<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

  Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
               1934 for the quarterly period ended September 30, 2001.

                        Commission file number 000-29039

                       SECURITY ASSET CAPITAL CORPORATION
                       ----------------------------------

            NEVADA                                               95-4729666
--------------------------------                             -------------------
  (State or Other Jurisdiction                                 (IRS Employer
of Incorporation or Organization)                            Identification No.)

              701 B Street, Suite 1775, San Diego, California 92101
              -----------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (619) 232-9950
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirement for the past 90 days.

Yes      X        No
   -------          -------

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

             26,736,710 of common stock shares as of September 30, 2001.
             ----------

Transitional Small Business Disclosure Format (check one):

Yes               No    X
   ------           --------



<PAGE>


                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.
<TABLE>

                       SECURITY ASSET CAPITAL CORPORATION
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                                     ASSETS
<CAPTION>

                                                                 September 30, 2001
                                                                 ------------------
<S>                                                                <C>
Current assets:
      Loan portfolio assets                                        $  1,789,429
      Related party receivables                                          21,789
      Prepaids and other                                                 68,000
                                                                   -------------
      Total current assets                                            1,879,218
                                                                   -------------

Note Receivable                                                       1,200,000

Furniture and equipment, net                                             69,721

Other assets:
      Patent and patents pending                                      1,552,500
      Goodwill (Debt Registry)                                          900,628
                                                                   -------------
      Total other assets                                              2,453,128
                                                                   -------------
                                                                   $  5,602,067
                                                                   =============

                     LIABILITIES AND SHAREHOLDERS' (DEFICIT)

Current liabilities:
      Notes payable (including accrued interest of
          $898,010)                                                $  7,895,921
      Accounts payable                                                  323,582
      Accrued expenses                                                  158,571
                                                                   -------------
            Total current liabilities                                 8,378,074

Deferred revenue                                                        382,190
                                                                   -------------
            Total liabilities                                         8,760,264
                                                                   -------------

Commitments and contingencies

Shareholders' (deficit):
      Common stock, $0.001 par value, 100,000,000 shares
         authorized; 26,736,710 shares issued                            26,737
      Additional paid-in capital                                     10,845,802
      Accumulated deficit                                           (13,822,131
                                                                   -------------
                                                                     (2,949,592)
      Less:  Treasury Stock (175,000 shares)                           (208,605)
                                                                   -------------

      Total shareholders'(deficit)                                   (3,158,197)
                                                                   -------------

                                                                   $  5,602,067
                                                                   =============

                   The accompanying notes are an integral part
                   of the consolidated financial statements.

                                       2

</TABLE>

<PAGE>

                       SECURITY ASSET CAPITAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  For the Quarter Ended September 30, 2001 and 2000
                                   (Unaudited)

                                             For the quarter ended September 30,
                                                  2001                 2000
                                              -------------        -------------

Revenues:
      Portfolio                               $     41,590         $     80,596
      Rental                                            --              112,693
                                              -------------        -------------

      Total revenues                                41,590              193,289
                                              -------------        -------------

Expenses:
      Portfolio                                     27,434               38,232
      Rental                                            --               55,879
      General and administrative                   556,022              457,840
                                              -------------        -------------

      Total expenses                               583,456              551,951
                                              -------------        -------------

            Loss from operations                  (541,866)            (358,662)

Other income (expense):
      Other                                             --                3,398
      Interest                                    (232,010)            (572,601)
                                              -------------        -------------
      Total other                                 (232,010)            (569,203)
                                              -------------        -------------
            Net loss                          $   (773,877)        $   (927 865)
                                              =============        =============

Basic and diluted net loss per share          $      (0.03)        $      (0.08)
                                              =============        =============

Shares used to compute basic and
  diluted net loss per share and loss
  before extraordinary item per share           23,932,634           12,361,000
                                              =============        =============

                   The accompanying notes are an integral part
                   of the consolidated financial statements.

                                       3

<PAGE>

                       SECURITY ASSET CAPITAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                  ((Unaudited)

                                                     For the nine months
                                                      ended September 30,
                                                   2001                2000
                                              -------------        -------------

Revenues:
      Portfolio                               $    108,378         $  1,376,202
      Rental                                        68,922              327,731
                                              -------------        -------------

      Total revenues                               177,300            1,703,933
                                              -------------        -------------

Expenses:
      Portfolio                                    163,044            1,095,183
      Rental                                        38,674              171,939
      General and administrative                 2,852,159            1,436,091
                                              -------------        -------------

      Total expenses                             3,053,877            2,703,213
                                              -------------        -------------

            Loss from operations                (2,876,577)            (999,280)

Other income (expense):
      Other                                         24,115               93,706
      Interest                                  (1,054,093)          (1,605,711)
                                              -------------        -------------
            Total Other                         (1,029,938)          (1,512,005)

            Net loss                          $ (3,864,967)        $ (2,511,285)
                                              =============        =============

Basic and diluted net loss per share          $      (0.20)        $      (0.20)
                                              =============        =============

Shares used to compute basic and
  diluted net loss per share and loss
  item per share                                19,334,000           12,265,000
                                              =============        =============

                   The accompanying notes are an integral part
                   of the consolidated financial statements.

                                       4


<PAGE>
<TABLE>

                                           SECURITY ASSET CAPITAL CORPORATION
                                   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' (DEFICIT)
                                                       (Unaudited)
                                        For the Three Months Ended September 30, 2001
<CAPTION>

                                 Common Stock         Treasury Stock      Additional
                            ---------------------  --------------------    Paid-In    Accumulated
                               Stock      Amount     Stock     Amount      Capital      Deficit       Total
                            ------------ --------  --------- ----------  ----------- ------------- ------------
<S>                          <C>         <C>        <C>      <C>         <C>         <C>           <C>
Balance, June 30, 2001      20,336,710  $20,337    175,000  $(208,605)  $10,278,952 $(13,048,254) $(2,957,570)

Issuances of common stock:

   Consulting services:

   @$0.14 July 2001           1,100,000    1,100         --         --       161,150           --      162,250
   @$0.14 August 2001           950,000      950         --         --       121,050           --      122,000

   Executive Services:

   @ $0.14 in July 2001         350,000      350         --         --        48,650           --       49,000
   @ $0.07 in August 2001     4,000,000    4,000         --         --       236,000           --      240,000

Net loss for three months ended
   September 30, 2001                --       --         --         --            --     (773,877)    (773,877)
                            ------------ --------  ---------- ---------  ----------- ------------- ------------

Balance, September 30, 2001  26,736,710  $26,737    175,000  $(208,605)  $10,845,802 $(13,822,131) $(3,158,197)
                            ============ ========  ========= ==========  =========== ============= ============

                        The accompanying notes are an integral part of the consolidated
                                            financial statements.
</TABLE>

                                                      5

<PAGE>

                       SECURITY ASSET CAPITAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                         For the nine months ended September 30,
                                                  2001               2000
                                             --------------    ---------------

Cash flows from operating activities           $(324,970)        $ (375,061)
                                               ----------        ----------

Cash flows from investing activities             (42,075)          (248,909)
                                               ----------        -----------

Cash flows from financing activities             363,602            630,219
                                               ----------        ----------

Net (decrease) increase in cash                   (3,443)            6,249

Cash at beginning of period                        3,443            29,580
                                               ----------        ----------

Cash at end of period                          $       0         $  35,829
                                               ==========        ==========

                   The accompanying notes are an integral part
                   of the consolidated financial statements.

                                       6


<PAGE>

                       SECURITY ASSET CAPITAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  September 30, 2001

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------

Basis of Presentation
---------------------

These condensed consolidated financial statements of Security Asset Capital
Corporation and subsidiaries (the Company) do not include all of the information
required by accounting principles generally accepted in the United States of
America for complete financial statements and should be read in conjunction with
the financial statements included in the Company's Form 10KSB for 2000. In the
opinion of management, the financial information set forth in the accompanying
condensed financial statements reflects all adjustments necessary for a fair
statement of the periods reported and all such adjustments were of a normal
recurring nature. Interim results are not necessarily indicative of results for
a full year.

Principles of Consolidation
----------------------------

The accompanying financial statements consolidate the accounts of Security Asset
Capital Corporation and its wholly owned subsidiaries, Security Asset
Management, Inc., Security Asset Properties, Inc. ("SAP")(Sold March 28, 2001),
Broadband Technologies, Inc., Universal View Corporations, the DebtTrader.com
and The Debt Registry. All significant intercompany accounts and transactions
have been eliminated in consolidation.

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
reported amounts of revenues and expenses during the reporting period. Actual
result could differ from those estimates.

Loan Portfolio Assets and Revenue Recognition
----------------------------------------------

Loan Portfolio Assets represent liquidating loan portfolios of delinquent
accounts, which have been purchased by SACC for resale and collection and are
stated at cost. The cost of these Assets is the actual amount spent for the
purchase, including related brokerage commissions, if any. Management believes
that the proceeds from resale and collections exceed the carrying value of the
Assets. The cost of the Asset is written off by a percentage of cash collections
on a portfolio-by- portfolio basis. Management presently estimates that Loan
Portfolio Assets in collection will realize gross collections equal to
approximately three times the purchase price of the Assets. The Company,
therefore, writes off one dollar of cost of Portfolio Assets for every three
dollars in gross collection. Certain Loan Portfolio Assets are sold in part or
in whole by the Company. Gains and losses from such sales are recorded when the
Assets are sold. The Company considers a sale to have taken place when there has
been a transfer of The Loan Portfolio Assets and where the Company surrenders
control over the Loan Portfolio Assets to the extent the consideration other
then beneficial interests in the transferred Loan Portfolio Assets is received
in exchange for the Loan Portfolio Assets.

Sale of Subsidiary
--------------------------------------

On March 28, 2001, the Company sold SAP to Western Asset Limited Partnership
(Western) and El Dorado Properties, Inc. (El Dorado), entities controlled by
SAP's former owners, for $1,200,000 note receivable and $250,000 in cash. The
note bears interest at 5% per annum payable in arrears with all unpaid Principal
and interest due on March 28, 2003. The note is secured by all SAP Assets and
the 900,000 shares of the Company common stock held by SAP's former Owners that
were received by them in 1999 when the Company first acquired SAP.

                                       7





<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Three Months Ended September 30, 2001 and 2000

Revenues

Revenues for the three months ended September 30, 2001 were $41,590 as compared
to $193,289 for 2000. The $151,699 decrease in revenues was primarily the result
of the sale of the real estate subsidiary in the first quarter of 2001.

Net Loss

Net loss for the three months ended September 30, 2001 was $773,877 as compared
to $927,865 for 2000. The $153,988 decrease in net loss was primarily
attributable to the reduction in interest offset by an increase in stock issued
for services.

Nine months Ended September 30, 2001 and 2000

Revenues

Revenues for the nine months ended September 30, 2001 were $177,300 as compared
to $1,703,933 for 2000. The $1,526,633 decrease was primarily due to reduced
Loan Portfolio activity and the sale of the real estate subsidiary in the first
quarter of 2001.

Net Loss

Net loss for the nine months ended September 30, 2001 was $3,864,967 as compared
to $2,511,285 for 2000. The $1,353,682 increase in net loss was primarily
attributable to the issuance of common stock and treasury stock for consulting
and other services and the reduction in Loan Portfolio activity and the sale of
the real estate subsidiary in the first quarter 2001.

Liquidity and Capital Resources

The Company plans to continue funding its operations and proceeds from
additional debt and equity capital offerings. There is no assurance that
management will be successful in these endeavors.

                                       8

<PAGE>

PART II  OTHER INFORMATION

Item 1.  Legal proceedings: The Company is currently involved in a legal
         dispute with its former auditors, Pannell Kerr Forester ("PKF"), over
         accounting fees. PKF has sued the company for unpaid accounting fees of
         $150,000. The Company vigorously disputes the amount of its obligation,
         if any, to PKF. The Company has brought its own suit for damages
         against PKF.

Item 2.  Changes in Securities - On June 29, 2001 at the annual meeting of
         the shareholders, the Articles of Incorporations were amended to
         increase the number of authorized common shares from 25,000,000 to
         100,000,000.

Item 3.  Defaults Upon Senior Securities - None

Item 4.  Submission of Matters to a Vote of Security Holders - On June 29,
         2001 at the annual meeting of the shareholders, David R. Walton, Darrel
         Musick, David S. Walton, Randy Johnson, D.J. Hill and Richard Wensel
         were elected to the Company Board of Directors.

Item 5.  Other Information - None

Item 6.  Exhibits and report of form 8K - From July 9, July 20, July 30 and
         August 1, 2001, the Company filed its form 8-K confirming the
         resignation of Pannell Kerr Forest as auditors and the selection of
         Hurley & Company as its new auditors.

                                       9


<PAGE>

                                   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 hereunto duly authorized.

                                     Security Asset Capital Corporation

DATED:  November 19, 2001              /s/ DAVID R. WALTON
                                     ------------------------------------------
                                     David R. Walton, Chief Executive Officer

                                       10