AMERICAS SENIOR FINANCIAL SERVICES INC, 10KSB40, 2000-04-14

AMERICAS SENIOR FINANCIAL SERVICES INC
10KSB40, 2000-04-14
MORTGAGE BANKERS & LOAN CORRESPONDENTS

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<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB

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

For the fiscal year ended Commission File No.
December 31, 1999 0-25803

AMERICA'S SENIOR FINANCIAL SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)

Florida 65-0181535
- ---------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

15544 N.W. 77th Court
Miami Lakes, FL 33014
- --------------------------------------------------------------------------------
(Address of principal executive offices)

(305) 828-2599
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)

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

Securities registered under Section 12(b) of the Exchange Act:

Common Stock, $0.001 par value per share
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X] No [ ]

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

State issuer's revenues for the most recent fiscal year. $4,723,697

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of April 10, 2000 was $2,752,481. This calculation is based upon
the average of the bid ($0.5469) and asked ($0.625) price of the voting stock on
April 5, 1999.

The number of outstanding shares of the issuer's $0.001 par value common stock
was 8,958,942 as of April 10, 2000.

<PAGE> 2

PART I

Item 1. DESCRIPTION OF BUSINESS

GENERAL

America's Senior Financial Services, Inc. ("AMSE") along with its
wholly-owned subsidiaries, Dow Guarantee Corp. ("Dow") and Jupiter Mortgage
Corporation ("Jupiter"), is a licensed mortgage lender active in originating,
processing and obtaining funding for forward and reverse mortgage loans secured
by single family residences which are funded by financial institutions or
independent investors. AMSE, Dow and Jupiter are collectively referred to herein
as the Company. All significant inter-company transactions are eliminated in
consolidation.

We receive income from two sources in connection with our mortgage
lending activities. We charge certain non-refundable mortgage application fees
to potential borrowers. Additionally, upon closing a loan, we receive additional
fees payable by the borrower or investor which fees are based upon a percentage
of the loan and/or the interest rates charged.

Our executive offices are located at 15544 NW 77th Court, Miami Lakes,
Florida 33016 and our telephone number is (305) 828-2599. We are a Florida
corporation, which was incorporated in 1990.

BUSINESS DEVELOPMENTS

America's Senior Financial Services, Inc. expanded dramatically in
1999.

In January 1999, the Company completed its acquisition of Capital
Funding of South Florida, Inc; (Capital Funding); a discussion of which is
included in the notes to our accompanying audited financial statements. The
Capital Funding acquisition added approximately $65 million dollars to our
forward loan originations.

In August 1999, the Company completed its acquisition of Jupiter
Mortgage Corporation, Inc; (Jupiter); a discussion of which is also included in
the notes to our accompanying financial statements. The Jupiter acquisition
added approximately $120 million dollars to our forward loan originations.

On September 30, 1999 we then merged Capital Funding with and into
Jupiter, creating a more efficient entity.

The Company's existing Dow Guarantee Mortgage, Inc. subsidiary (Dow)
originated in excess of $65 million dollars of gross loan originations for the
fiscal year ended December 31, 1999.

The Company's Reverse Mortgage operations contributed another $40
million dollars in gross loan originations. Combined with the forward
operations named above, the company achieved almost $300 million dollars in
gross loan originations, which are in line with

<PAGE> 3

previously disclosed proforma projections for the Company's results for 1999.

In 1999, largely as a result of offices acquired through acquisition
activity, the Company added 13 offices, growing to a total of 16. As a result of
the Capital/Jupiter merger, the company closed locations and at year end
operated 12. As a result of increased interest rates and a decline in revenues
from loan originations, Dow closed 1 office in February of 2000. At April 10,
2000, the company operated 11 offices. Subsequent to year end, the company has
continued to evaluate the performance of its individual offices, and expects
additional closures in the first half of 2000.

In addition, in 2000 and 1999 the Company signed agreements with
Pinnacle Financial Corporation and Senior Income Reverse Mortgage Corporation,
respectively, to acquire their mortgage operations. The company is currently
working diligently to arrange the financing necessary to close these proposed
acquisitions. The company is using its best efforts to identify investors
willing to contribute at least $15 million dollars. As of this date, there are
several initiatives underway, but funding remains an uncertainty.

FINANCINGS

In 1999, the company financed its activities with three primary
vehicles.

First, the company raised equity capital through the use of private
placements of restricted common stock to private individuals. There is a table
included in this report that shows the reader who invested and the amount that
they subscribed for.

Second, the company sold a $2.5 million dollar convertible debenture to
an institution. While this debenture had a positive effect on the cash available
to the company to cover operating expenses and close acquisitions, proper
accounting of the debenture has had a short-term negative effect on our balance
sheet. This debenture is discussed in detail in the notes that accompany the
financial reports.

Third, on occasion the company's principal shareholders advanced funds
to the company. This was usually done on a "bridge" loan basis. When possible,
the company repaid the funds from subsequent financings.

OPERATIONS

During 1999, the company remained focused on building its core
business, mortgage loan origination.

To create growth in forward mortgage origination, the company completed
the acquisitions described above. The company's combined forward mortgage loan
originations constitute over 80% of our total loan originations. Largely,
our forward business is purchase or relationship driven. Since the company does
very little forward mortgage retail advertising, our refinance business is
small. Of the forward mortgage loan origination, we estimate that 50% are

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<PAGE> 4

government products (FHA and VA), 30% are conforming products (FNMA and FHLMC)
and the balance (20%) is non-conforming sub prime customers.

To create growth in reverse mortgage origination, the Company increased
marketing, added key loan origination personnel, and generally worked to improve
the efficiency of its consumer education and closing cycle. In 1999, we estimate
that Reverse Mortgages constitute almost 20% of the Company's total loan
origination's. The FHA "Hecm" dominates our reverse mortgage sales program,
accounting for almost 90% of our reverse mortgage production. The balance of our
reverse mortgage loans are FNMA "Home Keepers". During 1999, we worked to
develop a third product, a private reverse mortgage that would offer greater
flexibility and ease of use to a wider base of seniors. As of December 31, 1999,
we had not secured the facility necessary to fund and warehouse the product.
Launching this product is a major goal for the year 2000.

COMPETITION

There are many sources of mortgages available to potential borrowers
today. These sources include consumer finance companies, mortgage banking
companies, savings banks, commercial banks, credit unions, thrift institutions,
credit card issuers and insurance companies. Many of these alternative sources
are substantially larger and have considerably greater financial, technical and
marketing resources than we do. Additionally, many financial service
organizations against whom we compete for business have formed national loan
origination networks or have purchased home equity lenders. We compete for
mortgage loan business in several ways, including convenience in obtaining a
loan, customer service, marketing and distribution channels, amount and term of
the loan, loan origination fees and interest rates. If any of our competitors
significantly expand their activities in our market, our business could be
materially adversely affected. Changes in interest rates and general economic
conditions may also affect our business and our competitors. During periods of
rising interest rates, competitors who have locked into lower rates with
potential borrowers may have a competitive advantage.

SALES AND MARKETING

As an independent mortgage originator, the Company seeks to identify
persons who are seeking mortgage loan funding. Currently, the Company advertises
in local and regional newspapers, yellow page telephone directories, internet
websites, direct mail and cable television. The Company markets through national
Trade Association participation, senior oriented direct mail, participation in
senior events, free video tapes given to potential clients, state level trade
shows, and HUD/Fannie Mae focus group activities.

For the fiscal year ended December 31, 1999 and 1998, the Company
expended approximately $393,000 and $155,000, respectively for sales and
marketing activities. In 1999 the Company expanded its marketing activities to
consistently include nationwide advertising of its Reverse Mortgage effort.

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<PAGE> 5

REGULATORY AGENCIES

Our operations are subject to extensive regulation, supervision and
licensing by federal, state and local governmental authorities and are subject
to various laws and judicial and administrative decisions imposing requirements
and restrictions on part or all of its operations. Our consumer lending
activities are subject to the Federal Truth-in-Lending Act and Regulation Z
(including the Home Ownership and Equity Protection Act of 1994), the Federal
Equal Credit Opportunity Act, as amended, and Regulation B, the Fair Credit
Reporting Act of 1970, as amended, the Federal Real Estate Settlement Procedures
Act and Regulation X, the Home Mortgage Disclosure Act, the Federal Debt
Collection Practices Act and the National Housing Act of 1934, as well as other
federal and state statutes and regulations affecting our activities.

We are also subject to the rules and regulations of, and examinations
by, state regulatory authorities with respect to originating and processing
loans. These rules and regulations, among other things, impose licensing
obligations on us, establish eligibility criteria for mortgage loans, prohibit
discrimination, govern inspections and appraisals of properties and credit
reports on loan applicants, collection, foreclosure and claims handling,
investment and interest payments on escrow balances and payment features,
mandate certain disclosures and notices to borrowers and, in some cases, fix
maximum interest rates, fees and mortgage loan amounts. Failure to comply with
these requirements can lead to loss of approved status, certain rights of
rescission for mortgage loans, class action lawsuits and administrative
enforcement action.

HUD: In 1999, the Company changed its FHA status from supervised lender
("mini eagle") to non-supervised direct endorsed lender ("full eagle").
Qualifying for this change required the Company to maintain a higher "allowable
net worth (according to FHA regulations). This new status gave us the right to
underwrite and close loans independent of any third party review before closing.
However, the Company has chosen to continue to operate as if still a
"mini-eagle", submitting its loan to a much larger third party for underwriting,
closing, and post-closing activity. By doing this, the Company reduces risk and
avoids certain costs that would be necessary by operating as a "full eagle"
direct endorsed lender. However, in 1999 the Company was not able to maintain
the necessary net worth requirement for direct endorsed status. Consequently, we
are presently in the process of reverting to our prior approval status as a
"supervised lender".

FNMA: In 1999, the Company sought direct approval from Fannie Mae, to
allow it to operate as an approved seller servicer. This change in status would
have a positive effect on the Company's earnings, because the Company would
retain certain servicing rights that have significant immediate and future
value. The approval is also necessary to our reverse mortgage operations, and
directly affects the credibility of our consumer education and marketing
efforts. FNMA initially rejected our application, citing our lack of experience
as a seller-servicer. In October of 1999, we amended our application to provide
assurances to FNMA about our quality control processes and our desire to use a
contract sub-servicer who is presently a large customer of FNMA, and obviously
acceptable to them from a risk perspective. As of April 10, 2000, we have not
received a response specific to our re-application. There can be no assurances
that we will obtain FNMA approval. However, we will continue to do all we can to
provide FNMA with the assurances it seeks, as the Company believes it can better
serve seniors nationwide by having this important approval in place.

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<PAGE> 6

LITIGATION

In December of 1998 we advanced $250,000 to Home Care America, Inc.
(HCAI), an acquisition candidate, pursuant to a promissory note. The purpose of
the note was for HCAI to use as working capital. There is no affiliation between
ourselves and HCAI.

In April 1999 we sued HCAI and Robert G. Williams in the Circuit Court
of the 11th Judicial Circuit, Miami-Dade County, Florida for repayment of the
$250,000 promissory note.

As of April 10, 2000 no settlement or judgment has been made pursuant
to this litigation. No assurances can be given as to the final outcome of this
matter.

EMPLOYEES

As of April 10, 2000 the company employs approximately 114 persons. The
Company believes it has satisfactory relationships with all of its employees.

ENVIRONMENTAL MATTERS

The Company has no environmental matters outstanding. The Company does
not own any real estate and, other than the merger talks discussed in note 1 of
the audited financial statements, the possibility of owning any is minimal. If
the Company had to repurchase a loan that was defaulted upon it would then
become the potentially responsible party for any environmental matters.

FACTORS AFFECTING THE COMPANY'S BUSINESS AND PROSPECTS

AVAILABILITY OF MORTGAGE FINANCING

The success of our mortgage origination business is dependent upon the
availability of mortgage funding at reasonable rates. Although there has been no
limitation on the availability of mortgage funding in the last few years, there
can be no assurance that mortgages at attractive rates will continue to be
available.

INDUSTRY OBSTACLES ENCOUNTERED

The Reverse Mortgage Industry is fragmented, dominated by small
regional firms, and generally lacks nationwide leadership. We saw this as an
opportunity to aggregate production, and used this weakness as the core of our
growth strategy. We are a founding member of the National Reverse Mortgage
Lenders Association (NRMLA). NRMLA was created to help this Industry become
mainstream, and we are a driving member of NRMLA.

Management of AMSE believes that the Company's results have started to
reflect its business model which is built on a mix of revenue weighted toward a
higher forward mortgage contribution. However, our overhead allocation is
weighted toward the development of our Reverse Mortgage ("RM") business. In 1999
we continued to increase our forward mortgage business in an attempt to
subsidize the cost of growing our RM business.

In 1999, we have continued to spend considerable resources to further
develop a program whereby mortgage brokers, financial planners, and other
advisors to the senior demographic could participate in the growth of the
Reverse Mortgage Industry.

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<PAGE> 7

ITEM 2. DESCRIPTION OF PROPERTY

All of the operations of the Company are conducted from premises leased
from independent landlords.

The following table sets forth information concerning these facilities:

AMERICA's SENIOR FINANCIAL SERVICES

<TABLE>
<CAPTION>
LOCATION TENANT APPROX. SIZE LEASE EXPIRATION MONTHLY RENT
--------------- ------------ ---------------- ------------

<S> <C> <C> <C>
15544 NW 77th Court 3,250 sf Aug. 2001 $3,500
Miami Lakes, FL 33016

911 East 86th Street, #30 1,227 sf May 2000 1,278
Indianapolis, IN 46240

420 Columbus Avenue 2,500 sf Feb. 2002 2,750
Valhalla, NY 10595

21 Alden Street 1,000 sf Month to Month 900
Cranford, NJ 07016

DOW GUARANTEE MORTGAGE:

9501 NE 2nd Ave. 5,500 sf Dec. 2001 $6,000
Miami Shores, FL 33138

JUPITER MORTGAGE CORPORATION:

1070 E. Indiantown Road 5,500 sf November 2004 $5,750
Jupiter, FL 33477

11398 Okeechobee Blvd., Suite 2 1,500 sf October 2000 1,800
Royal Palm Beach, FL 33411

1874 S.E. Port St. Lucie Blvd. 1,800 sf Feb. 2003 1,886
Port St. Lucie, FL 34952

2014 S.E. Port St. Lucie Blvd 850 sf Feb. 2000 780
Port St. Lucie, FL 34952

</TABLE>

6
<PAGE> 8

29 E. Osceola Street 1,000 sf June 2001 980
Stuart, FL 34994

1000 S. Federal Hwy. 500 sf Month to Month 1,000
Stuart, FL 34994

</TABLE>

Leases may provide for rent escalations tied to increases in operating expenses
or fluctuations in the consumer price index.

ITEM 3. LEGAL PROCEEDINGS

In April 1999 we sued HCAI and Robert G. Williams in the Circuit Court
of the 11th Judicial Circuit, Miami-Dade County, Florida for repayment of the
$250,000 promissory note.

As of April 10, 2000 no settlement or judgment has been made pursuant
to this litigation. No assurances can be given as to the final outcome of this
matter.

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

No matters were submitted to a vote of security holders of the Company
during the quarter ended December 31, 1999.

PART II

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

Our Common Stock has been trading on the over-the-counter market since
February 20, 1998. The following sets forth the range of high and low bid
quotations for the periods indicated as reported by National Quotation Bureau,
Inc. Such quotations reflect prices between dealers, without retail mark-up,
markdown or commission and may not represent actual transactions.

<TABLE>
<CAPTION>
HIGH BID LOW BID
-------- -------

<S> <C> <C>
February 20, 1998 through March 31, 1998 ......... $5.75 $5.75
April 1, 1998 through June 30, 1998 .............. 6.625 5.75
July 1, 1998 through September 30, 1998 .......... 7.375 5.50
October 1, 1998 through December 31, 1998 ........ 7.50 6.375
January 1, 1999 through March 31, 1999 ........... 5.75 7.00
April 1, 1999 through June 30, 1999 .............. 7.625 6.6875
July 1, 1999 through September 30, 1999 .......... 6.96875 5.00
October 1, 1999 through December 31, 1999 ........ 8.50 2.25
January 1, 2000 through March 31, 2000 ........... 3.9688 0.625
April 1, 2000 through April 10, 2000 ............. 0.7969 0.5469
</TABLE>

As of March 31, 2000, there were approximately 500 holders of record of
our common stock.

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<PAGE> 9

DIVIDENDS

The Company has paid no dividends to date on its common stock. It is
not anticipated that any dividends will be paid in the foreseeable future. The
Board of Directors intends to follow a policy of using retained earnings, if
any, to finance our growth. The declaration and payment of dividends in the
future will be determined by the Board of Directors in light of conditions then
existing, including our earnings, financial condition, capital requirements and
other factors.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS

Revenues for the Year Ended December 31, 1999 increased 163% to
$4,723,697 from $1,797,632 for the Year Ended December 31, 1998. This growth in
revenues was primarily attributable to the contributions of the Capital Funding
of South Florida, Inc. and Jupiter Mortgage Corporation subsidiaries totaling
$2,297,617 in 1999, whose results were not part of AMSE's 1998 results. The Year
Ended December 31, 1998 includes five months of Dow's operations as this
subsidiary was acquired July 31, 1998.

Total Expenses for the Year Ended December 31, 1999 compared to the
Year Ended December 31, 1998 increased 449% to $11,966,506 from $2,179,888. This
increase in expenses was partially attributable to the inclusion of the costs
associated with the Capital Funding and Jupiter subsidiaries totaling $3,696,576
in 1999, which were not a part of AMSE during 1998, and Dow which was a part of
AMSE for a portion of the year ended December 31, 1998.

These expenses also include impairment write-down's of $3,259,311
against the goodwill of Dow Guarantee Corp. and Jupiter. The Jupiter impairment
was specific to the former Capital Funding operations. Capital Funding had
negative operations prior to their merger into Jupiter. The Dow impairment was
taken due to Dow having negative operations in the last five months of 1998 and
during the second quarter of 1999. During the second quarter of 1999 Dow lost
some key sales personnel, these individuals had historically been responsible
for approximately 10% of Dow's revenues. These personnel have been replaced.

The Company has also recognized approximately $1,491,628 of Debenture
Financing Costs. These Debentures are immediately convertible into Common Stock
and therefor the expenses are recognized immediately and not amortized over the
life of the debenture. These expenses include approximately $280,000 of fees
paid out of the debenture financing and the issuance of 185,500 shares of the
Company's Common Stock issued to consultants and placement agents. The Common
Stock issued is valued with a 10% discount due to the restrictions imposed on
the transferability of the shares.

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<PAGE> 10

Total Other Expenses for the Year Ended December 31, 1999 compared to
the Year Ended December 31, 1998 increased to $519,031 from $17,010. This
increase in expenses was primarily due to the beneficial conversion feature of
the convertible debentures of $441,176.

ACQUISITION CANDIDATES

PINNACLE FINANCIAL CORPORATION

On February 3, 2000, America's Senior Financial Services, Inc., a
Florida corporation (the "Registrant"), entered into a Merger Agreement with
Pinnacle Financial Corporation, a Florida corporation ("Pinnacle"). Pursuant to
the terms of the Merger Agreement, AMSE Acquisition 3 Corp., a wholly-owned
subsidiary of the Registrant will merge with and into Pinnacle, with Pinnacle
surviving as a wholly-owned subsidiary of the Registrant (the "Merger"). The
purchase price for the Merger is $18,000,000, payable in a combination of: (i)
$8,500,000 in cash payable at the closing; (ii) $5,000,000 comprised of shares
of the Registrant's common stock payable at closing; and (iii) $4,500,000
comprised of shares of the Registrant's common stock payable over a five-year
period from the closing at a rate of twenty percent (20%) per year subject to
Pinnacle achieving certain earnings results for such five-year period. In
addition, Pinnacle's shareholders may also be entitled to receive an earnout
payment based upon a percentage of the increase in the value of the Registrant
over such five-year period. The Merger Agreement also provides for the payoff by
the Registrant of certain existing debt of Pinnacle.

The closing of the Merger transaction is subject to several conditions
to closing of both the Registrant and Pinnacle, including but not limited to the
obtaining of adequate financing by the Registrant with respect to the cash
consideration to be paid in the transaction. There can be no assurances that
such closing conditions will be met and the merger transaction will be
consummated or if consummated, it will be upon the terms as currently
contemplated.

SENIOR INCOME REVERSE MORTGAGE CORPORATION

On October 8, 1999, the Registrant entered into a Stock Purchase
Agreement with Senior Income Reverse Mortgage Corporation ("Senior Income"),
whereby the Registrant agreed to purchase all of the outstanding stock of Senior
Income from its shareholders for a purchase price of $6,425,000 payable in the
form of $3,425,000 in cash and $3,000,000 in the form of shares of the
Registrant's common stock. The number of shares which constitute the $3,000,000
stock component of the purchase price is subject to adjustment at both the first
anniversary and the second anniversary of the closing date in the event that the
Registrant's common stock price at such dates has fallen below certain defined
amounts.

The closing of the stock purchase transaction is subject to several
closing conditions of both the Registrant and the shareholders, including but
not limited to the obtaining of adequate financing by the Registrant with
respect to the cash consideration to be paid in the transaction. There can be no
assurances that such closing conditions will be met and the stock purchase will
be consummated or if consummated, it will be upon the terms as currently
contemplated.

LIQUIDITY AND CAPITAL RESOURCES

We sold $2,500,000 principal amount of 3% convertible debentures in May
1999 which are due on May 6, 2002. The debentures are convertible into our
common stock at the option of the debenture holder. If converted, the debentures
will be converted into common stock at a price of the lower of (a) $8.70 per
share or (b) 85% of the average closing bid price for the common stock for 5
trading days selected by the debenture holder from the twenty trading days
ending immediately before the conversion of the debenture. However, the Company
may not issue more than 9.9% of its outstanding common stock to this debenture
holder. We also issued warrants to purchase 34,483 shares of our common stock at
$8.70 per share to the purchaser of the debentures and will issue more warrants
in the event of the sale of additional debentures. The material risk associated
with this type of debenture is that with our stock price at a historic low it
has a significant dilutive effect.

In the fourth quarter of 1999, the debenture holder converted $750,000
of the principal of the debenture into 152,260 shares of the Company's common
stock. Interest expense associated with the conversion was approximately $1,300
and was paid by the issuance of shares of common stock.

In October 1999, the Company accrued a $45,000 penalty due to the
debenture holder. Such penalty was the result of the Company not filing an
active registration statement within 120 days of the debenture issue date per
the terms of the Securities Purchase Agreement dated May 6, 1999. This amount
is included in accounts payable at December 31, 1999, and it was paid in
January 2000 by the issuance of 21,019 shares of common stock.

Subsequent to December 31, 1999 an additional $613,995 of the
principal of the debenture was converted by the debenture holder into 372,223
shares of Company common stock.

The Company may seek to obtain additional equity and/or debt financing
in the future on terms deemed favorable by the Company. No assurances can be
given as to the Company's ability to procure any such debt and/or equity
financing in the future.

As a result of the sale of the convertible debentures in May 1999, the
Company had sufficient working capital to meet its capital needs for the past
eleven months and had up to $7,500,000 available from such investor for the
purchase of additional convertible debentures. Due to the restrictions on
additional draw downs and their dependency on a stock price of $5.75 or higher
we are currently unable to access these funds. We are also pursuing other
financing arrangements.

We currently manage the payment of our current liabilities and
obligations on a monthly basis as cash becomes available. Based on the current
success in raising capital from investors, the costs of operations may increase
as these funds are invested to enhance operations. We believe that our current
negative cash flow from operations is approximately $75,000 per month.

The Company, if its business plan is successfully implemented, expects
to achieve profitability in the third quarter of 2000 by accelerating revenue
growth in excess of its expense growth. The operating and administrative
infrastructure to manage the growth of the Company is currently in place.
Management plans to increase marketing of its mortgage products in the
workplace. The marketing efforts of the Company are dependent upon its ability
to fund such efforts; however, there can be no assurance that the Company will
reach profitability without accessing additional capital resources. Management
intends to generate the necessary capital to operate for the next twelve months
by selling our common and preferred shares to qualified investors in private
placements. Unless we are successful in our efforts to sell our stock to fund
the growth of the Company, we believe that we may not be able to continue
operations for the next twelve months. There are no assurances that we will be
able to raise the required capital through the sale of our debt or equity
securities or that we will have access to other sources of capital on terms that
are acceptable to us.

YEAR 2000

We believe that all of our systems are operating and that no material
Year 2000 issues have been encountered. We are also presently unaware of any
third party Year 2000 issues that would materially affect our financial
condition or results of operations. Nevertheless, if any Year 2000 issues
presently unknown to us occur with us or with third party products and business
dependencies, we may experience a delay or disruption in our operations. These
conditions could have a material adverse impact on our financial condition and
results of operations including, but not limited to, loss of revenue, increased
operating costs, loss of customers or other significant disruptions to our
business.

ITEM 7. FINANCIAL STATEMENTS

The financial statements of the Company required by Item 310(a) of
Regulation S-B are attached to this Report. Reference is made to page F-1 of
this Report for an index to the financial statements and financial statement
schedules. Proforma financial statements as required by Item 310(b) Regulation
S-B are

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<PAGE> 11

included within this Report beginning on page P-1.

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

There have been no changes in or disagreements with accountants in the
past two years.

PART III

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

MANAGEMENT

The directors and executive officers of the Company are:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Nelson A. Locke 49 Chairman of the Board, President and Treasurer

Cheryl D. Locke 43 Executive Vice President Personnel, Director

Elly Shea 64 Senior Vice President, Production

Thomas G. Sherman, Esq. 49 Director, Compensation Committee

Michael J. Shelley 38 Compensation and Audit Committees.

Charles M. Kluck 55 Director-President of Dow.

</TABLE>

Nelson A. Locke and Cheryl D. Locke are married.

Nelson A. Locke founded the Company in 1990 and has served as its
President and Director since that time. He is the architect of the Company's
business model. He is the past President of the Florida Association of Mortgage
Brokers - Miami Chapter and has earned the NAMB's certified residential mortgage
lender designation. In 1997 he was named FAMB's Broker of the Year, and in 1998
was awarded the prestigious FAMB President's Award for his public relations
efforts on behalf of the Florida Mortgage Brokerage Industry. In 1999, he was
elected by his 2,500 FAMB peers, to serve on the Association's Executive
Committee. He is a founder and director of the National Reverse Mortgage Lenders
Association. Mr. Locke is a Marine Corps. Veteran (non commissioned officer) and
holds a B.A. from California State University.

Cheryl D. Locke is the Company's Executive Vice President. She is a
member of the Board of Directors, and is directly responsible for the human
resources ("HR") function, supervising the Company's personnel department and
reviewing AMSE's compliance with state and federal employment issues. She joined

10
<PAGE> 12
the Company in 1990 on a part time basis, as a loan officer. By 1994, she had
risen to senior loan officer. From 1995 to 1998, she directly supervised all
loan production and closing. In January 1998, she was appointed executive vice
president and elected to the Company's Board of Directors.

Elly Shea has been an advocate of Reverse Mortgages since their
inception. Working in the industry for over 10 years, she has participated in RM
product development and marketing. From 1994 to 1998, she was Southeast
Correspondent Manager for TransAmerica HomeFirst. She understands the special
needs of senior citizens, and has worked diligently to help bring ethical
products to Florida seniors. She has been Senior Vice President-Production of
the Company since August 1998.

Thomas J. Sherman has been an attorney in private practice in Coral
Gables, Florida since 1980. He is also President and owner of Union Title
Services, Inc., a full service title insurance agency. Mr. Sherman is a graduate
of the University of Miami School of Law. Since 1990, Mr. Sherman has served as
the Company's general counsel. He became a director in January 1998.

Michael J. Shelley has been President and CEO of MJS Financial, Inc.
since 1993. From 1991 to 1993 he was senior sales representative for Siemens
Automotive. Mr. Shelley is a Phi Beta Kappa graduate of the University of
Illinois with a B.A. in Economics and also has a Master of Science degree from
the University of Illinois in Finance. He became a director in January 1998.

Charles M. Kluck has been the President of Dow Guarantee Corp. since
its founding in 1985. Dow was acquired by the Company on July 31, 1998. He
continues to serve in that capacity. He became an director in July 1998.

BOARD COMMITTEES

The Board of Directors has established an Audit Committee and a
Compensation Committee. The Audit Committee, consisting of Thomas Sherman and
Michael Shelley, reviews the adequacy of internal controls and results and scope
of the audit and other services provided by the Company's independent auditors.
The Compensation Committee, consisting of Thomas Sherman and Michael Shelley,
establishes and recommends salaries, incentives and other forms of compensation
for officers and other key employees.

11
<PAGE> 13

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth the total compensation paid to the
Company's chief executive officer for the last three completed fiscal years. No
executive officer of the Company received compensation of $100,000 or more
during any such year.
Other Annual
Principal\Position Year Salary Bonus Compensation
- ------------------ ---- ------ ----- ------------

Nelson A. Locke 1999 $62,750 -0- $0.00
President 1998 $70,000 -0- 5,000
1997 $50,000 -0- -0-

DIRECTOR COMPENSATION

No fees are paid for director services. At the Board's discretion,
stock options or grants may be awarded for actual services performed. No
options are outstanding or have been granted as of April 10, 2000.

EXECUTIVE EMPLOYMENT AGREEMENTS

In July 1998 the Company entered into a five (5) year employment
agreement with Nelson A. Locke. Mr. Locke is employed as President and Chairman
at an annual salary of $70,000 and such additional compensation as he
determines. The agreement provides certain health, life and disability
insurance, and autos to Mr. Locke. The Agreement provides for the establishment
of an Executive Performance Bonus Pool described below. The agreement provides
that in any calendar year when the Company's stock price increases by at least
20%, that he shall be eligible for stock options equal to 5% of his total common
stock holdings at the end of the calendar year which may be exercised at $1.00
per share and may be paid for by interest-free promissory note. There were no
options granted during 1999 and Mr. Locke waived these options for 1998 as this
event would have been harmful to future business and investor prospects.

In October 1999 the Board of Directors approved a change in Mr. Locke's
annual base salary to $200,000. His health, life, option plan, disability
insurance and auto allowances remain the same. However, Mr. Locke voluntarily
deferred the increase of the base salary until further notice, in the interest
of the company's cash flows.

In January 1998 the Company entered into a five (5) year employment
agreement with Cheryl D. Locke. Mrs. Locke is employed as Executive Vice
President, Secretary and Director at an annual salary of $50,000. The agreement
provides certain health, life and disability insurance, an auto to Mrs. Locke,
special performance bonus of up to $25,000 to be paid at the discretion of the
President. She is entitled to commission on loan origination's for which she was
submitting loan officer. The agreement provides that in any calendar year when
the Company's loan origination's increase by at least 20%, that she shall be
eligible for stock options equal to 5% of her total common stock holdings at the
end of the calendar year which may be exercised at $1.00 per share and may be
paid for by interest-free promissory note. There were no options granted during
1999 and Mrs. Locke waived these options for 1998 as this event would have been
harmful to future business and investor prospects.

In July 1998 the Company's subsidiary, Dow Guaranty Corp., entered into
an employment agreement with Charles M. Kluck for a term of five years, under
which Mr. Kluck will be paid an annual salary of $110,000.

12
<PAGE> 14

In July 1998 the Company's subsidiary, Dow Guarantee Corp., entered
into an employment agreement with Linda C. Kluck, Charles Kluck's sister, for a
term of five years, under which Ms. Kluck will be paid an annual salary of
$70,000. Ms. Kluck is the full time production manager for the subsidiary.

In August 1998 the Company entered into an employment agreement with
Elly Shea for a term of three years, under which Mrs. Shea will be paid an
annual salary of $65,000, an auto, certain health and life insurance, and
certain other performance bonuses which may be in the form of cash compensation
or stock.

In August 1999 the Company's subsidiary, Jupiter Mortgage Corp.,
entered into an employment agreement with Michael J. Buono for a term of 5
years, under which Mr. Buono will be paid an annual salary of $150,000.

In August 1999 the Company's subsidiary, Jupiter Mortgage Corp.,
entered into an employment agreement with Deanne J. Anderson for a term of 1
year, under which Ms. Anderson will be paid an annual salary of $120,000.

EXECUTIVE PERFORMANCE BONUS POOL

The Company's employment agreement with its President, Nelson A. Locke,
provides that ten percent (10%) of the Company's pre-tax net income for 1998
through 2002 in excess of the pre-tax net income for December 31, 1997 shall be
contributed to an annual bonus pool for the benefit of the President and other
key employees of the Company. The allocation of any bonus among the President
and other key employees is made by the Compensation Committee.

No bonus was allocated for 1999 and/or 1998.

STOCK OPTION PLANS

INCENTIVE STOCK OPTION PLAN

The Company's Board of Directors and Shareholders have adopted two
stock option plans. Pursuant to the Incentive Stock Option Plan (the "ISO
Plan"), options to acquire a maximum of 2,000,000 shares, but not more than
eight percent (8%) of the total authorized shares of the Company, may be granted
to directors, officers, employees, consultants and other independent contractors
and persons who performed services relating to the Company, including wholly or
partially owned subsidiaries.

The Plan is administered by a Stock Option Committee consisting of two
or more non-employee directors or in the absence of such a committee, the Board
of Directors.

Pursuant to the ISO Plan, the Company may grant Incentive Stock Options
as defined in Section 422(b) of the Internal Revenue Code of 1986 and
non-qualified stock options not intended to qualify under such section. The
price at which the Company's common stock may be purchased

13
<PAGE> 15

upon exercise of Incentive Stock Options granted under the Plan will be required
to be at least equal to the fair market value of the common stock on the date of
grant. Non-qualified stock options may be at any price designated by the
Committee on the date of grant. Options granted under the Plan may have maximum
terms of not more than ten (10) years and are not transferable except by will or
the laws of descent and distribution. No Incentive Stock Options under the Plan
may be granted to an individual owning more than ten percent (10%) of the total
combined voting power of all classes of stock issued by the Company unless the
purchase price of the common stock under such option is at least one hundred ten
percent (110%) of the Fair Market Value of the shares issuable on exercise of
the option at the date of grant and such option is not exercisable more than
five (5) years from the date of grant.

Generally, options granted under the Plan terminate upon the grantee's
employment or affiliation with the Company, but the Committee may authorize an
expiration date of up to ninety (90) days following such termination. If
termination was due to death or disability, the options expire one (1) year
after such termination or the termination date set forth in the option,
whichever is earlier. If termination is due to retirement the option expires
ninety (90) days after termination or the termination date set forth in the
option, whichever is earlier.

If a Change of Control takes place, the Board may vote to immediately
terminate all outstanding options or may vote to accelerate the expiration of
options to the tenth day after the effective date of the Change of Control. If
the Board votes to immediately terminate the options, it shall make a cash
payment to the grantees equal to the difference between the exercise price and
the Fair Market Value of the shares that would have been subject to the
terminated option on the date of the Change of Control. A Change of Control of
the Company is generally deemed to occur when any person becomes the beneficial
owner of or acquires voting control with respect to forty percent (40%) or more
of the total voting shares of the Company, the Company is merged into any other
company, or substantially all of its assets are acquired by another company, or
three or more directors nominated by the Board to serve as a director, each
having agreed to serve in such capacity, failed to be elected in a contested
election of directors.

Incentive Stock Options granted under the Plan are subject to the
restriction of the aggregate Fair Market Value as of the date of grant of
options which first become exercisable in any calendar year cannot exceed
$100,000.

The Plan provides for appropriate adjustments in the number and type of
shares covered by the Plan and options granted thereunder in the event of any
reorganization, merger, recapitalization or certain other transactions involving
the Company.

Until the closing of an underwritten public offering by the Company,
pursuant to a registration statement filed and declared effective under the
Securities Act of 1933 covering the offer and sale of the Company's common stock
for the account of the Company, the Company has the right of first refusal to
acquire any shares which were acquired pursuant to the exercise of options under
the Plan at the Fair Market Value on the date of the shareholder's notice to the
Company and the Company shall have the right to repurchase any option shares
following holder's termination of service or affiliation with the Company for
any reason at the original exercise price of the option.

14
<PAGE> 16

NON-QUALIFIED STOCK OPTION PLAN

Pursuant to the Non-Qualified Stock Option Plan (the "Non-ISO Plan"),
options to acquire a maximum of 500,000 shares, but not more than two percent
(2%) of the total authorized shares of the Company may be granted to any person
who performed services for the Company and its subsidiaries.

Non-qualified stock options may be at any price designated by the
Committee on the date of grant. Options granted under the Plan may have maximum
terms of not more than ten (10) years and are not transferable except by will or
the laws of descent in distribution.

Generally, options granted under the Plan terminate thirty (30) days
after termination of the grantee's employment or affiliation with the Company.
If termination was due to death or disability, the options expire one (1) year
after such termination or the termination date set forth in the option,
whichever is earlier.

Any conditions or restrictions on exercise lapse on a Change of Control
unless otherwise set forth in the Option Agreement.

The Plan is administered by a Stock Option Committee consisting of two
or more non-employee directors or in the absence of such a committee, the Board
of Directors.

Until the closing of an underwritten public offering by the Company,
pursuant to a registration, filed and declared effective under the Securities
Act of 1933 covering the offer and sale of the Company's common stock for the
account of the Company, the Company has the right of first refusal to acquire
any shares which were acquired pursuant to the exercise of options under the
Plan. At the Fair Market Value on the date of the shareholder's notice to the
Company and the Company shall have the right to repurchase any option shares
following holder's termination of service or affiliation with the Company for
any reason at the original exercise price of the option.

NON-PLAN STOCK INCENTIVES

In 1999 and 1998, the Company issued 151,300 and 74,400 shares
respectively of its Common Stock to employees as incentive compensation. These
shares vest at three years. There is no prorated vesting schedule. These shares
have been valued at $1 per share and the Company recognized amortization
expenses of $46,486 in 1999 and $7,333 in 1998 per this vesting schedule.

15
<PAGE> 17

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

The following table sets forth, as of March 31, 2000, the beneficial
ownership of the Company's 8,958,942 outstanding shares of Common Stock by (1)
the only persons who own of record or are known to own, beneficially, more than
5% of the Company's Common Stock; (2) each director and executive officer of the
Company; and (3) all directors and officers as a group.

<TABLE>
<CAPTION>
Number of
Name Shares Percent (1)
---- --------- -----------
<S> <C> <C>
Nelson A. Locke(2) 2,650,000 29.1%

Cheryl D. Locke(2) 2,650,000 29.1%

Charles M. Kluck(3) 550,000 6.0%

Louis Weltman 549,488 6.0%

Elly Shea 48,000 .5%

Thomas G. Sherman, Esq. 107,500 1.1%

Michael J. Shelley 107,500 1.1%

All officers and directors as a group 3,463,000 38.1%
(6 persons)

</TABLE>

- ----------

(1) Based upon 8,958,942 shares outstanding as of March 31, 2000.

(2) Nelson A. Locke and Cheryl D. Locke own such shares as joint tenants.

(3) Includes 200,000 owned by his sister, Linda Kluck.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

A shareholder, Louis Weltman of Vistra Growth Partners, Inc. provided
investment banking services to the Company. In 1998 such shareholder was paid
fees consisting of cash of $60,000 and 66,667 shares of the Company's common
stock for services in connection with the Company's acquisition of Dow. In 1999
he was paid approximately $417,000 in cash and issued 186,600 shares of common
stock and a warrant to purchase 228,888 shares of common stock in connection
with the sale of our 3% Convertible Debentures and the two acquisitions executed
during 1999. The warrant was forfeited as part of the termination agreement
entered into with the Company.

A shareholder, Brickell Equity Group received fees for services during
1999 consisting of 5,200 shares of the Company's common stock valued at $17,550
for investment services.

16
<PAGE> 18

The Company's president, Nelson Locke owed the Company $20,700
(including accrued interest) under a note bearing 5% interest. Also, Mr. Locke
bought a vehicle from the Company for $5,000, which was approximately the net
book value at the time of the sale.

Two shareholders of the Company (the former owners of Capital Funding)
each owe the Company $50,000 under promissory notes dated December 31, 1997.
These notes bear interest at 6% per annum and the interest is payable annually
on December 31st. These notes are due on January 1, 2004. The interest due at
December 31, 1998 and 1999 has not been paid. The total of principal and
interest is $112,000 at December 31, 1999 and $106,000 at December 31, 1998.
The fair value of these notes is not subject to reasonable estimation due to
their related party nature.

PART IV

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

(a) Exhibits

The following exhibits are filed as a part of this Report, with each
exhibit that consists of or includes a management contract or compensatory plan
or arrangement being identified with an asterisk.

<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2(a) Articles of Incorporation of the Registrant (1)

2(b) Articles of Amendment to Articles of Incorporation (1)

2(c) By-Laws of the Registrant (1)

2(d) Incentive Stock Option Plan (1)

2(e) Non-Qualified Stock Option Plan (1)

3(d) Form of Stock Purchase Warrant (1)

3(e) Form of 3% Convertible Debenture (1)

6(a) Employment Agreement as of January 2, 1998 between Registrant and Nelson A.
Locke (1)

6(b) Employment Agreement as of January 2, 1998 between Registrant and Cheryl D.
Locke (1)

6(c) Employment Agreement as of July 31, 1998 between Dow Guarantee Corp. and
Charles M. Kluck (1)

6(d) Employment Agreement as of July 31, 1998 between Dow Guarantee Corp. and Linda
C. Kluck (1)

6(f) Agreement for purchase of Dow Guarantee Corp. (1)

6(g) Agreement for purchase of Capital Funding of South Florida, Inc. (1)

6(h) Consulting Agreement as of August 25, 1998 between Registrant and Vistra
Growth Partners, Inc. (1)

</TABLE>

17
<PAGE> 19

<TABLE>
<S> <C>
6(i) Securities Purchase Agreement (1)

6(j) Registraton Rights Agreement (1)

6(k) Agreement for purchase of Jupiter Mortgage Corporation

10.1 Financial Advisory Agreement dated February 2, 2000 with Capitalink, L.C. (1)

10.2 Investor Relations Consulting Agreement dated January 20, 2000 with Access1 Financial, Inc. (1)

10.3 Consulting Agreement dated January 1, 2000 with Brickell Equity Group, Inc. (1)

10.4 Investment Banking Agreement dated January 7, 2000 with Charterbridge Financial Group, Inc. (1)

10.5 Investor Relation Services Agreement dated January 7, 2000 with Charterbridge Financial Group, Inc. (1)

22 Subsidiaries

27 Financial Data Schedule. (+)

</TABLE>

(+) Filed Herewith

(1) Previously filed

(b) Reports on Form 8-K:

No reports on Form 8-K were filed during the last quarter of the period
covered by this report.

18
<PAGE> 20

SIGNATURES

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

AMERICA'S SENIOR FINANCIAL SERVICES, INC.

Dated: April 14, 2000 By: /s/ Nelson A. Locke
----------------------------------
Nelson A. Locke, President
Chief Executive Officer
Principal Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the Capacities and on the dates indicated.

<TABLE>
<S> <C> <C>
/s/ Nelson A. Locke President April 14, 2000
- ---------------------- Director
Nelson A. Locke

/s/ Cheryl D. Locke Executive Vice President April 14, 2000
- ---------------------- Director
Cheryl D. Locke

/s/ Thomas Sherman Director April 14, 2000
- ----------------------
Thomas Sherman

/s/ Michael J. Shelley Director April 14, 2000
- ----------------------
Michael J. Shelley

/s/ Charles M. Kluck Director April 14, 2000
- ----------------------
Charles M. Kluck

</TABLE>

<PAGE> 21

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Financial Statements Page
----
<S> <C>
Independent Auditors' Report for the Years Ended December 31, 1999 and 1998.............. F-2

Consolidated Balance Sheets at December 31, 1999 and 1998 ............................... F-3

Consolidated Statements of Operations for the Years Ended December 31, 1999 and 1998 .... F-4

Consolidated Statement of Stockholders' Equity for the Years Ended December 31, 1999
and 1998 .............................................................................. F-5

Consolidated Statement of Cash Flows for the Years Ended December 31, 1999 and 1998...... F-6

Notes to Consolidated Financial Statements .............................................. F-8

Proforma Unaudited Consolidated Statements of Operations for the Year Ended
December 31, 1999 ..................................................................... P-1

Proforma Unaudited Consolidated Balance Sheets for the Year Ended December 31, 1998 ..... P-2

Proforma Unaudited Consolidated Statements of Operations for the Year Ended
December 31, 1998 ..................................................................... P-3

</TABLE>

F-1
<PAGE> 22

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
America's Senior Financial Services, Inc.

We have audited the accompanying consolidated balance sheets of America's Senior
Financial Services, Inc. and subsidiaries (collectively, the "Company") as of
December 31, 1999 and 1998, and the related consolidated statements of
operations, changes in stockholders' equity, and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
America's Senior Financial Services, Inc. and subsidiaries as of December 31,
1999 and 1998, and the results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company's accumulated deficit and its
loss from operations raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 1. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ Ahearn, Jasco + Company, P.A.
---------------------------------
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
March 31, 2000

F-2
<PAGE> 23
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
ASSETS

CURRENT ASSETS:
Cash and cash equivalents $ 402,373 $ 195,728
Brokerage fees receivable 214,604 49,853
Employee advances 175,714 70,528
Mortgage loans held for sale 2,389,162 --
Due from shareholder 20,734 22,618
Prepaid expenses 56,851 46,699
Other current assets 72,302 --
------------ ------------
TOTAL CURRENT ASSETS 3,331,740 385,426
------------ ------------

PROPERTY AND EQUIPMENT, net 442,897 254,783
------------ ------------

OTHER ASSETS
Goodwill, net 5,096,841 3,348,215
Due from related parties 112,000 --
Notes receivable 250,000 250,000
Other assets 561,536 69,940
------------ ------------
TOTAL OTHER ASSETS 6,020,377 3,668,155
------------ ------------

TOTAL $ 9,795,014 $ 4,308,364
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 24,934 $ 5,798
Lines of credit 366,298 --
Warehouse lines of credit 2,639,192 --
Accounts payable 394,752 173,904
Accrued liabilities 418,634 49,054
Other current liabilities 29,291 --
------------ ------------
TOTAL CURRENT LIABILITIES 3,873,101 228,756
------------ ------------

CAPITAL LEASE OBLIGATIONS, less current portion 56,834 --
------------ ------------

LONG-TERM DEBT, convertible debentures 1,750,000 --
------------ ------------

LONG-TERM DEBT, less current portion -- 13,287
------------ ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares
authorized, zero shares issued and outstanding -- --
Common stock, $0.001 par value; 25,000,000 shares
authorized, shares issued and outstanding, 7,690,262
in 1999 and 5,898,867 in 1998 7,690 5,899
Additional paid-in capital 12,498,553 4,584,932
Retained earnings (deficit) (8,219,283) (457,443)
Unearned compensation - restricted stock (171,881) (67,067)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 4,115,079 4,066,321
------------ ------------
TOTAL $ 9,795,014 $ 4,308,364
============ ============

</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE> 24

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
REVENUES $ 4,723,697 $ 1,797,632
============ ============

EXPENSES:
Payroll and related expenses 4,024,889 1,335,488
Administrative, processing, and occupancy 2,996,515 773,161
Debenture financing costs 1,491,628 --
Goodwill amortization 194,163 71,239
Impairment charges 3,259,311 --
------------ ------------

TOTAL EXPENSES 11,966,506 2,179,888
------------ ------------

LOSS FROM OPERATIONS (7,242,809) (382,256)
------------ ------------

OTHER
Acquisition costs -- 14,969
Interest income (34,873) --
Interest expense 553,904 2,041
------------ ------------

TOTAL OTHER, NET 519,031 17,010
------------ ------------

LOSS BEFORE INCOME TAXES (7,761,840) (399,266)
------------ ------------

PROVISION FOR INCOME TAXES -- --

NET LOSS $ (7,761,840) $ (399,266)
============ ============

LOSS PER SHARE:
Basic $ (1.123) $ (0.082)
============ ============
Diluted $ (1.123) $ (0.082)
============ ============
Weighted average common shares outstanding 6,909,245 4,849,247
============ ============

</TABLE>

See notes to consolidated financial statements.

F-4

<PAGE> 25

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

COMMON COMMON ADDITIONAL
STOCK, STOCK, AT PAID-IN RESTRICTED
# OF SHARES PAR VALUE CAPITAL STOCK
-------------- ------------- ----------- -------------

STOCKHOLDERS' EQUITY, December 31, 1997 4,367,000 $ 4,367 $ 169,647 $ --

Stock issued pursuant to the Dow acquisition 616,667 617 3,436,883 --

Restricted stock issued to employees 74,400 74 74,326 (74,400)

Recognition of restricted stock earned -- -- -- 7,333

Issuances of common stock for cash, net of expenses 840,800 841 904,076 --

Net loss for the year ended December 31, 1998 -- -- -- --
----------- ----------- ----------- -----------

STOCKHOLDERS' EQUITY, January 1, 1999 5,898,867 $ 5,899 $ 4,584,932 $ (67,067)

Stock issued pursuant to the Capital Funding acquisition 221,664 222 1,551,426 --

Stock issued pursuant to the Jupiter acquisition 360,750 361 2,499,639 --

Stock issued for debenture financing costs 185,500 186 1,211,442 --

Beneficial conversion feature of convertible debentures -- -- 441,176 --

Restricted stock issued to employees, net of stock earned 151,300 151 151,149 (104,814)

Issuances of common stock for cash, net of expenses 698,721 699 1,194,968 --

Stock issued pursuant to debenture conversions 152,260 152 751,184 --

Common stock issued for services 21,200 20 57,530 --

Other capital contributions -- -- 55,107 --

Net loss for the year ended December 31, 1999 -- -- -- --
----------- ----------- ----------- -----------

STOCKHOLDERS' EQUITY, December 31, 1999 7,690,262 $ 7,690 $12,498,553 $ (171,881)
=========== =========== =========== ===========

</TABLE>

TOTAL
STOCKHOLDERS'
DEFICIT EQUITY
------------- -----------------

STOCKHOLDERS' EQUITY, December 31, 1997 $ (58,177) $ 115,837

Stock issued pursuant to the Dow acquisition -- 3,437,500

Restricted stock issued to employees -- --

Recognition of restricted stock earned -- 7,333

Issuances of common stock for cash, net of expenses -- 904,917

Net loss for the year ended December 31, 1998 (399,266) (399,266)
----------- -----------

STOCKHOLDERS' EQUITY, December 31, 1998 $ (457,443) $ 4,066,321

Stock issued pursuant to the Capital Funding acquisition -- 1,551,648

Stock issued pursuant to the Jupiter acquisition -- 2,500,000

Stock issued for debenture financing costs -- 1,211,628

Beneficial conversion feature of convertible debentures -- 441,176

Restricted stock issued to employees, net of stock earned -- 46,486

Issuances of common stock for cash, net of expenses -- 1,195,667

Stock issued pursuant to debenture conversions -- 751,336

Common stock issued for services -- 57,550

Other capital contributions -- 55,107

Net loss for the year ended December 31, 1999 (7,761,840) (7,761,840)
----------- -----------

STOCKHOLDERS' EQUITY, December 31, 1999 $(8,219,283) $ 4,115,079
=========== ===========

</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 26
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>

1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(7,761,840) $ (399,266)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 304,385 106,195
Impairment charges 3,259,311
Loss on abandoned assets 66,514
Other 41,822 7,333
Common stock issued for services 17,550
Common stock issued for debenture financing costs 1,211,628
Beneficial conversion feature of convertible debentures 441,176
Changes in certain assets and liabilities, net of amounts
from acquisitions:
Brokerage fee receivable (104,223) 6,429
Employee advances (96,470) 28,544
Prepaid expenses (10,152) (46,464)
Other current assets and liabilities, net (27,127) 14,046
Accounts payable 126,039 --
Accrued liabilities 205,501 --
---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (2,325,886) (283,183)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (114,417) (205,302)
Acquisition expenditures, net of cash acquired (782,970) (294,395)
Increase in mortgage loans (2,389,162) --
Changes in other assets (477,889) 21,304
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (3,764,438) (478,393)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 1,195,667 904,917
Proceeds from issuance of convertible debentures 2,231,220 --
Other capital contributions 55,107 --
Net borrowings under lines of credit 2,844,188 --
Payments on capital lease obligations (31,097) --
Change in due from shareholder 1,884 (22,618)
Change in long-term debt (11,371)
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,296,969 870,928
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 206,645 109,352

CASH AND CASH EQUIVALENTS, Beginning of year 195,728 86,376
---------- ----------
CASH AND CASH EQUIVALENTS, End of year $ 402,373 $ 195,728
========== ==========

</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE> 27

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

(continued)

<TABLE>
<CAPTION>
1999 1998
----------- --------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid in cash during the period $79,887 $18,135
========== ===========
Income taxes paid in cash during the period $ 2,940 $ --
========== ===========

</TABLE>

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

On July 31, 1998, the Company recorded net tangible assets of $189,157
and goodwill of $3,419,454 in connection with the Dow acquisition (see Note 8).
During 1998, the Company issued restricted stock to employees valued at $74,400.

On January 29, 1999, the Company recorded net tangible assets of
approximately $93,500 and goodwill of $1,922,000 in connection with the Capital
Funding acquisition (see Note 8). In connection with the acquisition of Capital
Funding, the Company issued 16,000 shares of common stock to a shareholder that
provided investment services (see Note 7 and 8).

On August 18, 1999, the Company recorded net tangible liabilities of
approximately $129,410 and goodwill of $3,280,710 in connection with the Jupiter
acquisition (see Note 8).

On September 30, 1999, the Company transferred its ownership interest
in Capital Funding to Jupiter and Jupiter became the sole surviving entity.
Since no change in ownership of the entities occurred, the transfer was recorded
at historical cost in a manner similar to pooling of interests (see Note 8).

During October 1999, the holder of the convertible debenture bond
converted $750,000 of the principal and accrued interest into 152,260 shares of
common stock (see Note 5).

During 1999, the Company issued restricted stock to employees valued at
$151,300.

See notes to consolidated financial statements.

F-7
<PAGE> 28

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
================================================================================

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION

America's Senior Financial Services, Inc. ("AMSE") was incorporated on
February 26, 1990. On July 31, 1998, AMSE acquired Dow Guarantee Corp. ("Dow"),
on January 29, 1999, AMSE acquired Capital Funding of South Florida, Inc
("Capital Funding") and on August 18, 1999, AMSE acquired Jupiter Mortgage Corp.
("Jupiter"). On September 30, 1999, Capital Funding and Jupiter were merged and
Jupiter was the surviving corporation. AMSE and its subsidiaries are
collectively referred to as "the Company". All significant intercompany balances
and transactions are eliminated in consolidation.

The Company is engaged in originating, processing, and concurrently
funding mortgage loans. In addition to providing traditional (or forward)
mortgage loan services, the Company also arranges reverse mortgages specifically
developed to serve the special needs of the senior citizen community, and has
generated a substantial portion of the reverse mortgages originated in Florida.
The Company sells its closed loans to investors for resale into the secondary
market.

GOING CONCERN

The Company's consolidated financial statements have been prepared on a
going concern basis that contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of business. The
Company has incurred losses of $7,761,840 and $399,266 in 1999 and 1998,
respectively, and has an accumulated deficit of $8,219,283 at December 31, 1999.
In management's opinion, the operating deficit (which is largely confined to
AMSE corporate activities) is largely the result of the monies the Company has
expended in the execution of its aggressive acquisition strategy.

In 1999, the Company completed two acquisitions causing gross loan
originations to increase from under $150 million dollars to almost $300 million
dollars. In the process the Company grew from three physical locations to
twelve. In addition, the Company invested the capital necessary to complete due
diligence and prepare the appropriate documents to complete three more strategic
acquisitions that will again increase the Company's proforma gross loan
origination to a level approaching $1.5 billion dollars. Management is presently
waiting for final commitments on the funding necessary to close the three
additional acquisitions. Should such a closing occur, management believes that
the Company should operate profitably and the Company's balance sheet would be
favorably affected.

Historically, the Company has been funding its deficit primarily
through investor capital and has yet to generate profits from its primary
operating activities. Management recognizes that the Company must generate
additional resources and attain profitable operations to enable it to continue
in business. Management's growth plan estimated that given certain events the
Company could achieve critical mass in the year 2000. Since January 2000,
management has taken certain steps to reduce central office overhead and to
increase loan origination revenue system wide.

Since January 2000, the Company has financed its operating deficit
through private equity subscriptions and loans from management. The Company is
planning to obtain additional equity capital through the conversion of debt, and
is in the final stages of its execution of such a plan. In July 1999 the Company
signed a "best efforts" contract with a Wall Street placement agent to raise
between $17 and $25 million through the sale of equity. In October 1999, the
agreement was revised and the target amount increased to $50 million dollars
which was to be raised in several components consisting of debt and equity (see
Note 10 for additional details). In January 2000, the first component, a debt
offering, was set at $20 million. In March 2000, the offering memorandum was
printed and circulated to over 100 potential investors. Although the offering is
on a "best efforts" basis, management believes that the offering should be
successful and that sufficient capital could be raised allowing the completion
of some or all of the additional acquisitions discussed above. In addition, the
offering should provide some or all of the additional working capital needed to
correct the Company's current operating deficit.

F-8
<PAGE> 29

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

GOING CONCERN (continued)

In March 2000, the Company initiated merger talks with a real estate
and mortgage entity located in northeast Florida that if concluded could add
over $2 million of net assets to the Company's balance sheet. The transaction is
currently in due diligence. Management believes that these real estate assets
are unencumbered and would have a positive material effect on the Company's
balance sheet. In addition, these assets could provide the collateral necessary
for traditional short-term working capital borrowings, as required.

In summary, the realization of assets and satisfaction of liabilities
in the normal course of business is dependent upon the Company's raising
additional equity capital and ultimately reaching profitable operations.
However, no assurances can be given that the Company will be successful in these
activities. Should any of the events discussed above not occur, the accompanying
consolidated financial statements could be materially affected.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
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.

REVENUE RECOGNITION AND CREDIT RISKS

The Company, as a licensed mortgage company, derives its revenues
primarily from mortgage application fees paid by potential borrowers and from
brokerage, processing fees, and service release premiums payable by the borrower
and others at the time of closing. The brokerage and processing fees are
recognized as revenue at the time the loans are closed.

The Company operates in the mortgage banking industry, therefore, it is
highly dependent on the status of the economy and interest rates.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the assets, typically
seven years. Expenditures for routine maintenance and repairs are charged to
expense as incurred.

INTANGIBLE ASSETS

The excess of investment cost over the fair value of net assets
acquired (goodwill) is being amortized using the straight-line method over a
period of 20 years. The goodwill arose from the acquisitions of Dow, Capital
Funding, and Jupiter. Amortization of goodwill for the years ended December 31,
1999 and 1998 were approximately $194,200 and $71,239, respectively.

As a consequence of downturns in the mortgage industry in 1999 and the
interest rate increases that occurred during 1999, Dow and Capital Funding
operated at cumulative losses since their dates of acquisition. An impairment
review of these subsidiaries was initiated, pursuant to SFAS 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of". This review determined that the subsidiaries' estimated future
non-discounted cash flows were below its carrying value as a long-lived asset.
Accordingly, the Company has recorded impairment charges to adjust the carrying
value of the goodwill. The adjustments reduced the recorded value of the
goodwill by approximately $3,259,300. Management believes that the fair value of
the remaining assets approximates the amounts to which it was written down.

F-9
<PAGE> 30

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ADVERTISING

The costs of advertising, promotion, and marketing programs are
generally charged to operations in the year incurred. Significant funds were
spent in 1999 to launch a nationwide direct mail campaign to market reverse
mortgages, and the Company invested advertising money to attract loan
correspondents. Total advertising expense was approximately $392,500 and
$155,132 for the years ended December 31, 1999 and 1998, respectively.

INCOME TAXES

The Company accounts for income taxes in accordance with the Statement
of Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income
Taxes." Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences, operating loss
carryforwards, and tax credit carryforwards, and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment. State minimum taxes are expensed as paid.

NET LOSS PER COMMON SHARE

The Company has adopted SFAS No. 128, "Earnings Per Share." SFAS 128
requires companies with complex capital structures or common stock equivalents
to present both basic and diluted earnings per share ("EPS") on the face of the
income statement. Basic EPS is calculated as the income or loss available to
common stockholders divided by the weighted average number of common shares
outstanding during the period. Diluted EPS is calculated using the "if
converted" method for convertible securities and the treasury stock method for
options and warrants as previously prescribed by Accounting Principles Board
Opinion No. 15, "Earnings Per Share." The effect of common shares issuable under
the terms of the Company's preferred stock outstanding are excluded from the
calculation of diluted EPS since the effect is antidilutive. The adoption of
SFAS 128 did not have an impact on the Company's reported results.

STOCK BASED COMPENSATION

In October 1995, the Financial Accounting Standards Board (FASB) issued
SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123
encourages, but does not require, companies to record compensation plans at fair
value. The Company has chosen, in accordance with the provision of SFAS No. 123,
to apply Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued Employees" (APB 25) for its stock plans. Under APB 25, if the exercise
price of the Company's stock options is less than the market price of the
underlying stock on the date of grant, the Company must recognize compensation
expense. SFAS No. 123 will be adopted for disclosure purposes only and will not
impact the Company's financial position, annual operating results, or cash
flows.

For transactions with other than employees in which services were
performed in exchange for stock, the transactions were recorded on the basis of
the fair value of the services received or the fair value of the issued equity
instrument, whichever was more readily measurable.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all highly liquid investments
purchased with an original maturity of three months or less. The Company
occasionally maintains cash balances in financial institutions in excess of the
federally insured limits.

As of December 31, 1999, the Company has restricted $115,000 of cash in
connection with a letter of credit for Dow.

RECLASSIFICATIONS

Certain amounts from the 1998 financial statements have been
reclassified to conform to the 1999 presentation.

F-10
<PAGE> 31

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash, receivables, mortgage loans held for sale, accounts payable and
accrued expenses are reflected in the financial statements at fair value due to
the short-term nature of these instruments. The fair value of the Company's
obligations under credit agreements, as disclosed in Note 3, are the same as the
recorded amounts because the rates and terms approximate current market
conditions.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". Among other provisions, it requires that
entities recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
Gains and losses resulting from changes in the fair values of those derivatives
would be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. The effective date of this standard was delayed
via the issuance of SFAS No. 137. The effective date for SFAS No. 133 is now for
fiscal years beginning after June 15, 2000, though earlier adoption is
encouraged and retroactive application is prohibited. The Company must adopt
this standard no later than January 1, 2001. The Company does not expect the
adoption of this standard to have a material impact on results of operations,
financial position or cash flows.

STATEMENT OF COMPREHENSIVE INCOME

A statement of comprehensive income has not been included, per SFAS No.
130, "Reporting Comprehensive Income," as the Company has no items of other
comprehensive income.

SEGMENT INFORMATION

The Company adopted SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information," effective January 31, 1999. SFAS No. 131
establishes standards for the way that public companies report selected
information about operating segments in annual and interim financial reports to
shareholders. It also establishes standards for related disclosures about an
enterprise's business segments, products, services, geographic areas and major
customers. The Company operates its business as a single segment. As a result,
no additional disclosure was required.

NOTE 2 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31:

1999 1998
--------- ---------

Office equipment $ 345,802 $ 31,080
Furniture and fixtures 249,186 176,674
Leasehold improvements 92,226 87,022
Vehicles 104,562 42,586
--------- ---------
Total cost 791,776 337,362
Less: Accumulated depreciation (348,879) (82,579)
--------- ---------

Property and equipment, net $ 442,897 $ 254,783
========= =========

Depreciation expense for the years ended December 31, 1999 and 1998 was
approximately $110,200 and $34,956, respectively.

NOTE 3 -CREDIT AGREEMENTS

LINES OF CREDIT

The Company maintains several lines of credit with different financial
institutions. Interest rates vary, and include prime, prime plus 3%, and a flat
11% per annum. As of December 31, 1999 and 1998, the total amounts outstanding
under these lines of credit was approximately $366,000 and $50,000,
respectively.

F-11
<PAGE> 32

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 3 -CREDIT AGREEMENTS (continued)

MORTGAGE WAREHOUSE AGREEMENTS

The Company maintains two mortgage warehouse facilities with separate
financial institutions to assist the Company in originating and closing
mortgages. The Company is liable under these agreements only if defaults occur
during a mortgage closing process. As of December 31, 1999, there was
approximately $2,639,000 outstanding under one facility and the second facility
was unused. There were no amounts owed under this agreement as of December 31,
1998. Interest paid during 1999 and 1998 for borrowings under these two
facilities totaled approximately $121,900 and $16,094, respectively.

NOTE 4 - CAPITAL LEASE OBLIGATIONS AND LONG-TERM DEBT

In 1999, the Company acquired certain office equipment under the
provisions of various long-term leases and has capitalized the minimum lease
payments. The leases have terms from three to four years and are due to expire
at various times through 2002 and 2003. As of December 31, 1999, the leased
property has a recorded cost of $112,556 and is being depreciated along with
other property and equipment (see Note 2).

Future minimum lease payments under the capital lease and the net
present value of these future minimum lease payments subsequent to December 31,
1999 are as follows:

Future minimum lease payments $ 127,046
Less: Amount representing interest (45,278)
---------
Present value of minimum lease payments 81,768
Less: Current portion (24,934)
---------
Long-term capital lease obligation $ 56,834
=========

Future minimum lease payments subsequent to December 31, 1999 are as
follows: $24,934 in 2000, $24,176 in 2001, $15,158 in 2002, and $17,500 in 2003.

As of December 31, 1998 long-term debt consisted of installment notes
for the Company's vehicles. The current portion of this long-term debt was 5,798
and the balance was $13,287.

NOTE 5 - LONG-TERM DEBT, CONVERTIBLE DEBENTURES

On May 6, 1999, the Company entered into a Securities Purchase
Agreement, pursuant to which the Company issued $2,500,000 of 3% convertible
debentures, which are due May 6, 2002, and common stock purchase warrants for
34,383 shares at $8.70 per share, which expire May 31, 2004. The Securities
Purchase Agreement, among other terms, allows the Company to require the buyer
to purchase additional convertible debentures up to $7,500,000, as long as
AMSE's stock price remains above $5.75 per share. The holder of the convertible
debentures may take the interest in either cash or common stock of the Company.
The debentures are convertible into common stock at the option of the holder.
The conversion price is the lower of (a) $8.70 per share, or (b) 85% of the
average closing bid price for the Company's common stock for any five of the
past 20 trading days ending immediately before the conversion. At the time the
Company entered into this agreement, the debentures were available for
conversion at $6.16 per share. Under the accounting rule known as Emerging
Issues Task Force (EITF) Topic D-60, this beneficial conversion feature
increases the effective interest rate of the debenture, and as a result,
$441,176 has been charged to interest expense. In connection with the placement
of this convertible debenture, the Company issued 185,548 shares of common stock
and paid approximately $268,800 in fees to consultants and placement agents,
which resulted in additional costs recognized of approximately $1,491,600.

F-12
<PAGE> 33

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 5 - CONVERTIBLE DEBENTURES (continued)

In October 1999, the debenture holder converted $750,000 of the
principal of the debenture into 152,260 shares of the Company's common stock.
Interest expense associated with the conversion was approximately $1,300 and was
paid by the issuance of shares of common stock.

In October 1999, the Company accrued a $45,000 penalty due to the
debenture holder. Such penalty was the result of the Company not filing an
active registration statement within 120 days of the debenture issue date per
the terms of the Securities Purchase Agreement dated May 6, 1999. This amount is
included in accounts payable at December 31, 1999, and it was paid in January
2000 by the issuance of 21,019 shares of common stock.

Subsequent to December 31, 1999 an additional $613,995 of the principal
of the debenture was converted by the debenture holder into 372,223 shares of
Company common stock.

NOTE 6 - INCOME TAXES

A summary of income taxes for the years ended December 31, are as
follows:

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Currently payable:
Federal $ -- $ --
State -- --
Deferred tax benefit 1,220,180 112,220
----------- -----------
Income tax benefit 1,220,180 112,220
Valuation allowance (1,220,180) (112,220)
----------- -----------
Net income tax provision $ -- $ --
=========== ===========

</TABLE>

Temporary differences between the financial statement carrying amounts
and tax bases of assets and liabilities that give rise to net deferred income
tax assets at December 31, 1999 and 1998 relate to the following:

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Net operating loss carryforward $ 1,030,740 $ 111,040
Restricted stock awards 19,900 3,620
Financing costs 284,200 --
Valuation allowance (1,334,840) (114,660)
----------- -----------
Net deferred income tax asset $ -- $ --
=========== ===========

</TABLE>

There are no significant deferred tax liabilities. The Company has used
a combined estimated federal and state tax rate of approximately 35% for all
deferred tax computations. The tax benefit prior to the allowance differs from
the Federal statutory rate of 34% because of non-deductible expenses (primarily
resulting from the goodwill amortization and impairment charges) and the effect
of state income taxes.

The Company has recorded a valuation allowance in accordance with the
provisions of SFAS No. 109 to reflect the estimated amount of deferred tax
assets that may not be realized. In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation future
taxable income during the periods in which temporary differences and/or
carryforward losses become deductible.

F-13
<PAGE> 34

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 6 - INCOME TAXES (continued)

The Company has available tax net operating loss carryovers ("NOLs") as
of December 31, 1999 of approximately $2,940,000. The NOLs will begin to expire
in the year 2012. Certain provisions of the tax law may limit the net operating
loss carryforwards available for use in any given year in the event of a
significant change in ownership interest. There have already been significant
changes in stock ownership; however, management believes that an ownership
change has not yet occurred which would cause the net operating loss carryover
to be significantly limited.

NOTE 7 - RELATED PARTY TRANSACTIONS

NOTES RECEIVABLE

Two shareholders of the Company (the former owners of Capital Funding)
each owe the Company $50,000 under promissory notes dated December 31, 1997.
These notes bear interest at 6% per annum and the interest is payable annually
on December 31st. These notes are due on January 1, 2004. The interest due at
December 31, 1998 and 1999 has not been paid. The total of principal and
interest is $112,000 at December 31, 1999 and $106,000 at December 31, 1998. The
fair value of these notes is not subject to reasonable estimation due to their
related party nature.

FEES FOR SERVICE

A shareholder of AMSE formerly acted as financial advisor to the
Company. In connection with his services, the shareholder received fees
consisting of $250,000 in cash and 170,600 shares of common stock which were
issued pursuant to the placement of the convertible debentures (see Note 5). The
shareholder also received fees consisting of $74,000 in cash and 16,000 shares
of common stock were issued pursuant to the acquisition of Capital Funding, and
$93,000 in cash pursuant to the acquisition of Jupiter. As of December 31, 1999,
an additional $25,000 has been accrued to this shareholder pursuant to the
Jupiter acquisition. During 1998 this shareholder received fees consisting of
cash of $60,000 and 66,667 shares of restricted AMSE stock [which were issued
pursuant to the Dow acquisition (see Note 8)].

OTHER

During 1999, the Company's president purchased a vehicle for $5,000,
which was approximately net book value at the time of sale. At December 31,
1999, the Company's president owed the Company approximately $20,700 (including
accrued interest) under notes bearing interest at 5%. At December 31, 1998, the
Company's President owed the Company $22,500 under notes bearing interest at 5%.
The note outstanding at December 31, 1998 was repaid on January 28, 1999.

A shareholder received fees for services during 1999 consisting of
5,200 shares valued at $17,550 for investment services.

NOTE 8 - ACQUISITION ACTIVITIES

DOW GUARANTEE

The acquisition of Dow was completed on July 31, 1998 and was accounted
for as a purchase. Identified tangible assets and liabilities were recorded at
their estimated fair market values and the excess of the total cost over the net
fair values of identified assets and liabilities was recorded as goodwill. The
purchase price for these assets totaled $3,782,757, with 550,000 shares of
common stock of the Company being issued to the sellers (valued at $3,437,500),
costs of $171,111 (including 66,667 shares issued to the Company's investment
banker), and assumed liabilities of $174,146. The cost of the acquisition was
allocated to tangible assets and goodwill totaling $363,303 and $3,419,454,
respectively. As a result, Dow became a wholly owned subsidiary of AMSE on this
date. The financial statements of the Company include the operating results of
the acquired entity since the date of acquisition. The acquisition agreement
with Dow also contains an agreement value guarantee; see Note 9.

CAPITAL FUNDING

On January 29, 1999, AMSE completed the acquisition of Capital Funding
in a tax-free stock exchange. Management of AMSE placed a value of $1,551,648 on
the 221,664 shares of common stock issued to the shareholders of Capital
Funding, a valuation that was based on the common stock's trading level during
the time the acquisition was completed. In addition to the shares of stock
issued AMSE also paid $300,000 in cash to the sellers, incurred costs of
approximately $163,800 (including 16,000 shares issued to AMSE's investment

F-14
<PAGE> 35

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 8 - ACQUISITION ACTIVITIES (continued)

banker) and assumed liabilities of approximately $120,000. The cost of the
acquisition was allocated to the assets using the purchase accounting method
approximately as follows:

Depreciable tangible property and equipment $ 78,000
Receivables and other current assets, net 108,500
Other assets 67,000
Total liabilities (160,000)
Goodwill 1,922,000
-----------
Total $ 2,015,500
===========

As a result, Capital Funding became a wholly owned subsidiary of AMSE
on this date. The financial statements of the Company include the operating
results of the acquired entity since the date of acquisition. The acquisition
agreement with Capital Funding also contains an aggregate value guarantee; see
Note 9.

JUPITER

On August 18, 1999, AMSE completed the acquisition of Jupiter in a
tax-free stock exchange. Management of AMSE placed a value of $2,500,000 on the
360,750 shares of common stock issued to the shareholders of Jupiter, a
valuation that was based on the common stock's trading level during the time the
acquisition was completed. In addition to the shares of stock issued AMSE also
paid $500,000 in cash to the sellers, incurred costs of approximately $151,300
and assumed liabilities of approximately $349,300. The cost of the acquisition
was allocated to the assets using the purchase accounting method approximately
as follows:

Depreciable tangible property and equipment $ 125,100
Receivables and other current assets, net 82,790
Other assets 12,000
Total liabilities (349,300)
Goodwill 3,280,710
-----------
Total $ 3,151,300
===========

As a result, Jupiter became a wholly owned subsidiary of AMSE on this
date. The financial statements of the Company include the operating results of
the acquired entity since the date of acquisition. The acquisition agreement
with Jupiter also contains an aggregate value guarantee; see Note 9.

MERGER OF CAPITAL FUNDING INTO JUPITER

On September 30, 1999, AMSE, pursuant to a merger agreement,
transferred its ownership interest in Capital Funding to Jupiter and Jupiter
became the sole surviving entity. Since no change in the ultimate ownership of
the merged entities occurred, this transfer was recorded at historical cost in a
manner similar to a pooling of interests.

OTHER ACTIVITIES

On October 8, 1999, the Company entered into a stock purchase agreement
with Senior Income Reverse Mortgage Corporation ("Senior Income") under which
AMSE will purchase all of the issued and outstanding shares of capital stock of
Senior Income. As of March 31, 2000, the closing of this transaction is pending.

F-15
<PAGE> 36

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 8 - ACQUISITION ACTIVITIES (continued)

OTHER ACTIVITIES (continued)

On February 3, 2000, the Company entered into a stock purchase
agreement with Pinnacle Financial Corporation ("Pinnacle") under which AMSE will
purchase all of the issued and outstanding shares of capital stock of Pinnacle.
As of March 31, 2000, the closing of this transaction is pending and this
agreement has expired on March 31, 2000. An extension to June 30, 2000 has been
proposed.

PRO FORMA FINANCIAL INFORMATION

The following pro forma summary presents the results of operations as
if the Capital Funding and Jupiter acquisitions had occurred at January 1, 1999,
after giving effect to certain adjustments, including amortization of goodwill.
These pro forma results have been prepared for illustrative purposes only and do
not purport to be indicative of what would have occurred had the acquisitions
been made as of those dates, or results of which may occur in the future.

<TABLE>
<CAPTION>
1999 Consolidated 1998 Consolidated
Pro forma (12 months) Pro forma (12 months)
AMSE, Capital Funding, and Jupiter AMSE, Dow, Capital Funding and Jupiter
---------------------------------- --------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Revenues $ 6,554,000 $ 7,460,904
Goodwill and impairment charges (3,626,000) (431,098)
Other expenses (10,535,000) (7,508,040)
----------- -----------
Loss from operations (7,607,000) (478,234)
Interest expense, net (519,000) (22,877)
----------- -----------
Net loss $(8,126,000) $ (501,111)
=========== ===========
</TABLE>

NOTE 9 - STOCKHOLDERS' EQUITY

COMMON STOCK

The Company has authorized 25,000,000 shares of $0.001 par value Common
Stock (the "Common Stock"). The holders of the Common Stock are entitled to one
vote per share and have non-cumulative voting rights. The holders are also
entitled to receive dividends when, as, and if declared by the Board of
Directors. Additionally, the holders of the Common Stock do not have any
preemptive right to subscribe for, or purchase, any shares of any class of
stock.

PREFERRED STOCK

On March 23, 1999, the Company amended its Articles of Incorporation to
authorize up to 10,000,000 shares of $0.001 par value Preferred Stock (the
"Preferred Stock"). The shares of Preferred Stock may be issued from time to
time in one or more series. The Board of Directors is authorized to fix the
number of shares in each series, the designation thereof and the related rights,
preferences and limitations of each series. Specifically the Board of Directors
is authorized to fix with respect to each series (a) the dividend rate; (b)
redeemable features, if any; (c) rights upon liquidation; (d) whether or not the
shares of such series shall be subject to a purchase, retirement or sinking fund
provision; (e) whether or not the shares of such series shall be convertible
into or exchangeable for shares of any other class and, if so, the rate of
conversion or exchange; (f) restrictions, if any, upon the payment of dividends
on common stock; (g) restrictions, if any, upon the creation of indebtedness;
(h) voting powers, if any, of the shares of each series; and (i) such other
rights, preferences and limitations as shall not be inconsistent with the laws
of the State of Florida. As of March 31, 2000, no preferred stock has been
issued.

F-16
<PAGE> 37

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 9 - STOCKHOLDERS' EQUITY (continued)

RECONCILIATION OF SHARES ISSUED

During 1998, the Company issued 1,531,867 shares of its common stock.
During 1998 certain accredited investors purchased 140,800 shares for $231,500
in cash (before expenses) and 66,667 shares were issued to the Company's
investment banker pursuant to the Dow acquisition, in which 550,000 shares were
issued to the sellers. There were 700,000 common stock purchase warrants issued
pursuant to the Company's private placement in 1997 and each of these were
exchanged during 1998. The warrants were exchanged in 1998 with proceeds to the
Company, before expenses, of $700,000. Also during 1998 a total 74,400
restricted shares of the Company's common stock were granted to certain
employees. The market value of shares issued was $74,400. This amount was
recorded as unearned compensation - restricted stock and is shown as a separate
component of stockholders equity.

During 1999, the Company issued 1,791,395 shares of common stock. The
issuance and the effect on certain capital accounts are as follows:

<TABLE>
<CAPTION>
Additional
Number $0.001 Paid-in
of Shares Price Par Value Capital Total
----------- ----- ------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balances as of December 31, 1998 5,898,867 $ 5,899 $ 4,584,932 $ 4,590,831
----------- ------- ----------- -----------
Unrestricted stock:
Issued for services 16,000 2.50 16 39,984 40,000
Issued for cash 234,000 1.00 234 233,766 234,000
Issued for cash 50,000 1.00 50 49,950 50,000
----------- ------- ----------- -----------
Total unrestricted stock 300,000 300 323,700 324,000
----------- ------- ----------- -----------
Restricted stock:
Acquisition of Capital Funding 221,664 7.00 222 1,551,426 1,551,648
Conversion of debentures 52,940 4.611 53 244,052 244,105
Conversion of debentures 52,966 4.610 53 244,120 244,173
Conversion of debentures 46,354 5.675 46 263,012 263,058
Awards to employees 151,300 1.00 151 151,149 151,300
Debenture fees 185,500 6.53 185 1,211,443 1,211,628
Acquisition of Jupiter 360,750 6.93 361 2,499,639 2,500,000
Issued for cash 160,900 1.00 161 160,739 160,900
Issued for cash 77,000 2.00 77 153,923 154,000
Issued for cash 176,821 3.375 177 596,590 596,767
Issued for services 5,200 3.375 5 17,545 17,550
----------- ------- ----------- -----------
Total restricted stock 1,491,395 1,491 7,093,638 7,095,129
----------- ------- ----------- -----------
Total shares issued in 1999 1,791,395 1,791 7,417,338 7,419,129
----------- ------- ----------- -----------

Other increases to additional
paid-in capital -- 496,283 496,283
------- ----------- -----------
Balances as of December 31, 1999 7,690,262 $ 7,690 $ 12,498,553 $ 12,506,243
=========== ========= ============ ============

</TABLE>

CONTINGENT STOCK ISSUES

DOW GUARANTEE

In conjunction with the acquisition of Dow in July 1998, the Company
agreed to an aggregate value guarantee for the 550,000 shares of the Company's
common stock issued in that transaction. If, at such time a registration
statement has been declared effective by the U.S. Securities and Exchange
Commission (the initial measurement date) and the value of the shares at that
date is not at least $2,750,000, then the Company shall issue additional shares
of its common stock so that the total shares received by the former Dow
shareholders multiplied by the then fair market value (as defined) equals
$2,750,000. There is also an additional measurement date if an underwriter of a
public offering of the Company's stock imposes a lock-up on the stock issued to
the former Dow shareholders; this date is one year after the expiration of the
lock-up period, and the adjustment formula is similar to the initial formula. As
of March 31, 2000, no shares are due to the former shareholders of Dow, as the
event to trigger the initial measurement date has not occurred.

F-17
<PAGE> 38

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 9 - STOCKHOLDERS' EQUITY (continued)

CAPITAL FUNDING

In conjunction with the acquisition of Capital Funding on January 29,
1999, the Company agreed to an aggregate value guarantee for the 221,664 shares
of the Company's common stock issued in that transaction. If the value of the
shares issued in the acquisition are not at least $6.42 per share on January 29,
2000, the Company must issue additional shares so that the total shares received
multiplied by the then market value (as defined) equals this guaranteed amount.
As of January 29, 2000, the first year anniversary of this transaction the value
of the shares issued in the acquisition were less than $6.42 per share. The
maximum shares issuable pursuant to this provision, as of the January 29, 2000
measurement date, is 489,878 shares. The Company is currently in negotiations
with the former Capital Funding shareholders regarding this matter and others,
and as of March 31, 2000, a final resolution has not been made.

JUPITER MORTGAGE

In conjunction with the acquisition of Jupiter on August 18, 1999, the
Company agreed to an aggregate value guarantee for the 360,750 shares of the
Company's common stock issued in that transaction. If the value of the shares
issued in the acquisition are not at least $7.00 per share at the first
anniversary of the transaction, i.e. August 2000, the Company must issue
additional shares so that the total shares received multiplied by the then
market value (as defined) equals this guaranteed amount. As of March 31, 2000,
no shares are due to the former shareholders of Jupiter, as the anniversary date
has not occurred.

VISTRA GROWTH PARTNERS, INC.

In February 2000, AMSE entered into a termination agreement with its
former financial advisor, Vistra Growth Partners, Inc; and Louis Weltman. The
number of shares potentially to be issued was determined based on Vistra's
efforts and services prior to the termination and were to be earned upon the
closing of certain open matters. Management believes that it is probable that
some or all of these shares may not be issued. If all the events as defined in
the termination agreement were to be concluded as contemplated and the former
financial advisor were to comply with other material aspects of the agreement
the Company could issue up to 1,092,857 shares. All such shares would be
restricted and subject to conditions regarding voting rights and re-sale. Since
February 2000 certain of the trigger events have undergone changes in both
structure and certainty. Therefore, management now believes that the number of
shares ultimately issued could be substantially less than named in the document.

STOCK PURCHASE AGREEMENT, DEBENTURES, AND WARRANTS

As described in Note 5, the Company entered into a Securities Purchase
Agreement, pursuant to which the Company issued $2,500,000 of 3% convertible
debentures, which are due on May 6, 2002, and common stock purchase warrants for
34,383 shares at $8.70 per share, which expire on May 31, 2004. Warrants were
also issued to placement agents involved in this transaction in the aggregate of
17,241 warrants with an exercise price of $8.70 and an expiration date of May
31, 2004. The Securities Purchase Agreement, among other terms, allows the
Company to require the buyer to purchase additional convertible debentures up to
$7,500,000, as long as AMSE's stock price remains above $ 5.75 per share. The
holder of the debentures may take the interest in either cash or Company common
stock. The debentures are convertible into common stock at the option of the
holder. The conversion price is the lower of (a) $8.70 per share, or (b) 85% of
the average closing bid price for the common stock for five of the past 20
trading days ending immediately before the conversion. In connection with the
placement of this convertible debenture, the Company issued 185,548 shares of
common stock and paid $268,800 in fees to consultants and placement agents,
which resulted in additional costs recognized of approximately $1,491,600.

F-18
<PAGE> 39

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 9 - STOCKHOLDERS' EQUITY (continued)

Subsequent to December 31, 1999, an additional $613,995 of the
principal of the debenture was converted by the debenture holder into 372,223
shares of the Company common stock.

RESTRICTED STOCK AWARDS

During 1999, a total of 151,300 restricted shares of the Company's
common stock were granted to certain employees with a market value of $151,300.
This amount was recorded as unearned compensation, restricted stock and is shown
as a separate component of stockholders' equity. Unearned compensation is being
amortized to expense over the three-year vesting period and, net of forfeitures,
amounted to $46,486 in 1999.

STOCK OPTION PLAN

On March 15, 1999, the shareholders of the Company approved the
adoption of a stock option plan. The plan calls for a maximum of 2,000,000
incentive stock options and 500,000 non-qualified stock options to be issued, at
the discretion of the Board of Directors, over the next ten years. As of March
31, 2000, no options have been granted.

Terms of the options, when issued, are as follows: (a) for
non-qualified options, the term of the option may not exceed ten years, the
options may be granted to any eligible person with the remaining terms to be
determined by the designated Board Committee; and (b) for incentive options, the
term of the option may not exceed ten years, the exercise price may not be less
than the fair market value of the optioned share on the date of grant, the
option may contain vesting provisions, and the option may contain other terms to
be determined by the designated Board Committee.

When options are granted under this plan, the Company will account for
such options under SFAS No. 123 which requires entities that account for awards
of stock-based compensation to employees in accordance with APB 25 to present
pro forma disclosures of results of operations and earnings per share. This pro
forma disclosure presents the results of operations as if compensation cost was
measured at the date of grant based on the fair value of the award. The fair
value for options will be estimated, at the date of grant, using a Black-Scholes
option pricing model. The Black-Scholes option pricing model uses the following
weighted-average assumptions, (a) a risk-free interest rate, (b) a dividend
yield, (c) a volatility factor of the expected market price of the Company's
common stock and (d) the weighted-average expected life of the options. The
Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases office space in various locations as well as certain
office equipment and a vehicle. Future minimum lease payments subsequent to
December 31, 1999 under these operating leases are as follows: $329,632 in 2000,
$286,991 in 2001, $179,112 in 2002, $138,026 in 2003 and $92,004 in 2004. Rent
expense for the years ended December 31, 1999 and 1998 $415,224 and $60,841,
respectively.

F-19
<PAGE> 40

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 10 - COMMITMENTS AND CONTINGENCIES (continued)

LITIGATION

From time to time, the Company is exposed to claims, regulatory, and
legal actions in the normal course of business, some of which are initiated by
the Company. At December 31, 1999, management believes that any such outstanding
issues will be resolved without significantly impairing the financial condition
of the Company.

In December 1998, the Company advanced $250,000 to a then potential
acquisition target pursuant to a promissory note. The note is secured by 263,445
unrestricted and 2,148,500 restricted shares of the target's stock, which have
an aggregate value of approximately $361,000 at December 31, 1999. The note is
non-interest bearing and presently has no due date. The Company has commenced
litigation to collect the note. This note is recorded as other assets on the
accompanying balance sheet at December 31, 1999 and 1998.

PRIVATE PLACEMENT OFFERING

On October 8, 1999, the Company engaged a placement agent in connection
with a private placement offering of up to $50 million of debt and equity
securities (the "Offering"). For the year ended December 31, 1999 the Company
has expended approximately $40,000 in connection with the Offering. The terms of
Offering are as follows: (a) a placement fee equal to 10% of the gross capital
raised, (b) warrants to purchase up to 10% of the number of shares or securities
sold with an exercise price equal to 120% of the price paid by investors, (c)
payment of miscellaneous expenses equal to 2% of the Offering amount and (d) a
termination fee equal to $100,000 if the Company terminates the agreement within
six months from the above date. If the Offering is not completed within the
first six month period the agreement will automatically renew for a successive
period of six months unless either party terminates the agreement.

NOTE 11 - NET LOSS PER COMMON SHARE

For the years ended December 31, 1999 and 1998, basic and diluted
weighted average common shares include only common shares outstanding. The
inclusion of common share equivalents would be anti-dilutive and, as such, they
are not included. However, the common stock equivalents, if converted, would
have increased common shares outstanding at December 31, 1999 by 869,123
shares. There were no common stock equivalents at December 31, 1998.

A reconciliation of the number of common shares shown as outstanding in
the consolidated financial statements with the number of shares used in the
computation of weighted average common shares outstanding is shown below:

<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Common shares outstanding at December 31, 1999 and 1998 7,690,262 5,898,867
Effect of weighting (781,017) (1,049,620)
---------- ----------
Weighted average common shares outstanding 6,909,245 4,849,247
========== ==========

</TABLE>

F-20
<PAGE> 41

AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED PROFORMA STATEMENTS OF OPERATIONS INCLUDING JUPITER
FOR THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
1/01/99 to 1/01/99 to
Historic 1/31/99 8/18/99 Proforma
AMSE CFSF Jupiter Adjustments Consolidated
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues: $ 4,723,697 $ 58,469 $ 1,771,773 $ 6,553,939

Expenses:
Payroll and related expenses 4,024,889 58,089 1,103,902 5,186,880
Administrative, processing,
and occupancy 2,996,515 37,191 822,308 3,856,014
Debenture Financing Costs 1,491,628 -- -- 1,491,628
Impairment charges 3,259,311 -- 3,259,311
Goodwill amortization 194,163 -- -- 172,047 (a) 366,210
------------ ------------ ------------ ------------ ------------
TOTAL EXPENSES 11,966,506 95,280 1,926,210 172,047 14,160,043
------------ ------------ ------------ ------------ ------------
PROFIT (LOSS) FROM OPERATIONS (7,242,809) (36,811) (154,437) (172,047) (7,606,104)
------------ ------------ ------------ ------------ ------------
Interest Expense (Net) 519,031 -- -- 519,013
------------

PROFIT (LOSS) BEFORE INCOME TAXES (7,761,840) (36,811) (154,437) (172,047) (8,125,135)

PROVISION FOR INCOME TAXES -- -- -- --
------------ ------------ ------------ ------------ ------------
NET PROFIT (LOSS) $ (7,761,840) (36,811) $ (154,437) (172,047) $ (8,125,135)
============ ============ ============ ============ ============

</TABLE>

(a) To annualize goodwill as if this acquisition took place on January 1, 1999.

P-1

<PAGE> 42

AMERICA'S SENIOR FINANCIAL SERVICES,INC. AND SUBSIDIARIES
CONSOLIDATED UNAUDITED PROFORMA BALANCE SHEET AT DECEMBER 31, 1998

<TABLE>
<CAPTION>
Proforma
AMSE CFSF Jupiter Adjustments Consolidated
----------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $ 195,728 $ 23,543 $ 214,835 $ 434,106
Brokerage fee's receivable 49,853 45,828 67,714 163,395
Notes & Other Receivable 22,618 106,000 128,618
Employee advances 70,528 -- 7,628 78,156
Prepaid expenses 46,699 -- 889 47,588
Property and equipment, net 254,783 79,983 66,865 401,631
Other Assets 319,940 67,739 11,334 (319,940)a 79,073
Goodwill, Net 3,348,215 -- 4,763,398 a 8,111,613
----------- --------- --------- ----------- -----------
Total Assets $ 4,308,364 $ 323,093 $ 369,265 $ 9,444,180

Liabilities:
Current portion of long-term debt $ 5,798 $ 110,454 $ 93,609 $ 209,861
Accounts payable and accrued expenses 173,904 60,909 4,452 143,871 383,136
Commission payable 49,054 17,873 -- 66,927
Income taxes payable -- -- -- --
Long-Term debt, less current portion 13,287 -- -- 13,287
----------- --------- --------- ----------- -----------
Total Liabilities 242,043 189,236 98,061 673,211

Stockholders' Equity:
Common Stock 5,899 2,000 1,000 599 a 9,498
Additional paid-in capital 4,584,932 59,369 124,106 4,517,574 a 9,285,981
Retained earnings (58,177) (46,318) 28,650 17,668 a (58,177)
Income YTD (399,266) 118,806 117,448 (236,254)a (399,266)
Unearned Compensation - restricted stock (67,067) -- -- (67,067)
----------- --------- --------- ----------- -----------
Total stockholders' equity 4,066,321 133,857 271,204 8,770,969
----------- --------- --------- ----------- -----------
Total liabilities and stockholders'
equity $ 4,308,364 $ 323,093 $ 369,265 $ 9,444,180
=========== ========= ========= =========== ===========

</TABLE>

a- To record estimated purchase accounting entry as if the Capital & Jupiter
acquisition took place on December 31, 1998.

P-2

<PAGE> 43

AMERICA'S SENIOR FINANCIAL SERVICES,INC. AND SUBSIDIARIES
PROFORMA CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS AT DECEMBER 31, 1998

<TABLE>
<CAPTION>
1998 01/01/98 to 1998 1998
Historic 7/31/98 Historic Historic Proforma
AMSE DOW CFSF Jupiter Adjustments Consolidated
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>

Revenues: $ 1,797,632 $ 1,490,249 $ 1,426,919 $ 2,746,104 $ 7,460,904
----------- ----------- ----------- ----------- ----------- -----------
Expenses:
Payroll and related expenses 1,335,488 822,372 826,415 1,632,728 4,617,003
Administrative, processing,
and occupancy 722,828 630,023 476,956 995,928 2,825,735
Acquisition costs 14,969 -- -- -- 14,969
Employee recruitment 50,333 -- -- -- 50,333
Goodwill amortization 71,239 -- -- -- 359,859 (a) 431,098
----------- ----------- ----------- ----------- ----------- -----------

TOTAL EXPENSES 2,194,857 1,452,395 1,303,371 2,628,656 359,859 7,939,138
----------- ----------- ----------- ----------- ----------- -----------

PROFIT (LOSS) FROM OPERATIONS (397,225) 37,854 123,548 117,448 (359,859) (478,234)
----------- ----------- ----------- ----------- ----------- -----------

INTEREST EXPENSE (NET) 2,041 16,094 4,742 -- 22,877
----------- ----------- ----------- ----------- ----------- -----------

PROFIT (LOSS) BEFORE INCOME TAXES (399,266) 21,760 118,806 117,448 (359,859) (501,111)

PROVISION FOR INCOME TAXES -- -- -- -- 0
----------- ----------- ----------- ----------- ----------- -----------
NET PROFIT (LOSS) $ (399,266) $ 21,760 $ 118,806 $ 117,448 $ (359,859) $ (501,111)
=========== =========== =========== =========== =========== ===========

</TABLE>

(a) To annualize goodwill as if these acquisition's took place on
January 1, 1998.

P-3

<PAGE> 1
Exhibit 22

AMERICA'S SENIOR FINANCIAL SERVICES, INC.
LIST OF SUBSIDIARIES AS OF DECEMBER 31, 1999

AMERICA'S SENIOR FINANCIAL SERVICES, INC.
Incorporated in Florida

Subsidiaries:

DOW GUARANTEE CORP.
Incorporated in Florida

JUPITER MORTGAGE CORP.
Incorporated in Florida

<ARTICLE> 5

<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 DEC-31-1999
<CASH> 195,728 402,373
<SECURITIES> 0 0
<RECEIVABLES> 142,999 411,052
<ALLOWANCES> 0 0
<INVENTORY> 0 2,389,162
<CURRENT-ASSETS> 385,426 3,331,740
<PP&E> 337,362 791,776
<DEPRECIATION> (82,579) (348,879)
<TOTAL-ASSETS> 4,308,364 9,795,014
<CURRENT-LIABILITIES> 228,756 3,873,101
<BONDS> 0 1,750,000
0 0
0 0
<COMMON> 5,899 7,690
<OTHER-SE> 4,060,422 4,107,389
<TOTAL-LIABILITY-AND-EQUITY> 4,308,364 9,795,014
<SALES> 0 0
<TOTAL-REVENUES> 1,797,632 4,723,697
<CGS> 0 0
<TOTAL-COSTS> 2,179,888 11,966,506
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,041 519,031
<INCOME-PRETAX> (399,266) (7,761,840)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (399,266) (7,761,840)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (399,266) (7,761,840)
<EPS-BASIC> (.082) (1.123)
<EPS-DILUTED> (.082) (1.123)

</TABLE>