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

FORM 10-Q

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

For the quarterly period ended November 30, 2003

Commission file number: 000-31667

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( )

As of the close of business on January 14, 2004, 1,775,053 shares of the issuer's classes of common stock, par value of $.001 per share, were outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MFC DEVELOPMENT CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these financial statements.

MFC DEVELOPMENT CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these financial statements.

MFC DEVELOPMENT CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

The accompanying notes are an integral part of these financial statements.

MFC DEVELOPMENT CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

The accompanying notes are an integral part of these financial statements.

MFC DEVELOPMENT CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

The accompanying notes are an integral part of these financial statements.

MFC DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information in response to the requirements of Article 10 of Regulation S-X. Accordingly they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring items) necessary to present fairly the financial position as of November 30, 2003; results of operations for the nine months and three months ended November 30, 2003 and 2002; cash flows for the nine months ended November 30, 2003 and 2002; and changes in stockholders' equity for the nine months ended November 30, 2003. For further information, refer to the Company's financial statements and notes thereto included in the Company's Form 10-K for the year ended February 28, 2003. The consolidated balance sheet at February 28, 2003 was derived from the audited financial statements as of that date. Results of operations for interim periods are not necessarily indicative of annual results of operations.

Certain prior year amounts were reclassified to conform with the current year presentation.

2. Business Activities of the Company

The Company operates in two distinct industries consisting of real estate and medical financing. The real estate business is conducted by the Company through various subsidiaries. It owns real estate in New York, which is currently held for development or sale, and holds a mortgage on a real estate parcel in Connecticut.

The medical financing business is conducted through (i) Medical Financial Corp., which purchases insurance claims receivable from medical practices and provides certain services to those practices; and (ii) three other subsidiaries which were formed to provide additional management services to certain medical practices.

3. Property and Equipment

Property and equipment consists of the following:

As of November 30, 2003 and February 28, 2003, accumulated amortization of equipment under capital leases was $160,619 and $123,804.

4. Finance and Management Fee Receivables, Net

Net finance and management fee receivables consist of the following:

Due to finance customers represents the amount of the unpaid receivables less the advance payment and fee that the Company charges. The Company is liable for this amount only if (i) it is collected or (ii) if an insurance carrier suffers a financial inability to pay.

The Company may incur a finance receivable bad debt loss when the portion of a medical claim collected does not exceed the advance (including the fee charged) given to the client. The increase in bad debt expense that occurred during the three months ended November 30, 2003 is based on an increase in adverse arbitration decisions from the hearings that were decided on during the last several months. An increase in the amount of closed arbitration cases has provided management with a larger base of information to better estimate the reserve for bad debts. Management's decision to increase the bad debt reserve was based on the overall decrease in the collections rate from the arbitrations that have been closed in the last few months. Management believes that it will be increasingly more difficult to collect on outstanding receivables, and has initiated a new program that it believes could increase the collections rate. Management has also taken other measures to reduce its bad debts, such as eliminating poorly collecting clients and  reducing the upfront advance percentage that it makes when receivables are purchased. Management will monitor the results of these efforts as to the effect on collection rates, and whether the reserve for bad debts is adequate based on actual collections.

Management service fees are billed monthly according to the cost of services rendered to the client. If the assets of the management client, which is also a finance client, are not enough to satisfy the billed fees, an allowance for billing adjustments is recorded to reduce the Company's net receivables to an amount that is equal to the assets of the client that are available for payment. The Company may incur a medical management bad debt loss when the assets of the management client, which is also a finance client, are potentially insufficient to satisfy the billed fees from prior periods. Since the management clients are also finance clients, the bad debt reserve is a result of the overall decrease in the collections rate from the arbitrations that have been closed in the last few months. The Company increased the bad debt reserve based on the information that it currently has, because it now believes receivables that will be available to pay management fees will be lower. The final bad debt expense will ultimately be determined after all receivables are litigated.

There is approximately $4,457,000 of additional collateral consisting of finance receivables that are past the contractual collection period, and written off, but not yet uncollectible.

Certain of these receivables are collateral for a line of credit (see Note 8).

5. Real Estate Held for Development or Sale

In October 2002, the Company commenced construction at its Hunter, New York property of the renovation of a vacant office building into three townhouse units. A construction loan in the amount of $290,000 was obtained, which is secured by the Hunter property  (see Note 8). The Company is capitalizing interest and loan acquisition costs during the construction period. For the nine months ended November 30, 2003, $12,000 of interest costs were capitalized.

6. Other Real Estate Revenue

The Company's real estate assets currently include property held for development and sale in Hunter, New York and a mortgage and note receivable on property previously sold. The net proceeds of any sales of the Hunter, New York property will be allocated 65% to the Company and 35% to co-investors, after deducting the cost of carrying all of the Hunter properties. Upon payment in full of the Granby mortgage note, co-investors will share in the positive cash flow from the collections of the note, after deducting costs and expenses of carrying and developing the related property.

During the quarter ended May 31, 2003, the Company paid $25,000 in settlement of a dispute with a prior co-investor and the Company reevaluated balances owed to the current co-investors as a result of the current development at the property. Accordingly, amounts payable to all co-investors were adjusted, resulting in a net gain of $175,000.

7. Due to Co-investors

Amounts payable to co-investors on property that has not yet been sold are included in real estate held for development or sale, as reductions to the asset. Amounts payable to co-investors on property that has previously been sold, and is subject to the final collection of a mortgage note receivable, are recorded as liabilities.

8. Notes Payable

Notes payable include the following:

Series A Bonds: In July 2002, the board of directors authorized the Company to issue an aggregate of $750,000 of Series A Bonds ("Bonds") in $25,000 increments to finance additional growth of the medical division. There were $750,000 of Bonds outstanding at November 30, 2003. Each Bond matures eighteen months after the issue date and may be extended for additional six month periods by mutual consent of the Company and the individual bondholders. Interest is payable monthly, and is calculated at a rate of prime plus 3% but not less than 9% per annum nor more than 15% per annum. The rate of interest will be adjusted at the end of each calendar quarter. The rate of interest as of November 30, 2003 was 9%. Monthly interest-only payments are due through maturity. The Bonds may only be prepaid on 120 days prior written notice. The Company, at the option of the bondholders, may be required to prepay on 60 days prior written notice, up to an aggregate of $50,000 per bondholder per 60 day period. The Company may not issue more than $100,000 of Bonds to each bondholder. A director, officer and shareholder of the Company is related to six of the bondholders. Two other directors-shareholders, each hold a $25,000 bond, and they are both related to two other bondholders.

The Bonds are a joint and several obligation of the Company and its subsidiary, Medical Financial Corp. The Bonds are collateralized by insurance claims receivable purchased by Medical Financial Corp., which are not older than six months, equal to at least 333% of the principal sum outstanding under the line.

Series B Bonds: In February 2003, the board of directors authorized the Company to issue an aggregate of $450,000 of Series B Bonds ("Bonds") in $25,000 increments to finance the development of the real estate in Hunter, New York and elsewhere, except for $25,000, which may be used by the Company for the purchase of additional shares of its common stock and $200,000 for working capital. There were $200,000 of Bonds outstanding at November 30, 2003, one of which was held by NWM Capital, LLC., a related party that is owned by an officer, director and shareholder of the Company. Another director, officer and shareholder of the Company is related to two of the bondholders. Each Bond matures eighteen months after the issue date and may be extended for additional six month periods by mutual consent of the Company and the individual bondholders. Interest is payable monthly, and is calculated at a rate of prime plus 3% but not less than 9% per annum nor more than 15% per annum. The rate of interest will be adjusted at the end of each calendar quarter. The rate of interest as of November 30, 2003 was 9%. Monthly interest only payments are due through maturity. The Bonds may only be prepaid on 120 days prior written notice. The Company, at the option of the bondholders, may be required to prepay on 60 days prior written notice, up to an aggregate of $50,000 per bondholder per 60 day period. The Company may not issue more than $100,000 of Bonds to each bondholder.

The Bonds are a joint and several obligation of the Company and its subsidiary, Yolo Equities Corp. The Bonds are collateralized by the mortgage note receivable on the property located in Granby, Connecticut.

Bank Loan - Construction: In October 2002, the Company obtained a $290,000 construction loan to be used for development at its Hunter, New York property. The terms of the loan call for monthly payments of interest through June 1, 2003, at which time it converted into a term loan with monthly payments of principal and interest that will amortize the loan in 15 years. Interest is at a rate of prime plus 1.5% but not less than 6.25% per annum nor more than 14% per annum. The rate of interest and monthly payment will be adjusted once every year beginning on May 1, 2004. The current rate of interest is 6.25%. This loan is secured by the Hunter property and is guaranteed by Lester Tanner, who is a director, shareholder and President of the Company. There were $2,900 of commitment fees paid in connection with this loan.

Bank Loan - Equipment: In September 2002, the Company obtained a $27,000 loan secured by certain existing computer equipment. This loan is for a term of 36 months with monthly payments of $916 for principal and interest at the rate of 14% per annum. There were no commitment fees paid in connection with this loan.

Promissory Note: In November 2002, the Company became obligated under a $75,000 note for a 25% and 33% equity interest in two Limited Liability Companies. The terms of the note call for 12 monthly payments, beginning in January 2003, of $6,455 for principal and interest at the rate of 6% per annum. The note is secured by the Company's membership interest in the two Limited Liability Companies.

Interest expense on related party borrowings for the three months and nine months ended November 30, 2003 and 2002 was $1,313 and $3,569.

Capital Lease Obligations. The Company has acquired certain equipment under various capital leases expiring in 2005. The leases provide for monthly payments of principal and interest of $6,594 and have been capitalized at imputed interest rates of 10.75% to 19.12%.

Aggregate maturities of the amount of notes payable and capital leases at November 30, 2003 are as follows:

9. Income Taxes

The provision for income taxes consist of the following:

The Company has net operating loss ("NOL") carryforwards for Federal purposes of approximately $4,590,000 as of February 28, 2003, the close of its last fiscal tax year. The Company's taxable loss for the nine months ended November 30, 2003 is approximately $319,000. These losses will be available for future years, expiring through February 28, 2022. The Company has taken a 94% valuation allowance against Federal NOL carryforwards due to a prior history of operating tax losses and the uncertainty of generating enough taxable income throughout the carryforward period to utilize the full amount available.

10. Commitments and Contingencies

In the normal course of business, the Company becomes a party to various legal claims, actions and complaints. The Company's management does not expect that the results in any of these legal proceedings will have a material adverse effect on the Company's results of operations, financial position or cash flows.

11. Earnings per Share

Earnings (loss) per common share for each of the periods presented is calculated by dividing net income by weighted average common shares outstanding during the period. The effect of outstanding stock options on earnings per share does not have a material effect in calculation of earnings per share during any of the periods presented.

12. Business Segment Information

Operating segments are managed separately and represent separate business units that offer different products and serve different markets. The Company's reportable segments include: (1) real estate, (2) medical financing, and (3) other. "Other" is comprised of corporate overhead and Capco, which is inactive. The real estate segment operates in New York and Connecticut. The medical financing segment operates in New York.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. All inter-segment balances have been eliminated. Business segment information for the nine months and three months ended November 30, 2003 and 2002 follows:

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

All statements contained herein that are not historical facts, including but not limited to, statements regarding future operations, financial condition and liquidity, expenditures to develop real estate owned by the Company, future borrowing, capital requirements, and the Company's future development plans, are based on current expectations. These statements are forward-looking in nature and involve a number of risks and uncertainties. Actual results may differ materially. Among the factors that could cause actual results to differ materially are the following: changes affecting the business of the Company's medical service organization and medical provider clients, a legislative change in insurance regulations affecting the future purchases of medical receivables, changes in the real estate and financial markets, adverse arbitration or court decisions on collectibility of purchased receivables, environmental action by governments affecting development of real estate, and other risk factors described herein and in the Company's reports filed and to be filed from time to time with the Commission. The discussion and analysis below is based on the Company's unaudited consolidated financial statements for the nine months and three months ended November 30, 2003 and 2002. The following should be read in conjunction with the Management's Discussion and Analysis of results of operations and financial condition included in Form 10-K for the year ended February 28, 2003.

Overview

MFC presently generates revenues from two business segments: real estate and medical. The real estate segment consists of parcels of real estate in Hunter, New York held for future development or sale, in which co-investors also have interests, and of a mortgage note receivable on a property that was previously sold. Revenues in the real estate division vary substantially from period to period depending on when a particular transaction closes and depending on whether the closed transaction is recognized for accounting purposes as a sale, or is reflected as a financing, or is deferred to a future period.

The medical segment consists of three Limited Liability Companies, which act as service organizations for providers of medical services, and a wholly-owned subsidiary, Medical Financial Corp., which purchases medical insurance claims receivable, paying cash to the medical provider in return for a negotiated fee.

Critical Accounting Policies

Management's discussion and analysis of its financial position and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Management believes that the critical accounting policies and areas that require the most significant judgments and estimates to be used in the preparation of the consolidated financial statements are allowance for doubtful accounts and the valuation allowance against its deferred tax asset, and revenue recognition.

Allowance for Doubtful Accounts

Mortgage and note receivable: The Company evaluates the credit positions on its notes receivable and the value of the related collateral on an ongoing basis. The Company estimates that all of its notes receivable are fully collectible and the value of the collateral is in excess of the related receivables. The Company continually evaluates its notes receivable that are past due as to the collectibility of principal and interest. The Company considers the financial condition of the debtor, the outlook of the debtor's industry, decrease in the ratio of collateral values to loans, and any prior write-downs on loans. The above considerations are all used in determining whether the Company should suspend recording interest income on any notes receivable or provide for any loss reserves.

Finance and management receivables: Management's periodic evaluation of the adequacy of the allowance for loan losses is based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the customer's ability to repay, the estimated value of any underlying collateral, the outlook of the debtor's industry, and current economic conditions. When the Company estimates that it may be probable that a specific customer account may be uncollectible, that balance is included in the reserve calculation. Actual results could differ from these estimates under different assumptions.

Deferred tax assets: The Company records a valuation allowance to reduce the carrying value of its deferred tax assets to an amount that is more likely than not to be realized. While the Company has considered future taxable income and prudent and feasible tax planning strategies in assessing the need for the valuation allowance, should the Company determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the valuation allowance would be charged to income in the period in which such determination was made. A reduction in the valuation allowance and corresponding credit to income may be required if the likelihood of realizing existing deferred tax assets were to increase.

Revenue Recognition

Real Estate: The full accrual method is used on the sale of real estate if the profit is determinable, the Company is not obligated to perform significant activities after the sale to earn the profit and there is no continuing involvement with the property. If the buyer's initial and continuing investments are inadequate to demonstrate a commitment to pay for the property, the installment method is used, resulting in the deferral of income. If there is continuing involvement with the property by the Company, the financing method is used.

Purchase and Collection of Medical Insurance Claims Receivables: A fee is charged to medical providers upon the purchase of their accounts receivable by the Company. The fee is for the up-front payment that the Company makes upon purchase of the receivables and for collection services rendered to collect the receivables. This fee income is deferred and recognized over the contractual collection period in proportion to the costs of collection. The deferred fee income is netted against finance receivables. The Company is not entitled to interest on unpaid principal balances.

Medical Management Service Fees: Three subsidiaries provide additional management services to certain medical practices. Management fees are billed to these medical practices monthly in amounts that are proportional to the expenses and services provided by the Company for that month. The accrual method of accounting is used to record all management service fees.

RESULTS OF OPERATIONS

2003 Period Compared to the 2002 Period

The Company's revenues from operations for the three months ended November 30, 2003 ("2003") were $672,000, a decrease of $505,000 or 43% as compared to the three months ended November 30, 2002 ("2002"). The change was a result of decreases in both the medical and real estate divisions. The Company's revenues from operations for the nine months ended November 30, 2003 ("2003") were $2,697,000, a decrease of $593,000 or 18% as compared to the nine months ended November 30, 2002 ("2002"). The net change was a result of a decrease in the medical division, offset by an increase  in the real estate division. The following table summarizes the Company's changes in revenue (in thousands) for the three months and nine months ended November 30, 2003.

The $500,000 and $754,000 decreases in revenues in the medical division for the three month and nine month periods ended in 2003 were due to decreases  both in income from the purchase and collection of medical claims and in management fees. The 37% and 14% decreases in income from the purchase and collection of medical claims of $185,000 and $207,000 in the three month and nine month periods ended in November 2003 were due to decreases in the amount of insurance claims purchased, resulting in a decrease in fees. Income from additional collection services decreased during the three month period due to the Company being less successful in its collection efforts as a result of increased efforts by insurance companies to delay and deny medical bills. The increase in the additional collection services in the nine month period was due to more successful collections during the first two quarters of the fiscal year. These additional services also generate interest income received from insurance companies for delayed payments on improperly denied and delayed receivables. The decrease in earned fees is a result of the Company eliminating poorly collecting clients as a way of continuing its effort to be more selective in the bill purchasing process due to new State insurance department regulations that make collections more difficult.

The decreases in management fees of $315,000 (50%) and $547,000 (32%) for the three months and nine months ended in November 2003, were a result of the decrease in management services that the Company provided to one of the two finance clients it manages. The decrease in management fees from that client is related to a decrease in the size of its medical practice. The Company bills for its services based on the amount of expenses that it incurs on behalf of those practices. If those practices decrease their size, the Company will not incur as much expense, resulting in a decrease in the amount of service fees. These fees are net of billing adjustments. Management service fees are billed monthly according to the cost of services rendered to the client. If the assets of the management client, which is also a finance client, are not enough to satisfy the billed fees, an allowance for billing adjustments is recorded to reduce the Company's net receivables to an amount that is equal to the assets of the client that are available for payment.

Revenue in the real estate division decreased by $5,000, to $42,000, in the three month period and increased by $161,000, to $303,000 in the nine month period. The decrease in the three month period was due to a decrease in interest income from the Granby mortgage. The increase in the nine month period was due to net adjustments to amounts due to co-investors of $175,000, offset by an $15,000 decrease in interest income from the Granby mortgage. During the quarter ended May 31, 2003, the Company paid $25,000 in settlement of a dispute with a prior co-investor and reevaluated the balances owed to the current co-investors as a result of the development at the Hunter property.

The following table summarizes the Company's changes in costs and expenses (in thousands) for the three months and nine months ended November 30, 2003.

The 21% decrease in costs and expenses in the medical division for the three month period was due to a decrease of $218,000 (41%) in expenses that are related to the management of two finance clients' medical practices, offset by an increase of $14,000 (3%) of medical receivable expenses. The $323,000 (12%) decrease for the nine month period was due to a decrease in medical management expenses of $393,000 (28%), offset by an increase of $70,000 (6%) in medical receivable expenses.

The $14,000 increase in medical receivable expenses for the three month period ended in 2003 was primarily due to an increase of $27,000 in the costs of filing arbitrations against insurance companies on denied and unpaid medical bills and an increase of $9,000 in computer related expenses, due to a reduction in the allocation of capitalized costs, offset by a decrease in postage costs of $23,000. The increase of $27,000 in arbitration costs was a result of the increase in the amount of arbitrations that were closed during the three month period ended in 2003 as compared to 2002. the decrease in postage expenses the three month period was due to a less costly method of mailing medical bills and the related packages to the insurance carriers and a decrease in the quantity of mailings due to the reduction in the amount of bills purchased.

The $70,000 increase in medical receivable expenses for the nine month period ended in 2003 was primarily due to an increase of (i) $31,000 in the costs of filing arbitrations against insurance companies on denied and unpaid medical bills, (ii) an increase of $16,000 in computer related expenses, due to a reduction in the allocation of capitalized costs, and  (iii) an increase of $39,000 in employment costs due to increases in health insurance costs, higher payroll taxes and a reallocation of expenses that were previously capitalized, offset by a decrease in postage costs of $47,000.

The $218,000 (41%) decrease in medical management expenses for the three months ended in 2003 was due to a decrease of (i) $241,000 in operating expenses from managing  a radiologist's practice and (ii) a reduction of $33,000 in operating expenses from a former client's office that is now closed, offset by $56,000 in additional operating expenses from managing the same radiologist's practice at a different location that opened in November 2002. A decrease in operating expenses occurs when there is a decrease in a management client's radiology practice. The reduction in operating expenses is related to the reduction in the size of the radiologist's practice. As the size of the radiologist's practice decreases, expenses also decrease.

The $393,000 (28%) decrease in medical management expenses for the nine months ended in 2003 was due to (i) a decrease of $475,000 in operating expenses from managing a radiologist's practice and (ii) a reduction of $110,000 in operating expenses from a former client's office that is now closed, offset by an increase of $192,000 in additional operating expenses  from managing the same radiologist's practice at a different location that opened in November 2002. The reasons for the decrease in operating expenses from a management client's radiology practice for the nine month period are the same as described for the three month period in the immediately preceding paragraph.

The $407,000 increase in bad debt expense for the three month period is due to increases of bad debt reserves of  $139,000 from medical receivables and $268,000 from medical management services. The $409,000 increase in bad debt expense for the nine month period is due to increases of bad debt reserves of  $141,000 from medical receivables and $268,000 from medical management services. The Company may incur a medical receivable bad debt loss when the portion of a medical claim collected does not exceed the advance (including the fee charged) given to the client. The increase in bad debt expense that occurred during the three month period ended in 2003 is based on an increase in adverse arbitration decisions from the hearings that were decided during  the last several months. An increase in the amount of closed arbitration cases has provided management with a larger base of information  to better estimate the reserve for bad debts. Management's decision to increase the bad debt reserve was based on the overall decrease in the collections rate from the arbitrations that have been closed in the last few months. Management believes that it will be increasingly more difficult to collect on outstanding receivables, and has initiated a new program that it believes could increase the collections rate. Management has also taken other measures to reduce its bad debts, such as eliminating poorly collecting clients and  reducing the upfront advance percentage that it pays when receivables are purchased. Management will monitor the results of these efforts as to the effect on collection rates, and whether the reserve for bad debts is adequate based on actual collections.

The Company may incur a medical management bad debt loss when the assets of the management client, which is also a finance client, are potentially insufficient to satisfy the billed fees from prior periods. Since the management clients are also finance clients, the bad debt reserve is a result of the overall decrease in the collections rate from the arbitrations that have been closed in the last few months. The Company increased the bad debt reserve based on the information that it currently has, because it now believes receivables available to pay management fees will be lower. The final bad debt expense will ultimately be determined after all receivables are litigated.

The impairment loss of $54,000 from unconsolidated subsidiaries in both the three month and nine month periods ended in 2003 is a result of management's estimate as to the actual value of the MRI facility that these subsidiaries own and operate.

The net decreases of $5,000 and $13,000 in the real estate division for the three month and nine month periods ended in 2003 were due to an increase in executive salaries, offset by a reallocation of administrative salaries to corporate and other.

The $42,000 (57%) increase in corporate expenses and other for the three month period ended in 2003 was due to (i) an increase of $19,000 in accounting fees due to a billing adjustment for the prior year's annual audit, (ii) an increase of $9,000 in directors' fees due to additional meetings,  (iii) a $6,000 reallocation of administrative salaries from the real estate division, (iv) an increase of $7,000 in executive employment costs, and (v) an increase in other various expenses, offset by a decrease in director and officer liability insurance of $8,000.  The reasons for the $47,000 (19%) increase in corporate expenses and other for the nine month period ended in 2003 were approximately the same as for the three month period.

The increase in depreciation and amortization for the three month period was $18,000 (42%) and the increase for the nine month period was $58,000 (52%). The increase in both periods is attributable to increased capital expenditures in the medical financing division, continuing the Company's trend of relying on technology to perform formerly labor-intensive functions.

Net interest expense for the three months ended in 2003 was $26,000, compared to $3,000 in 2002. Net interest expense for the nine months ended in 2003 was $75,000, compared to $3,000 in 2002. The increases in both periods ended in 2003 were caused by additional borrowing due to (i) the amount of time insurance claims receivable are now remaining outstanding as a result of new regulations that make the collection process more difficult and (ii) the increase in management service fees receivable. The collection cycle of the management clients' insurance claims has lengthened due to the same new regulations that make it more difficult to process their receivables. If there is a delay in the management clients' collections, then there is a lesser amount available for payment of the management fee receivables. These delays, which are timing issues rather than credit issues, have caused the Company to increase its borrowings to finance the additional receivables.

For the reasons described above, the Company recorded a net loss from operations of $819,000 for the three months ended November 30, 2003 as compared to net income of $20,000 for the three months ended in 2002. For the same reasons, net loss from operations for the nine months ended November 30, 2003 was $816,000, as compared to net income of $81,000 for the same period in 2002.

LIQUIDITY AND CAPITAL RESOURCES

The Company's two business activities during the nine months ended November 30, 2003 resulted in a decrease of cash in the amount of $166,000. The changes in regulations that caused the increase in the length of the collection cycle of insurance claims resulted in an increase in the amount of cash needed to purchase medical insurance claims receivable. As a result of the increase in the collection cycle, the finance clients that are also management clients had less funds available to pay for management service fees, which then increased the management fee receivable collection cycle. For new prospective clients, the emphasis will be on less cash-intensive services, such as billing, collections and other management services. The Company is not seeking any new accounts receivable finance clients and is in the process of reducing the percentage that it advances on the upfront payment it makes upon the purchase of medical bills from its existing clients. The funds for these needs are expected to be provided from existing cash and proceeds from the collection of outstanding receivables. If those sources are insufficient, additional funds may be provided from asset-based borrowing facilities, refinancing of assets under capital leases, issuance of preferred stock, and the sale of real estate assets.

The real estate division is not expected to be a significant user of cash flow from operations due to the elimination of carrying costs on the real estate that was sold during prior periods. The Company's real estate assets in Hunter, New York are owned free and clear of mortgages, except for the construction loan that is being used to finance the current property renovation. Further development of this property, at any significant cost, is expected to be funded by the issuance of Series B Bonds, other asset-based financing, the sale of property under renovation or the sale of other property in Hunter.

The Company believes that its present cash resources and the cash available from financing activities will be sufficient on a short-term basis and over the next 12 months to fund its existing medical financing and management service business, its company-wide working capital needs, and its expected investments in property and equipment. The Company expects that the reduction in both its client base and the advances it makes to its existing customers in the medical division will enable funds to be provided internally and from its financing activities.

Cash used by operations in 2003 was $791,000, as compared to $130,000 being used in 2002. The $661,000 increase in cash used by operations in 2003 was due to (i) a change in net income to loss after adjustments for non-cash items of depreciation, real estate gains, provision for bad debts and unrealized loss from unconsolidated subsidiaries, the net of these items totaling $549,000; (ii) an increase in the additions to management fee receivables of $392,000; and (iii) payment of $25,000 to a co-investor on property previously sold. These increases in the use of cash were offset by a $17,000 reduction in the amount of cash used for real estate held for development and sale, and fluctuations in operating assets and liabilities of $86,000, primarily caused by timing differences.

Cash provided by investing activities was $393,000 in 2003 as compared with $979,000 being used in 2002. The change in cash from being used in 2002 to being provided in 2003 of $1,372,000 was primarily due to $1,349,000 net increase in proceeds from the collection of finance receivables. The increase in funds from the collection of receivables of $549,000 in 2003 compared to $800,000 being used in 2002 to purchase receivables was due to the decrease in receivable purchases in 2003 as compared to the increase in purchases that occurred in 2002.

Net cash provided by financing activities was $232,000 in 2003 as compared with the $28,000 used in 2002. The $260,000 increase in cash being provided in 2003 was primarily due to $232,000 of net borrowing in 2003, as compared to $25,000 of net borrowing in 2002. The proceeds from the additional borrowings in 2003 were used to finance insurance claims receivable and management service fees, which are outstanding for a longer period of time as a result of new regulations that create timing issues and make the collection process more difficult.

The table below summarizes aggregate maturities of future minimum note and lease payments under non-cancelable operating and capital leases as of November 30, 2003.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company's market risk arises principally from the interest rate risk related to certain of its receivables. Interest rate risk is a consequence of having fixed interest rate receivables in the Company's Real Estate and Medical Divisions. The Company is exposed to interest rate risk arising from changes in the level of interest rates.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

During the 90-day period prior to the date of this report, an evaluation was performed under the supervision and with the participation of our Company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective. Subsequent to the date of this evaluation, there have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls, and no corrective actions taken with regard to significant deficiencies or material weaknesses in such controls.

PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits.

31.1 - Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 - Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 - Certification by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K.

None during the three months ended November 30, 2003.

SIGNATURE

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

EXHIBITS

Exhibit 31.1

Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Lester Tanner, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MFC Development Corp;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

   1. Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; and

   2. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

   3. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

   1. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

   2. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls.

Exhibit 31.2

Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Victor Brodsky, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MFC Development Corp;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

   1. Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; and

   2. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

   3. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

   1. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

   2. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls.

Exhibit 32.1

Certification by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of MFC Development Corporation (the "Company") on Form 10-Q for the period ended November 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"),

We, Lester Tanner, Chief Executive Officer, and, Victor Brodsky, Chief Financial Officer of the Company, certify, pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended  (the "Exchange Act"). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.