY

By: /s/Gary N. Pelehaty
-----------------------
Gary N. Pelehaty, President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>

Signature Title Date
- --------------------- ---------------------------------------- ----------------
<S> <C> <C>
/s/ Gary N. Pelehaty. Director, President & Principal
- ---------------------
Gary N. Pelehaty. . . Executive Officer October 21, 1997

/s/ Philip deMena . . Director
- ---------------------
Philip deMena October 21, 1997

/s/ Thomas E. Juliano Director, Treasurer, Principal Financial
- ---------------------
Thomas E. Juliano . . Officer and Principal Accounting Officer October 21, 1997

/s/ Todd Beck . . . . Director October 21, 1997
- ---------------------
Todd Beck
</TABLE>

EXHIBITS

3.1 - Certificate of Incorporation.**
3.2 - By-Laws.**
4.1 - Trust Indenture between the Registrant and the Indenture Trustee.**
4.2 - Form of Notes (included as part of Exhibit 4.1).**
5.1 - Opinion of Sonfield & Sonfield with respect to legality of the
Notes.
8.1 - Opinion of Sonfield & Sonfield with respect to tax matters
(included as part of Exhibit 5.1).
10.1 - Indemnification Agreement between the Company and William T.
Juliano.**
10.2 - Indemnification Agreement between the Company and Thomas E.
Juliano.**
10.3 - Lease Agreement covering office space.**
10.4 - Amendment to Lease Agreement covering office space.**
23.1 - Consent of Sonfield & Sonfield (included as part of Exhibit 5.1).
23.2 - Consent of Harper & Pearson Company.
25.1 - Statement of Eligibility of Trustee.**

_____________________________
** Previously filed

EXHIBIT 5.1

OPINION OF SONFIELD & SONFIELD
S O N F I E L D & S O N F I E L D
A PROFESSIONAL CORPORATION
<TABLE>
<CAPTION>

<S> <C> <C>
LEON SONFIELD (1865-1934). . . . . . . ATTORNEYS AT LAW NEW YORK
GEORGE M. SONFIELD (1899-1967) LOS ANGELES
ROBERT L. SONFIELD (1893-1972) WASHINGTON, D.C.
____________________ . . . . . . . . . 770 SOUTH POST OAK LANE
HOUSTON, TEXAS 77056
FRANKLIN D. ROOSEVELT, JR. (1914-1988) CABLE: SONFIELD

TELECOPIER (713) 877-1547
ROBERT L. SONFIELD, JR.. . . . . . . . ____
MANAGING DIRECTOR. . . . . . . . . . . TELEPHONE (713) 877-8333

</TABLE>

SONFIELD & SONFIELD
Board of Directors
First Nations Financial Services Company
October 27, 1997
Page 2

October 27, 1997

Board of Directors
First Nations Financial Services Company
Christiana Executive Campus
Newark, Delaware 19713-4314

Dear Gentlemen:

In our capacity as counsel for First Nations Financial Services Company
(the "Company"), we have participated in the corporate proceedings relative to
the authorization and issuance by the Company of a maximum of $50,000,000
Senior Subordinated, Fixed Rate Term Notes (the "Notes") all as set out and
described in the Company's Registration Statement on Form SB-2 (File No.
333-1612) under the Securities Act of 1933 (the "Registration Statement"). We
have also participated in the preparation and filing of the Registration
Statement including the federal income tax information set out therein under
the caption "Material Income Tax Consequences" and elsewhere in the Prospectus
constituting a part of the Registration Statement.

Based upon the foregoing and upon our examination of originals (or copies
certified to our satisfaction) of such corporate records of the Company and
other documents as we have deemed necessary as a basis for the opinions
hereinafter expressed, and assuming the accuracy and completeness of all
information supplied us by the Company, having regard for the legal
considerations which we deem relevant, we are of the opinion that:

(1) The Company is a corporation duly organized and validly
existing under the laws of the State of Delaware;

(2) The Company has taken all requisite corporate action and all
action required by the laws of the State of Delaware with respect to the
authorization, issuance and sale of Notes to be issued pursuant to the
Registration Statement;

(3) The maximum of $50,000,000 of Notes, when issued and
distributed pursuant to the Registration Statement, will be validly issued,
fully paid, nonassessable and binding obligations of the Company;

(4) Based upon the current provisions of Federal income tax laws
and regulations, and on current authoritative interpretations thereof, we
believe the discussion in the Registration Statement under the caption
"Material Income Tax Consequences" of the Federal income tax laws relevant to
the prospective investors, although necessarily general, considers each
material Federal income tax issue of significance to noteholders and the
result which, more likely than not, would obtain under the laws and
regulations in effect as of the date hereof.

We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the references to our firm in the Registration
Statement.

Yours very truly,

/s/Sonfield & Sonfield
- ------------------------
SONFIELD & SONFIELD

EXHIBIT 23.2

CONSENT OF HARPER & PEARSON COMPANY

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the inclusion in this Post-Effective Amendment No. 1 to
this Registration Statement on Form SB-2 (File No. 333-1612) of our audit
report dated October 18, 1996, except for Note F, as to which the date is
February 14, 1997 included herein and to the reference to our firm under the
heading "Experts" in the Prospectus and the Registration Statement on Form
SB-2.

/s/Harper & Pearson Company

Houston, Texas
October 21, 1997