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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 10-K

                                   ----------

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934

            FOR THE TRANSITION PERIOD FROM            TO
                                           ----------    ----------

                         COMMISSION FILE NUMBER: 0-28067

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                               FIRST RESERVE, INC.
        (Exact name of small business issuer as specified in its charter)

                                   ----------

            FLORIDA                                              86-0740730
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

       1360 South Dixie Highway
         Coral Gables, Florida                                          33146
(Address of principal executive offices)                              (Zip Code)

       Registrant's telephone number, including area code: (305) 667-8871

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                           Common Stock, no par value

                                (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 [ ]

Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The Registrant's revenues for its most recent fiscal year are $50,150,029.

The number of shares of Common Stock of the Registrant outstanding as of March
24, 2003 is 6,547,350, of which 2,160,001 shares are held by
Esslinger-Wooten-Maxwell, Inc.

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                               FIRST RESERVE, INC.

                                TABLE OF CONTENTS

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                                     PART I

Item 1.    Business................................................................     1

Item 2.    Properties..............................................................     9

Item 3.    Legal Proceedings.......................................................     9

Item 4.    Submission of Matters to a Vote of Security Holders.....................    10

                                     PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters...    10

Item 6.    Selected Financial Data.................................................    10

Item 7.    Management's Discussion and Analysis of Financial Condition and
              Results of Operations................................................    10

Item 7A.   Quantitative and Qualitative Disclosure about Market Risk...............    12

Item 8.    Financial Statements and Supplementary Data.............................    13

Item 9.    Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosures............................................    13

                                    PART III

Item 10.   Directors and Executive Officers of the Registrant......................    13

Item 11.   Executive Compensation..................................................    15

Item 12.   Security Ownership of Certain Beneficial Owners and Management..........    16

Item 13.   Certain Relationships and Related Transactions..........................    17

Item 14.   Controls and Procedures.................................................    17

                                     PART IV

Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K.........    17
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                                     PART I

ITEM 1. BUSINESS

GENERAL

First Reserve, Inc. (the "Company" or "Registrant") is a holding company whose
primary operations are through Esslinger-Wooten-Maxwell, Inc. ("EWM"), a
wholly-owned subsidiary, and a general real estate brokerage firm. EWM was
originally founded in 1964. Allen C. Harper and Ronald A. Shuffield, the current
principals of the Company, purchased EWM in April 1984 through First Reserve,
Inc., a Florida corporation ("First Reserve Florida"), which was established for
the purpose of acquiring EWM. First Reserve Florida was a holding company that
wholly-owned EWM along with certain other related entities. In addition, a
growing amount of the Company's operations are conducted through its
wholly-owned subsidiaries, Embassy Financial Services, Inc. and Columbia Title
of Florida, Inc.

History

Pursuant to a Stock Purchase Agreement dated January 7, 1998, certain
shareholders of First Reserve Florida acquired 83.3% of the total shares of
common stock (5,000,000 shares) of Phoenix Financial Reporting Group, Inc.
("PFRG"), a public holding company with no operations. The PFRG shares were
acquired from four different shareholders for an aggregate purchase price of
$80,000. The remaining 1,000,000 shares of PFRG common stock were owned by 219
shareholders that owned shares in PFRG prior to the consummation of the Stock
Purchase Agreement. By acquiring 83.3% of PFRG, the shareholders of First
Reserve Florida acquired control of PFRG.

PFRG was organized under the laws of the State of Arizona on September 7, 1993
under the name El Squared, Inc. On August 31, 1994, El Squared, Inc. changed its
name to PFRG. On February 2, 1998, PFRG changed its name to First Reserve, Inc.
("FRI"). On June 17, 1998, the Company transferred it domicile from Arizona to
Florida, effectively becoming a Florida corporation. Our headquarters are
located at 1360 South Dixie Highway, Coral Gables, Florida 33146. Our telephone
number is (305) 667-8871 and the fax number is (305) 667-9019.

Subsequent to the above-described acquisition, FRI issued additional shares of
common stock. In addition, pursuant to an Agreement of Tax-Free Reorganization
(the "Exchange Merger Agreement"), dated as of April 1, 1998, the shareholders
of First Reserve Florida and the shareholders of Embassy Financial Services,
Inc. ("Embassy"), a licensed residential mortgage lender that originates loans
in an agency capacity on behalf of other mortgage lenders, exchanged all of the
shares of common stock of First Reserve Florida and Embassy respectively, for
shares of FRI's common stock, with the result being that First Reserve Florida
and Embassy became wholly-owned subsidiaries of FRI. This exchange was intended
to qualify as a tax-free reorganization pursuant to Section 351 of the Internal
Revenue Code of 1986, as amended. After the completion of the share exchange,
First Reserve Florida was merged into FRI and all the assets of First Reserve
Florida became assets of FRI.

Effective May 1, 1998, EWM acquired Byrne-Rinehart & Co. ("Byrne"), a Miami,
Florida real estate brokerage operation. The acquisition was consummated through
a merger pursuant to a Plan of Reorganization and Merger Agreement dated as of
May 1, 1998 (the "Byrne Merger Agreement"). Pursuant to the Byrne Merger
Agreement, Byrne merged with and into EWM, with EWM being the surviving
corporation. The merger was structured as a reorganization to comply with the
terms of Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended.

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Under the terms of the Byrne Merger Agreement, all of the shares of common stock
of Byrne were converted into and exchanged for an aggregate of 400,000 shares of
common stock of the Company and $300,000 cash. In connection with the merger,
Thomas E. Byrne was hired as President of EWM's Commercial Sales Division
pursuant to a five-year employment agreement and the sales associates of Byrne
were retained by EWM. As of May 1, 1998, all of Byrne's pending real estate
transactions had been administered by EWM and EWM was entitled to the brokerage
proceeds therefrom.

Effective September 30, 1998, EWM acquired Gerard International Realty, Inc.
("Gerard"), a Miami Beach, Florida real estate brokerage operation. The
acquisition was consummated through a merger pursuant to a Plan of
Reorganization and Merger Agreement dated as of September 30, 1998 (the "Gerard
Merger Agreement"). Pursuant to the Gerard Merger Agreement, Gerard merged with
and into EWM, with EWM being the surviving corporation. The merger was
structured as a reorganization to comply with the terms of Section 368(a)(2)(D)
of the Internal Revenue Code of 1986, as amended.

Under the terms of the Gerard Merger Agreement, all of the shares of common
stock of Gerard were converted into and exchanged for up to 500,000 shares of
the Company's common stock, in the ratio of (i) 3,000 shares of the Company's
common stock for each share of Gerard common stock and (ii) 2,000 shares of the
Company's common stock for each share of Gerard common stock, which shall be
subject to and released from escrow in accordance with the terms and conditions
set forth in the Gerard Merger Agreement. As of September 30, 1998, all of
Gerard's pending real estate transactions had been administered by EWM and EWM
was entitled to the brokerage proceeds therefrom.

On March 31, 1999 the Company purchased all the stock of Columbia Title of
Florida, Inc. ("Columbia") in a business combination accounted for as a
purchase. Columbia is a title company engaged in the business of closing real
estate and mortgage loan transactions, primarily in the South Florida area.
Columbia has two branches, Miami and Key Largo, Florida. Under the terms of the
agreement, the shareholder of Columbia received $100 for the stock of Columbia.
The agreement also provided for additional consideration if the assets of the
Key Largo branch were sold within ninety days of the acquisition date. If this
condition was met, the former shareholder of Columbia would receive eighty-five
percent (85%) of the net proceeds of the sale of the assets of the Key Largo
branch. If the sale did not effectuate within the ninety days, all the assets of
the Key Largo branch would be transferred back to the former shareholder of
Columbia. The sale of the assets of the Key Largo branch was made within the
ninety day period. As a result, additional consideration of $191,350 for the
acquisition of the stock was recorded. The total cost of the acquisition was
approximately $191,350. As a result of this merger, accounted for as a purchase,
assets of $104,267, goodwill of $257,340, and liabilities of $170,257 were
recorded.

On September 30, 1999, the Company issued 200,000 shares of its common stock to
the former shareholders of Gerard. These shares were previously held in escrow
as discussed above. As a result, common stock and goodwill increased by
$200,000.

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On September 1, 2000, EWM purchased substantially all the assets of Ross &
Associates, Inc. ("Ross") for $186,300 in stock of the Company. As a result of
this acquisition, accounted for as a purchase, property and equipment of
$46,875, accounts receivable of $41,500 and other assets of $97,925 were
recorded. Ross was primarily engaged in the same activity as EWM. Under the
terms of the agreement, the Ross sole shareholder received 138,000 shares of
common stock of the Company on the date of the acquisition. An additional
112,000 "contingent" shares of common stock of the Company was issued in 2002 as
a result of the former shareholder of Ross meeting certain gross commission
requirements for the period January 1, 2001 through December 31, 2001. The total
cost of the acquisition, including the contingent shares, was $337,500.

On September 1, 2000, EWM acquired substantially all the assets of Daniels
Group, Inc. ("Daniels") for $13,500 in common stock of the Company. As a result
of this acquisition, accounted for as a purchase, property and equipment
totaling $13,500 was recorded. Daniels was primarily engaged in the same
activity as EWM. Under the terms of the agreement, the shareholder of Daniels
received 10,000 shares of common stock of the Company on the date of the
acquisition. Additional cash consideration to the former shareholder of Daniels
may be paid, pending achieving certain commission levels during four separate
one-year periods, ending on August 31, 2004. If these commission levels are not
achieved during these four separate one-year periods, no additional cash
consideration will be paid. Due to the contingent nature of this cash
consideration, the Company will record this transaction as additional
compensation upon the former shareholder of Daniels achieving the required
commission levels. The total cost of the acquisition was approximately $13,500.

In 2002, the Company created First Reserve Insurance, Inc. ("FRINS"). FRINS is
principally engaged in insurance brokerage. On September 13, 2000, FRINS signed
an exclusive agreement with an insurance broker to market and sell insurance
products to the clients of EWM and the Company. These insurance products
include, but are not limited to, property and casualty, automobile, life and
health insurance policies.

In early 2002, the Company completed negotiations with one of its principal
shareholders for the purchase of all of the shares of common stock of the
Company owned by such shareholder. In order to consummate this transaction, EWM
entered into a Credit Agreement with Mellon United National Bank (the "Bank"),
dated April 19, 2002, whereby EWM borrowed $3 million from the Bank to be used
for the purchase of such shares. The stock purchase transaction, which had
previously been authorized by the Board of Directors of the Company, was
evidenced by a Stock Purchase Agreement, dated as of January 10, 2002, by and
among Charles Manni (a former director of the Company), the Company and EWM. The
Stock Purchase transaction was closed on May 16, 2002. The total purchase price
of the stock was $4,250,000.

On April 18, 2002, the Company purchased 39,700 shares of its common stock from
James E. Newmeyer, a director of the Company. This transaction was evidenced by
a Stock Purchase Agreement, dated April 18, 2002.

Operations

Our primary operations are conducted through Esslinger-Wooten-Maxwell, Inc., our
wholly-owned subsidiary. EWM is a Florida licensed real estate brokerage firm
with eleven offices, which engages approximately 700 sales associates and
support staff, in Miami-Dade and Broward Counties. In 2002, EWM closed 4,806
real estate sale transactions and 667 rental transactions having a gross dollar
value of $1,802,000,000. The average home price was $361,000.

EWM is member of the Realtor Association of Greater Miami and the Beaches, the
Realtor Association of Miami-Dade County, the Realtor Association of Greater Ft.
Lauderdale and the Florida Keys Association of

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Realtors. EWM offers its services in eleven southern Florida locations. EWM
operates from eight offices located in Miami Dade County, Florida: Coral Gables,
Coconut Grove, Ponce de Leon, South Miami, Miami Beach, Key Biscayne, the
Brickell area and Pinecrest/Palmetto area; and three offices located in Broward
County, Florida: Plantation, Weston and Las Olas/Ft. Lauderdale. EWM provides
the following services:

               Residential Brokerage
               Commercial Brokerage
               Relocation
               Property Management and Leasing
               International Brokerage
               Business Brokerage
               Development Sales

We believe that our increased expansion into Broward County has allowed EWM to
take advantage of the burgeoning growth in the residential real estate market in
Broward as well as the much sought after relocation transferee market. EWM ranks
as the second highest dollar value real estate broker in Miami-Dade County
Florida and as the sixth highest dollar value broker in Broward County, Florida.

Residential Brokerage

EWM acts as a broker or agent in residential real estate transactions. EWM
markets homes in every price range throughout Miami-Dade County, with a market
niche in luxury properties (over $500,000).

All customers who list their property for sale with EWM must sign an Exclusive
Right of Sale Listing Agreement, which provides that EWM shall be the exclusive
sales agent for a set period of time. Our residential brokerage services offered
to sellers of real estate include:

               Pricing a property based on market knowledge and current research

               Individualized marketing program for each property

               Preparation of Seller's Net Sheet, setting forth costs of sale
               and net profit estimates upon closing

               Suggestions for preparing a property for sale

               Appointment options

               Inclusion  of  all  properties  in  the  computerized  South
               Florida  Regional Multiple Listing System

               Pre-qualifying of potential buyers' ability to purchase

               General  advice and  assistance  in preparing  forms and
               attending  closing of transaction

               Negotiating the terms and conditions of the sales and purchase
               contract

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               Conducting "open houses" for properties

               Obtaining tenants

In exchange for these services, the customer pays our commission which is
typically fixed at 6% of the sales price, of which 3% is paid to the "listing"
broker and 3% is paid to the "selling" broker, which amounts are then divided
between the Company and the participating sales associate.

EWM assists buyers of real estate by providing the following services:

          Locating a property that meets personal and financial objectives
          Showing the buyer properties
          Assistance with inspections, repairs, and obtaining appraisals, etc.
          Negotiating the terms and conditions of the sales and purchase
          contract
          Assisting the buyer in preparing for and attending closing of
          transactions.

In exchange for these services, the customer pays our commission which is
generally fixed at 6% of the sales price.

The agreement usually executed by the customer (the buyer/seller) of residential
real estate is the form Contract for Sale and Purchase that is approved by the
Florida Association of Realtors and the Florida Bar and is customarily used in
the State of Florida. Under Florida real estate law, EWM does not represent the
buyer or seller directly, but rather operates as a "transaction" broker.

Commercial Brokerage

EWM's commercial brokerage services provide specialized services to third
parties, including financial institutions, investors, developers and landowners.
EWM's services include but are not limited to:

               Commercial Sales and Leasing
               Property Owner Representation
               Tenant Representation
               Corporate Relocations
               Project Management
               Market Surveys
               Project Feasibilities
               Computer Financial Models
               Construction and Permanent Loan Packaging
               Land Acquisition and Assemblage
               Workouts of Challenging Properties
               Real Estate Consulting

Relocation

EWM has an extensive corporate relocation division, specializing in corporate
relocations. EWM is affiliated with several of the industry's largest relocation
networks. In particular, effective 2003, EWM is a shareholder of The RELO(R)
Network, which is the nation's largest relocation organization, and provides EWM
with membership in The RELO(R) Network's nationwide network of over 700 other
suppliers of relocation services.

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We believe the South Florida area is strongly positioned for corporate
relocations. The area serves as a hub for domestic and international business.
Because of the favorable geographic location of Miami-Dade County, coupled with
its trained commercial and industrial labor force, many Fortune 500 companies
have a Latin American and Caribbean base in Miami, Florida. According to
Miami-Dade County statistics obtained from the Miami-Dade County Beacon Council
(the county's economic development council), in Coral Gables, Florida (our main
office location) the following corporations have operations: Texaco West
Africa/Latin America, Hilton Hotel-International, Apple Computer and IBM. In
addition, such major corporations as Burger King and Eastman Kodak have
significant South Florida operations. In order to capitalize on the growing need
to assist international executives, EWM has a division devoted solely to
assisting relocating executives.

The services that EWM provides in connection with corporate relocations
includes, but is not limited to, sales and marketing of a transferred employee's
existing properties, assisting relocated employees in finding new properties,
education and school placement counseling, rental assistance, area tours,
short-term housing, financial service assistance, mortgage prequalification,
assistance with coordination of moving personal property, and personal and
repair service professionals, including a list of pre-qualified baby sitters,
interior design consultants and home repair specialists.

A referral fee equal to 25% to 30% of the selling commission received by EWM is
paid to the referring party for any business referred to EWM. All outgoing
referral fees earned by EWM are split between the referring associate and the
Company. All outgoing referrals must be placed through The RELO(R) Network.

Property Management

The Property Management Division of EWM serves as an agent for the property
owner, overseeing all facets of the leasing and management process, including
customary landlord activities.

EWM provides property management for single family homes, condominiums, and
apartment complexes. Specific property management services include:

               Collecting rent
               Accounting and bookkeeping services
               Regular property inspections
               Coordination of regular maintenance (lawn pool, service
               contracts, etc.)
               Contract work (paint, repairs, etc.)
               Customer services for tenants
               Consistent owner contact
               Showing rental properties to prospective tenants.

Mortgage Lending Services

Embassy is a licensed residential mortgage lender that specializes in
conventional, FHA, and VA first mortgages primarily in the South Florida area.
Embassy originates loans in an agency capacity on behalf of other mortgage
lenders. Beginning in 1999, Embassy began funding loans to be made in connection
with its mortgage banking operations. Each loan is backed by a permanent loan
take-out commitment from various national lenders of residential financing. The
loans are purchased by the national lender once permanent

                                       6

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financing is secured. Embassy does not service these loans. Since the
acquisition of Embassy in 1998, its operations have had an increasing positive
effect on the overall financial results of the Company.

Title Company Services

Columbia is a title company engaged in the business of closing real estate and
mortgage loan transactions, primarily in the South Florida area. At the time of
its acquisition by the Company, Columbia was involved in the title insurance
business in South Florida for over 37 years. Columbia's title business has been
profitable since its acquisition, and has continued to contribute to the cash
flow of the Company's overall operations.

Market

The rate of home sales in Miami-Dade County, Florida for 2002 showed a marked
improvement over 2001. Analysts believe that strong consumer confidence, low
interest rates, weak inflation and a continued increase of international buyers
contribute to a very strong real estate market in South Florida. The fact that
South Florida has a diminishing supply of land, coupled with the fact that the
population continues to grow dramatically, will encourage values to increase.

According to Multiple Listing Service data, there were 25,317 existing home
sales in Miami-Dade County in 2002, compared to 23,313 in 2001 representing a
8.6% increase in sales for 2002.

While homes under $200,000 accounted for 54% of all homes sold in Miami-Dade
County in 2002, luxury homes continue to sell well in the region. In the past
year, EWM was involved in 195 home sale transactions in Miami-Dade County
through the Multiple Listing Service in the price range over $500,000. This
equals 15.2% of the 1,284 total Miami-Dade County transactions in this price
range through the Multiple Listing Service.

Marketing

We intend to undertake an aggressive growth strategy by engaging additional
sales associates for our brokerage operations throughout Southeast Florida to
increase market presence, sales volume and our geographic base. We intend to
continue our expansion of our mortgage brokerage services and title company
services across Southeast Florida.

The Company's services are marketed in a variety of outlets throughout South
Florida. EWM's marketing efforts include, without limitation, advertising in all
major newspapers, full-color magazine pictorials, targeted mailings, press
releases and inclusion of all properties in the county-wide Multiple Listing
Systems. EWM targets new sellers and buyers of its properties by placing
advertisements for its properties in each Sunday's Miami Herald Real Estate
Guide. Further, EWM mails its "Open House Sundays" literature monthly to over
110,000 potential customers in Miami-Dade and Broward counties. EWM provides its
associates with advertising dollar value credits, based on their property's
sales price, for use in various advertising means. EWM also uses its website,
www.ewm.com, to provide information including photographs and "webtours" of
available - properties.

In addition to the above described traditional avenues of sales and marketing,
we and our executives and associates are extremely active members of the
community. EWM is a sponsor of such South Florida charities as the American Red
Cross, United Way, Junior Orange Bowl, Junior Achievement, the College
Assistance Program and the local arts and crafts festivals, just to name a few.
Further, EWM is a member of all local

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Chambers of Commerce, and is a trustee for chambers in Miami, Coral Gables, and
Ft. Lauderdale, Florida and is a member of the University of Miami Citizens
Board.

Competition

All of the businesses in which we are engaged are highly competitive, especially
residential real estate brokerage services. Many of our competitors, in
particular those who benefit by affiliated franchising organizations, have
substantially greater financial resources than the Company. Many of our
competitors are also undertaking a growth strategy. In 2002, EWM ranked second
in Miami-Dade County and sixth in Broward County in total dollar sales of
transactions for homes based upon the South Florida Regional Multiple Listing
System data. We believe that our ability to specialize in higher priced
properties, coupled with the quality of our services, knowledge and relative
strength in the South Florida market, positions us well with our competitors.

EWM believes it has a higher average sales price than that of its major
competitors. Its average residential sales price substantially exceeds the
average sales prices in Miami-Dade County. EWM sales for 2002 including all
residential, commercial and rentals from existing operations and acquisitions
and newly opened offices was approximately $1,802,000,000, a 15.5% increase from
2001.

Economic Factors

Our operations are directly dependent on the South Florida economy in general,
and the South Florida real estate market in particular. South Florida's real
estate market has been historically cyclical. Downturns in South Florida's
economy would likely have adverse affects on our business and operations.

Regulatory Issues

Our operations are subject to various federal, state and local laws and
regulations. EWM is licensed by the State of Florida Department of Business and
Professional Regulation to sell real estate in the State of Florida. In
addition, each of our real estate associates must be licensed with the State of
Florida Department of Business and Professional Regulation as a real estate
broker or real estate sales person. The licenses must be updated every two years
by passing an administered examination. We have made, and will continue to make,
expenditures to comply with such laws and regulations. We believe that our
operations are in compliance with all applicable material laws and regulations.
We do not believe that any laws or regulations currently in existence, or, to
the best of our knowledge any laws which are being proposed or contemplated,
will have an adverse affect on our financial condition or our operations.

The subsequent adoption or modification of state and local laws and regulations
imposing environmental controls, disclosure rules, zoning and other land use
restrictions may materially and adversely affect the marketability of real
estate, which would likely have a negative effect on our financial condition and
our operations. Additionally, there are various licensing requirements imposed
on us and our sales associates. While based on our experiences to date, the cost
of compliance has not had, and is not expected to have, a material effect on our
operations; however, changes in laws and regulations may give rise to additional
compliance costs that could have a material adverse effect on such operations.
Further, licenses may be revoked for a variety of reasons, including the
violation of regulations and the failure to maintain certain financial
requirements. Revocation of licenses would also have material and adverse affect
on our operations.

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Employees

As of December 31, 2002, we employ 99 persons full time as support staff and
engage 720 persons as sales associates, who are independent contractors. Of the
sales associates, 185 are based in our two Coral Gables offices, 25 are based in
our Coconut Grove Office, 90 are based in our Pinecrest/Palmetto office, 90 are
based in our South Miami office, 115 are based in our Miami Beach office, 15 are
based in our Brickell office, 25 are based in our Key Biscayne office, 50 are
based in our Plantation office, 100 are based in our Weston office and 25 are
based in our Las Olas/Ft. Lauderdale office. All sales associates are
independent contractors rather than our employees, which is a standard structure
in the real estate brokerage industry. We require that each associate sign an
Independent Contractor Status Agreement that is a Florida Association of
Realtors standard form.

All of our sales associates are paid by commission solely on the basis of closed
sales transactions. Typically, the share of a total commission is split evenly
between the listing broker and the selling broker, with each broker entitled to
a commission of approximately 3% of the property sales price for residential
listings and 5% for commercial, business brokerage and rental listings.
Approximately 27% of EWM sales are "in-house," where EWM represents both the
buyer and seller and therefore receives the full brokerage commission.

Reports to Security Holders

We intend to provide all of our shareholders with an annual report of our
operations, including audited financial statements, for the 12-month period
ended December 31, 2002.

The public may read and copy any materials that we have on file with the
Securities and Exchange Commission ("SEC") at the SEC's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.

ITEM 2. PROPERTIES

Our facilities consist of eleven offices: (1) 11,930 square feet leased at our
principal office at 1360 S. Dixie Highway, Coral Gables, Florida 33146; (2)
7,468 square feet leased at 12651 S. Dixie Highway, Miami, Florida 33156; (3)
5,000 square feet leased at 419 Arthur Godfrey Road, Miami Beach, Florida 33140;
(4) 5,000 square feet leased office at 6150 S.W. 76 Street, South Miami,
Florida; (5) 6,400 square feet leased at 8500 West Broward Boulevard,
Plantation, Florida 33324; (6) 5,600 square feet leased at 4410 Weston Road,
Weston, Florida 33331; (7) 5,000 square feet leased at 4689 Ponce de Leon Blvd.,
Coral Gables, Florida 33146; (8) 1,450 square feet at 644 Crandon Boulevard, Key
Biscayne, Florida 33149, which is owned by EWM; (9) 1,350 square feet leased at
671 Brickell Key Drive, Miami, Florida 33131; (10) 2,200 square feet leased at
3560 Main Highway, Coconut Grove, Florida 33133; and (11) 1,600 square feet
leased at 1700 E. Las Olas Boulevard, Ft. Lauderdale, Florida 33301.

ITEM 3. LEGAL PROCEEDINGS

We are currently not a party to any material litigation which is not incidental
to the ordinary course of our business and operations.

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

No matters were submitted to a vote of our security holders, through the
solicitation of proxies or otherwise, during the quarter ended December 31,
2002.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is not currently quoted on any national exchange or other
public trading market.

There were 174 shareholders of record of our common stock on December 31, 2002.

We have not paid any dividends on our common stock and intend to retain all
earnings for use in our operations and to finance the development and the
expansion of our business. We do not anticipate paying any dividends on the
common stock in the foreseeable future. The payment of dividends is within the
discretion of the our Board of Directors. Any future decision with respect to
dividends will depend on future earnings, future capital needs and the
registrant's operating and financial condition, among other factors.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth a summary of the selected financial information
for the Company. The information below should be read in conjunction with the
audited financial statements and with the information presented in Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations.

<TABLE>
<CAPTION>
                                        2002          2001          2000          1999         1998*
                                    -----------   -----------   -----------   -----------   -----------
<S>                                 <C>           <C>           <C>           <C>           <C>
Total Revenues                      $50,150,029   $41,291,197   $32,829,214   $25,908,304   $17,015,043
Income from Continuing Operations     3,185,661     1,693,093     1,385,729       345,457       134,233
Basic Earnings per Common Share            0.37          0.18          0.20          0.08          0.02
Weighted Average Common Shares        5,103,315     6,633,858     6,768,847     6,618,009     5,718,504
Total Assets                         12,044,409     9,687,764     7,520,830     4,990,348     3,123,885
Long-Term Liabilities                 4,067,200       572,260       743,130       995,125       616,881
</TABLE>

----------
*    11-month period ended December 31, 1998.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included herein should be read in conjunction with the Consolidated
Financial Statements of First Reserve, Inc. and subsidiaries, as of December 31,
2002, and the related notes to the Consolidated Financial Statements, along with
the Consolidated Financial Statements of First Reserve, Inc. and subsidiaries as
of December 31, 2001 and December 31, 2000, and the related Notes to
Consolidated Financial Statements. The Company's Financial Statements have been
prepared in accordance with accounting principles generally accepted in the

                                       10

<PAGE>

United States and have been audited by the Company's independent accountants.

The financial information in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" refers to the continuing operations of the
Company.

Results of Operations

Revenues. The Company's revenues increased approximately 21.5% for the year
ended December 31, 2002, over those for the year ended December 31, 2001.
Approximately $3,100,000 of the increase in 2002 revenues is attributable to the
opening of new real estate offices in Coconut Grove and Las Olas/Ft. Lauderdale
and new development sales. The $8,858,832 increase resulted from the following
sources: (i) new Las Olas/Ft. Lauderdale office and new Coconut Grove office
(35%); (ii) existing sales offices (63%); and (iii) title company operations
(2%).

Operating Expenses. Operating expenses increased to approximately $47.0 million
for the year ended December 31, 2002 versus $39.6 million for the year ended
December 31, 2001. The significant components of the Company's operating
expenses are: commissions to real estate associates (68.9%), officer and staff
salaries (1.9%), office rental costs (4.1%), advertising expenses (6.0%),
promotional expenses (.6%) and insurance (.8%). The Company's operating expenses
also increased as a result of costs incurred by the Company in connection with
the pre-opening costs associated with the expansion of the Miami Beach, Key
Biscayne and Las Olas offices, which will be completed in 2003.

Interest. Interest income decreased from approximately $213,000 for the year
ended December 31, 2001 to approximately $176,000 for the year ended December
31, 2002 primarily due to a decrease in interest rates and lower average daily
balances of unrestricted cash and Embassy's mortgage banking operations.

Pre-tax Income from Continuing Operations and Net Income. The Company had
pre-tax income from operations of approximately $3,186,000 for the year ended
December 31, 2002 as compared to pre-tax income of approximately $1,693,000 for
the year ended December 31, 2001. This increase in pre-tax profit from
continuing operations resulted primarily from increased residential sales.

Liquidity and Capital Resources

Cash provided by operating activities was $910,800 for the year ended December
31, 2002. This was primarily due to an increase in revenue from sales
commissions, offset by an increase in mortgage loans held for sale of $1,008,115
and an increase in accounts receivable of $261,105.

Net cash used from investing activities was approximately $1,490,000 for the
year ended December 31, 2002, primarily attributable to the purchase of property
and equipment of $1,455,394.

Net cash used from financing activities was approximately $61,000 for the year
ended December 31, 2002, principally due to the net proceeds received from the
Company's "warehouse" line of credit of $1,007,165 and proceeds from borrowing
on a note payable of $3,500,000, offset by the acquisitions of the Company stock
by EWM of $4,250,000 and principal payment on borrowings of $175,000.

At December 31, 2002, the Company had long term notes payable of approximately
$3,925,000. The Company has a $5 million "warehouse" line of credit to fund
loans to be made in connection with its mortgage banking operations. Each
"warehouse" loan is fully backed by a permanent loan "take-out" commitment from

                                       11

<PAGE>

various national lenders of residential financing. As of December 31, 2002, the
balance of this "warehouse" line of credit was approximately $4,384,500 with a
corresponding asset of "mortgage loans held for sale" of $4,430,140. Current
maturities of long term debt due in 2002 was approximately $300,000, exclusive
of the "warehouse" line of credit.

At December 31, 2002, the Company had shareholder equity of approximately
$2,606,900. For the year ended December 31, 2002 the Company's net working
capital (current assets minus current liabilities) increased to approximately
$2,122,200 from $2,080,600 for the year ended December 31, 2001, primarily as a
result of an increase in accounts receivable and prepaid expenses and other,
offset by a decrease in cash. The Company believes its current working capital
will be sufficient to support its presently-contemplated strategy for the next
12 months.

Three major office expansions will be completed in 2003: the Miami Beach office
will be expanded from 5,000 square feet to 9,400 square feet; the Key Biscayne
office will be relocated from 1,400 square feet to 2,600 square feet; and the
Las Olas office will be expanded from 1,600 square feet to 4,200 square feet.
The Company anticipates that these offices will increase opportunities to
substantially increase sales.

Seasonality

The Company's operations are principally based on the residential real estate
market in South Florida. These markets have historically been seasonal with
generally higher sales in the second and third fiscal quarters. Therefore, the
results of any interim period is not necessarily indicative of the results that
might be expected during a full fiscal year.

Forward Looking Statements

From time to time, we make statements about our future results in this Form 10-K
that may constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based on
our current expectations and the current economic environment. We caution you
that these statements are not guarantees of future performance. They involve a
number of risks and uncertainties that are difficult to predict. Our actual
results could differ materially from those expressed or implied in the
forward-looking statements. Important assumptions and other important factors
that could cause our actual results to differ materially from those in the
forward-looking statements, include, but are not limited to: (i) the continued
growth in the residential real estate market in South Florida; (ii) the general
availability of home mortgage financing at favorable rates; (iii) continued
positive economic climate in the United States; (iv) competition in our existing
lines of business; and (v) our ability to obtain and maintain working capital,
whether internally generated or from financing sources (on acceptable terms) in
order to finance our growth strategy.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company, in its normal course of business, is exposed to interest rate
changes as they relate to real estate mortgage loans and the effect of such
mortgage rate changes. Additionally, the Company's cash equivalents and
short-term investments, if any, generally bear variable interest rates. Changes
in the market rates of interest on short-term investments will affect the
interest earned by the Company. Since the Company does not rely on its interest
earnings on short-term investments to fund working capital needs, changes in
these interest rates will not have an impact on the Company's results of
operations or working capital position.

                                       12

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Immediately following the signature page in this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES

None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers and directors of the registrant are as follows:

        NAME          AGE                      POSITION
-------------------   ---   ---------------------------------------------

Allen C. Harper        58   Chairman of the Board of Directors/
                            Chief Executive Officer

Ronald A. Shuffield    52   President/Chief Operating Officer/Director
                            President of EWM, Principal Financial Officer

James E. Newmeyer      54   Secretary/Treasurer and Director
                            Chairman of Embassy Financial Services, Inc.

Louis Cossato          74   Director

Israel Kreps           42   Director

Management

A brief description of the key management of the Company is as follows:

Allen C. Harper

Since 1984 Allen C. Harper has been principally employed as the Chairman and
Chief Executive Officer and is a principal shareholder of the Company. Mr.
Harper has more than 30 years of business experience, primarily in the areas of
real estate management and development and rail transportation. He is still
active in a variety of businesses. Mr. Harper is currently the Chairman of the
Board of Directors, Chief Executive Officer and, with his wife, the owner of
American Heritage Railways, Inc., which owns and operates The Durango &
Silverton Narrow Gauge Railroad, in southwestern Colorado and Great Smoky
Mountains Railroad, Inc. in North Carolina. Since September 1989, Mr. Harper has
served as a Director on the Tri-County Rail Authority and has been chairman of
the board for two terms. He is president elect for the Greater Miami Chamber of
Commerce. He has also served as a director of Florida East Coast Railway Co., a
railroad company based in

                                       13

<PAGE>

St. Augustine Florida, since May of 1994.

Ronald A. Shuffield

Ronald A. Shuffield is the President and Chief Operating and Principal Financial
Officer of both the Company and EWM, and a member of each entity's Board of
Directors. He has been the President of EWM since 1984. He acts as the chief
operating officer and supervises the day-to-day operations of the Company and
EWM. Mr. Shuffield is a licensed Florida real estate broker and certified
general contractor. Mr. Shuffield has been a member of the Realtor Association
of Dade County since 1984 and has served in a variety of officer and director
positions thereon. Mr. Shuffield's community memberships include the Coral
Gables Chamber of Commerce (where he served as President from 1992-93 and where
he was awarded the Robert B. Knight Outstanding Citizen of Coral Gables Award),
the Greater Miami Chamber of Commerce (where he serves on the Board of
Governors) and the Rotary Club of Coral Gables. Mr. Shuffield received a
Bachelor of Science degree in business administration from the University of
Tennessee. He currently serves on the Board of Baptist Health Enterprises and
the Coral Gables Community Foundation

James E. Newmeyer

Mr. Newmeyer was appointed Chairman of Embassy Financial Services in February
2003. Prior to his appointment as Chairman, Mr. Newmeyer has been President of
Embassy Financial Services, Inc. since 1996, where he oversaw all operations of
the mortgage business. He is also Secretary/Treasurer of the Company. Prior to
joining Embassy, Mr. Newmeyer has been an executive with numerous real estate
mortgage companies for over twenty years, including PHH Mortgage Services,
Source One Mortgage Services Corporation, MHSI/Chemical Residential Mortgage/
CenTrust Mortgage, Amerifirst Mortgage and Southeast Mortgage Company. Mr.
Newmeyer has a Bachelor of Arts degree from Furman University and a Masters
Degree from Florida International University.

Louis Cossato

Mr. Cossato is President of Tilesman Italia SPA, an Italian corporation in the
energy industry which operations include energy field analysis. He has held this
position since 1986 and his responsibilities for such business include
management and operations.

Israel Kreps

Mr. Kreps has been a director of the Company since June 2002. He is managing
partner of Kreps/DeMaria, a Miami-based international public relations firm that
provides a broad range of services and expertise in media relations, business
development and strategic partnerships. He has held this position since 1988 and
his particular expertise is in the area of tourism, banking, real estate and
professional services. Mr. Kreps is a graduate of the University of Miami, and
is a vice chairman of the Governors of the Greater Miami Chamber of Commerce,
and chairs the Chamber's Marketing Resource Institute. Mr. Kreps has served on
the Jackson Memorial Hospital Foundation Board and the Health and Human Services
Board of the Department of Health and Rehabilitative Services.

                                       14

<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

Compensation

The following table sets forth information about the compensation paid or
accrued by the Company to the Company's named executive officers whose aggregate
compensation exceeded $100,000, for the last three completed fiscal years:

                           SUMMARY COMPENSATION TABLE

                                                                Long-Term
                                                               Compensation
                                                          ---------------------
                                 Annual Compensation              Awards
                              -------------------------   ---------------------
          Name and                                        Securities Underlying
     Principal Position       Year    Salary     Bonus           Options
-------------------------------------------------------------------------------

Allen C. Harper - Chief       2002   $150,000        --              --
Executive Officer             2001   $150,000        --              --
                              2000   $150,000        --              --

-------------------------------------------------------------------------------
Ronald A. Shuffield -         2002   $500,000        --              --
President, Chief Operating    2001   $320,000        --              --
Officer;                      2000   $320,000        --              --
President of EWM

-------------------------------------------------------------------------------
James E. Newmeyer -           2002   $212,900        --              --
Secretary, Treasurer;         2001   $200,400        --              --
President of Embassy          2000   $145,187        --              --
Financial Services, Inc.

-------------------------------------------------------------------------------
Thomas E. Byrne, President,   2002   $200,000   $34,664              --
EWM Commercial Sales          2001   $200,000   $53,468              --
Division                      2000   $200,000        --              --

-------------------------------------------------------------------------------

Compensation of Directors

The Company reimburses members of the Board of Directors for their expenses
incurred in connection with their services as directors. In addition, each
director is paid $500 for every directors meeting they attend and $100 for each
committee meeting they attend for directors' committees of which such director
is a member.

                                       15

<PAGE>

Compensation of Officers - Employment Agreements

On April 19, 2002, the Company entered into employment agreements with Messrs.
Harper and Shuffield. The agreements memorialize the employment relationship
that have existed since 1984 between the respective individuals and the Company.
The agreements have an initial two year term, with an option for each employee
to extend for an additional two-year period. Mr. Shuffield's agreement provides
for his employment as President of the Company and President of EWM at a base
salary of $500,000 per year with a bonus of up to 5.0% of EWM's pre-tax net
income. Mr. Harper's agreement provides for his employment as Chairman and Chief
Executive Officer of the Company and Chairman and Chief Executive Officer of EWM
at a base salary of $150,000 per year with a bonus of up to 5.0% of EWM's
pre-tax net income. Each of the employment agreements provide that the base
salary shall be increased at least 3% per year during the term of the agreement.
The Company also pays for disability and life insurance for both Messrs. Harper
and Shuffield and provides each with full medical and health insurance coverage,
a 401(K) plan and an automobile. The employment agreements also contain two-year
non-compete provisions.

In connection with the purchase of Byrne, EWM also entered into an employment
agreement with Thomas E. Byrne dated as of May 1, 1998. Mr. Byrne's agreement
provides for his employment as President of EWM's Commercial Sales Division at a
base salary of $100,000 plus a commission and bonus incentives based on real
estate closings. In addition, EWM provides Mr. Byrne with full medical and
health insurance coverage and a 401(k) plan and an automobile. The agreement
provides for an initial term of five years.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information with respect to the securities
ownership of those persons who own more than five (5%) percent of the
registrant's outstanding common stock as of the date hereof, including shares
owned by its executive officers and directors:*

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
                          Name and Address of                        Percent of Class
Title of Class             Beneficial Owners         No. of Shares          (%)
-------------------------------------------------------------------------------------
<S>              <C>                                   <C>                 <C>
Common Stock     Thomas E. Byrne                         421,000            6.43
                 6150 S.W. 76th Street
                 South Miami, FL 33143
-------------------------------------------------------------------------------------
Common Stock     James E. Newmeyer                       275,000            4.20
                 1360 S. Dixie Highway
                 Coral Gables, FL 33146
-------------------------------------------------------------------------------------
Common Stock     Allen C. Harper &                     1,113,501           17.01
                 Carol Harper, JTWROS
                 1360 S. Dixie Highway
                 Coral Gables, FL 33146
-------------------------------------------------------------------------------------
Common Stock     Ronald A. Shuffield                   1,113,501           17.01
                 1360 S. Dixie Highway
                 Coral Gables, FL 33146
-------------------------------------------------------------------------------------
Common Stock     Officers and directors as a group
                 (5 persons)                           2,599,503           39.70
-------------------------------------------------------------------------------------
</TABLE>

                                       16

<PAGE>

----------
*    Between April and June 2002, EWM acquired 2,160,001 shares of common stock
     of the Company from a majority shareholder for $4,250,000. These shares
     remain issued and outstanding as they have been pledged to Mellon United
     National Bank in connection with a loan made to EWM. Upon repayment of all
     amounts due under this loan, the subject shares will be returned to the
     Company's treasury and cancelled.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to two First Reserve, Inc. Common Stock Purchase Warrants dated August
31, 1998 (collectively, the "Warrants"), the Company granted to VALORSEC
Vermaltungs & Treu-Anstalt, a Swiss company and former shareholder ("VALORSEC"),
rights to purchase Common Stock of the Company. M. Thierry Manni, a former
director of the Company, is a director of VALORSEC. In connection with the Stock
Purchase transaction, all of the Warrants have been cancelled as of May 2002.
However, Valorsec has the option to purchase, on or before June 30, 2007, up to
5% of the then outstanding shares of common stock of the Company at a purchase
price equal to 90% of the fair market value of the shares.

ITEM 14. CONTROLS AND PROCEDURES

As of a date within 90 days of the filing date of this annual report, an
evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures was performed under the supervision and with
the participation of the Company's management, including the chief executive
officer and principal financial officer. Based on that evaluation, the Company's
management, including the chief executive officer and chief financial officer,
concluded that the Company's disclosure controls and procedures were effective
as of the evaluation date. Subsequent to the evaluation date, there have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect internal controls.

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) Exhibits. The following exhibits are filed with or incorporated by reference
into this report. The exhibits which are marked by a single asterisk (*) were
previously filed as a part of, and are hereby incorporated by reference from the
Company's Registration Statement on Form 10SB, as filed with the Securities and
Exchange Commission on May 14, 1999. The exhibits which are marked by a double
asterisk (**) were previously filed as part of, and are hereby incorporated by
reference from the Company's Form 10SB/A as filed with the Securities and
Exchange Commission on September 13, 1999. The exhibits which are marked by a
triple asterisk (***) were previously filed as part of, and are hereby
incorporated by reference from the Company's Form 10-Q as filed with the
Securities and Exchange Commission on August 8, 2002.

        3.1   Articles of Incorporation of the Company (f.k.a. El Squared,
              Inc.).*

        3.2   Bylaws of First Reserve, Inc.*

       10.1   Articles of Merger of First Reserve, Inc. (a Florida corporation)
              and First Reserve, Inc. (an Arizona corporation).*

                                       17

<PAGE>

       10.2   Agreement and Plan of Merger dated April 1, 1998 by and between
              First Reserve, Inc. (a Florida corporation) and First Reserve,
              Inc. (an Arizona corporation).*

       10.3   Articles of Merger of Byrne-Rinehart & Co. (a Florida corporation)
              and Esslinger-Wooten-Maxwell, Inc. (a Florida corporation).*

       10.4   Articles of Merger of Gerard International Realty, Inc. (a Florida
              corporation) and Esslinger-Wooten-Maxwell, Inc. (a Florida
              corporation).*

       10.5   Employment Agreement dated April 19, 2002 by and between First
              Reserve, Inc. and Allen C. Harper. ***

       10.6   Employment Agreement dated April 19, 2002 by and between First
              Reserve, Inc. and Ronald A. Shuffield. ***

       10.7   Promissory Note for $1.2 million between First Reserve, Inc. and
              R.T. Construction Interests, Inc., dated July 13, 1998.**

       10.8   Confidential Private Offering Memorandum, dated April 6, 1998.**

       10.9   Common Stock Purchase Warrant between the Company and Valorsec,
              dated August 31, 1998.**

       10.10  Common Stock Purchase Warrant between the Company and Valorsec,
              dated August 31, 1998.**

       10.11  Stock Purchase Agreement dated March 31, 1999 by and between
              Marjorie Schwartz and First Reserve, Inc. (acquisition of Columbia
              Title of Florida, Inc.).*

       10.12  Credit Agreement, dated as of April 19, 2002, by and between
              Esslinger-Wooten-Maxwell, Inc. and Mellon United National Bank.
              ***

       10.13  Stock Purchase Agreement, dated as of January 10, 2002, by and
              among Esslinger-Wooten-Maxwell, Inc., First Reserve, Inc. and
              Charles Manni..***

       10.14  Stock Purchase Agreement, dated as of April 18, 2002, by and
              between James Newmeyer and First Reserve, Inc. ***

       21     Subsidiaries of the registrant.

       23.1   Consent of McClain and Company, L.C.

       99.1   Certificate Pursuant to 18 U.S.C. Section 1350, as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 executed
              by the Chief Executive Officer of the Company.

       99.2   Certificate Pursuant to 18 U.S.C. Section 1350, as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 executed
              by the Principal Financial Officer of the Company.

                                       18

<PAGE>

(b)    REPORTS ON FORM 8-K

       None

                                       19

<PAGE>

                                   SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                            FIRST RESERVE, INC.


Date: March 28, 2003        By:    /s/ Allen C. Harper
                                ------------------------------------------------
                            Name:  Allen C. Harper
                            Title: Chairman and Chief Executive Officer


                            By:    /s/ Ronald A. Shuffield
                                ------------------------------------------------
                            Name:  Ronald A. Shuffield
                            Title: Director, President and Principal Financial
                                   Officer


                            By:    /s/ James E. Newmeyer
                                ------------------------------------------------
                            Name:  James E. Newmeyer
                            Title: Director, Secretary/Treasurer


                            By:
                                ------------------------------------------------
                            Name:  Louis Cossato
                            Title: Director


                            By:    /s/ Israel Kreps
                                ------------------------------------------------
                            Name:  Israel Kreps
                            Title: Director

<PAGE>

                                 CERTIFICATIONS

I, Ronald A. Shuffield, certify that:

1. I have reviewed this annual report on Form 10-K of First Reserve, Inc.;

2. Based on my knowledge, this annual 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 annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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-14 and 15d-14) for the registrant and have:

a) 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 annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

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
functions):

a) 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

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

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: March 28, 2003                      By: /s/ Ronald A. Shuffield
                                              ----------------------------------
                                              Ronald A. Shuffield, President
                                              and Principal Financial Officer

<PAGE>

                                 CERTIFICATIONS

I, Allen C. Harper, certify that:

1. I have reviewed this annual report on Form 10-K of First Reserve, Inc.;

2. Based on my knowledge, this annual 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 annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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-14 and 15d-14) for the registrant and have:

a) 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 annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

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 functions):

a) 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

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

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: March 28, 2003                    By: /s/ Allen C. Harper
                                            --------------------------------
                                              Allen C. Harper
                                              Chief Executive Officer

<PAGE>


                        CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001, AND 2000

                      FIRST RESERVE, INC. AND SUBSIDIARIES

                              CORAL GABLES, FLORIDA

<PAGE>


                          INDEPENDENT AUDITORS' REPORT

The Officers and Directors
First Reserve, Inc. and Subsidiaries
Coral Gables, Florida

We have audited the accompanying consolidated balance sheets of First Reserve,
Inc. and Subsidiaries (the "Company"), as of December 31, 2002 and 2001, and the
related consolidated statements of income, stockholders' equity and cash flows
for the years ended December 31, 2002, 2001, and 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of First Reserve,
Inc. and Subsidiaries, as of December 31, 2002 and 2001, and the consolidated
results of their operations and their cash flows for the years ended December
31, 2002, 2001, and 2000 in conformity with accounting principles generally
accepted in the United States of America.

McClain & Company, L.C.

February 27, 2003
Miami, Florida

                                  Page 1 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                           DECEMBER 31, 2002 AND 2001
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                            2002            2001
                                         -----------   -----------

CURRENT ASSETS
   Cash                                  $ 1,693,280   $ 2,333,012
   Interest-bearing deposit with bank        100,000            --
   Receivables                             1,000,656       409,551
   Mortgage loans held for sale            4,430,140     3,422,025
   Prepaid expenses and other                268,479       167,160
                                         -----------   -----------

      Total current assets                 7,492,555     6,331,748
                                         -----------   -----------

PROPERTY AND EQUIPMENT
   Land                                      190,571            --
   Building                                  829,097            --
   Furniture and fixtures                  1,477,468     1,378,055
   Office equipment                          983,210       921,348
   Transportation equipment                   20,000        20,000
   Leasehold improvements                  1,009,911       779,830
   Equipment held under capital leases        35,730        35,730
                                         -----------   -----------
                                           4,545,987     3,134,963
   Less accumulated depreciation          (1,577,883)   (1,249,088)
                                         -----------   -----------

      Net property and equipment           2,968,104     1,885,875
                                         -----------   -----------

OTHER ASSETS
   Goodwill, net                           1,376,122     1,224,922
   Deposits and other                        207,628       245,219
                                         -----------   -----------

      Total other assets                   1,583,750     1,470,141
                                         -----------   -----------

      Total assets                       $12,044,409   $ 9,687,764
                                         ===========   ===========

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

                                  Page 2 of 36

<PAGE>

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                              2002          2001
                                                                          -----------   ----------
<S>                                                                       <C>           <C>
CURRENT LIABILITIES
   Accounts payable and accrued expenses                                  $   556,230   $  390,988
   Deferred mortgage fee income                                                96,256       64,296
   Reserves on deposit                                                         24,053       10,414
   Warehouse line of credit - bank                                          4,384,544    3,377,379
   Current portion of obligations under capital leases                          9,238        8,049
   Current maturities of long-term debt                                       300,000      400,000
                                                                          -----------   ----------

      Total current liabilities                                             5,370,321    4,251,126
                                                                          -----------   ----------

LONG-TERM LIABILITIES
   Notes payable                                                            3,925,000      500,000
   Deferred tax liability                                                     142,200       63,022
   Obligations under capital leases                                                --        9,238
                                                                          -----------   ----------

      Total long-term liabilities                                           4,067,200      572,260
                                                                          -----------   ----------

      Total liabilities                                                     9,437,521    4,823,386
                                                                          -----------   ----------

STOCKHOLDERS' EQUITY
   Common stock, no par value, 100,000,000 authorized shares, 7,027,050
      and 6,915,050 shares issued, 6,547,350 and 6,475,050 shares
      outstanding at December 31, 2002 and December 31, 2001,
      respectively                                                          6,290,507    6,139,307
   Retained earnings (accumulated deficit)                                  1,213,976     (680,929)
   Less treasury  stock,  479,700 and 440,000 common shares,  no par
      value, at cost at December 31, 2002 and 2001, respectively             (647,595)    (594,000)
                                                                          -----------   ----------
                                                                            6,856,888    4,864,378
   Less 2,160,001 common shares held by a consolidated subsidiary          (4,250,000)          --
                                                                          -----------   ----------

      Total stockholders' equity                                            2,606,888    4,864,378
                                                                          -----------   ----------

      Total liabilities and stockholders' equity                          $12,044,409   $9,687,764
                                                                          ===========   ==========
</TABLE>

                                  Page 3 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                               2002          2001          2000
                                                           -----------   -----------   -----------
<S>                                                        <C>           <C>           <C>
REVENUES
   Real estate management and brokerage                    $46,280,266   $37,555,259   $30,252,462
   Mortgage                                                  1,890,067     2,015,642     1,493,631
   Title fees                                                1,947,239     1,704,810     1,081,051
   Insurance                                                    32,457        15,486         2,070
                                                           -----------   -----------   -----------

         Total revenues                                     50,150,029    41,291,197    32,829,214
                                                           -----------   -----------   -----------

COSTS AND EXPENSES
   Commissions, fees, and other incentives:
      Real estate                                           32,145,849    26,208,216    20,915,737
      Mortgage                                               1,193,263     1,257,568       906,511
      Title                                                    651,866       546,864       309,758
      Insurance                                                     --            --            --
   General and administrative expenses                      12,541,039    11,177,524     8,956,187
   Depreciation and amortization                               432,351       407,932       355,292
                                                           -----------   -----------   -----------

         Total costs and expenses                           46,964,368    39,598,104    31,443,485
                                                           -----------   -----------   -----------

         Income from operations before income taxes
            and other income and expenses                    3,185,661     1,693,093     1,385,729
                                                           -----------   -----------   -----------

OTHER INCOME AND (EXPENSE)
   Interest income                                             175,593       213,453        81,514
   Other income                                                 75,280        74,429        64,002
   Interest expense                                           (379,581)     (170,984)     (142,242)
   (Loss)/gain on disposition of property and
      equipment                                                   (965)       (4,715)        4,537
                                                           -----------   -----------   -----------

         Total other (expense) and income                     (129,673)      112,183         7,811
                                                           -----------   -----------   -----------

         Income before income taxes                          3,055,988     1,805,276     1,393,540

PROVISION FOR INCOME TAX                                     1,161,083       616,896        16,362
                                                           -----------   -----------   -----------

         Net income                                        $ 1,894,905   $ 1,188,380   $ 1,377,178
                                                           ===========   ===========   ===========

EARNINGS PER COMMON SHARE:

   BASIC EARNINGS PER COMMON SHARE                         $      0.37   $      0.18   $      0.20
                                                           ===========   ===========   ===========

   WEIGHTED AVERAGE COMMON SHARES                            5,103,315     6,633,858     6,768,847
                                                           ===========   ===========   ===========

   DILUTED EARNINGS PER COMMON SHARE                       $      0.36   $      0.18   $      0.20
                                                           ===========   ===========   ===========

   WEIGHTED AVERAGE DILUTED COMMON SHARES                    5,252,966     6,634,165     6,768,847
                                                           ===========   ===========   ===========
</TABLE>

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

                                  Page 4 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                        Common      Common
                                                                         Stock       Stock      Treasury
                                                                        Shares       Amount       Stock
                                                                      ----------   ----------   ---------
<S>                                                                    <C>         <C>          <C>
BALANCE, January 1, 2000                                               6,767,050   $5,939,507   $      --

No par value stock issued for the acquisition of assets of Ross &
   Associates, Inc.                                                      138,000      186,300          --

No par value stock issued for the acquisition of assets of The
   Daniels Group Inc.                                                     10,000       13,500          --

Acquisition of treasury stock                                           (200,000)          --    (270,000)

Net income                                                                    --           --          --
                                                                      ----------   ----------   ---------

BALANCE, December 31, 2000                                             6,715,050    6,139,307    (270,000)

Acquisition of treasury stock                                           (240,000)          --    (324,000)

Net income                                                                    --           --          --
                                                                      ----------   ----------   ---------

BALANCE, December 31, 2001                                             6,475,050    6,139,307    (594,000)

Acquisition of treasury stock                                            (39,700)          --     (53,595)

Subsidiary acquisition of parent's common stock                       (2,160,001)          --          --

No par value stock issued for the acquisition of Ross & Associates,
   Inc., previously held as contingent shares                            112,000      151,200          --

Net income                                                                    --           --          --
                                                                      ----------   ----------   ---------

BALANCE, December 31, 2002                                             4,387,349   $6,290,507   $(647,595)
                                                                      ==========   ==========   =========

<CAPTION>
                                                                         Common         Retained
                                                                      Stock Held by     Earnings         Total
                                                                      Consolidated    (Accumulated   Stockholders'
                                                                        Subsidiary       Deficit)       Equity
                                                                      -------------   ------------   -------------
<S>                                                                    <C>            <C>             <C>
BALANCE, January 1, 2000                                               $        --    $(3,246,487)    $ 2,693,020

No par value stock issued for the acquisition of assets of Ross &
   Associates, Inc.                                                             --             --         186,300

No par value stock issued for the acquisition of assets of The
   Daniels Group Inc.                                                           --             --          13,500

Acquisition of treasury stock                                                   --             --        (270,000)

Net income                                                                      --      1,377,178       1,377,178
                                                                       -----------    -----------     -----------

BALANCE, December 31, 2000                                                      --     (1,869,309)      3,999,998

Acquisition of treasury stock                                                   --             --        (324,000)

Net income                                                                      --      1,188,380       1,188,380
                                                                       -----------    -----------     -----------

BALANCE, December 31, 2001                                                      --       (680,929)      4,864,378

Acquisition of treasury stock                                                   --             --         (53,595)

Subsidiary acquisition of parent's common stock                         (4,250,000)            --      (4,250,000)

No par value stock issued for the  acquisition of Ross & Associates,
   Inc., previously held as contingent shares                                   --             --         151,200

Net income                                                                      --      1,894,905       1,894,905
                                                                       -----------    -----------     -----------

BALANCE, December 31, 2002                                             $(4,250,000)   $ 1,213,976     $ 2,606,888
                                                                       ===========    ===========     ===========
</TABLE>

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

                                   Page 5 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

<TABLE>
<CAPTION>
                                                                           2002           2001           2000
                                                                       ------------   ------------   ------------
<S>                                                                    <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Cash received from customers                                        $ 49,619,803   $ 41,700,756   $ 32,585,528
   Interest received                                                        174,865        213,453         81,514
   Interest paid                                                           (328,185)      (170,984)      (150,706)
   Cash paid to suppliers and employees                                 (46,393,826)   (39,428,506)   (30,887,749)
   Payments to borrowers, net                                            (1,008,115)      (422,691)      (177,588)
   Settlements paid                                                          (5,000)    (1,363,009)    (1,120,036)
   Income taxes paid                                                     (1,148,738)      (473,500)       (37,113)
                                                                       ------------   ------------   ------------

      Net cash provided by operating activities                             910,804         55,519        293,850
                                                                       ------------   ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Payments from (advances to) employees                                      6,897         (7,583)       (11,600)
   Net decrease (increase) in deposits                                       58,940        (97,479)       (20,977)
   Purchases of property and equipment                                   (1,455,394)      (381,746)      (698,569)
   Purchase of interest-bearing deposit with bank, net of maturities       (100,000)            --       (100,000)
   Proceeds from disposition of property and equipment                           --             --          4,537

   Proceeds from interest-bearing deposits with bank                             --        225,000             --
                                                                       ------------   ------------   ------------

      Net cash used in investing activities                              (1,489,557)      (261,808)      (826,609)
                                                                       ------------   ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from borrowings on loan payable                               3,500,000        400,000             --
   Net proceeds from warehouse line of credit                             1,007,165      1,589,055        967,642
   Principal payments on borrowings                                        (175,000)            --         (4,646)
   Payment of capital lease obligation                                       (8,049)        (7,012)        (6,109)
   Acquisition of treasury stock                                            (53,595)      (324,000)      (270,000)
   Subsidiary's acquisition of the parent's common stock                 (4,250,000)            --             --

   Loan acquisition costs                                                   (81,500)            --             --
                                                                       ------------   ------------   ------------

      Net cash (used in) provided by financing activities                   (60,979)     1,658,043        686,887
                                                                       ------------   ------------   ------------

      Net (decrease) increase in cash                                      (639,732)     1,451,754        154,128

CASH, beginning of period                                                 2,333,012        881,258        727,130
                                                                       ------------   ------------   ------------

CASH, end of period                                                    $  1,693,280   $  2,333,012   $    881,258
                                                                       ============   ============   ============
</TABLE>

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

                                   Page 6 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

<TABLE>
<CAPTION>
                                                                                  2002          2001          2000
                                                                              -----------   -----------   -----------
<S>                                                                           <C>           <C>           <C>
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
   Net income                                                                 $ 1,894,905   $ 1,188,380   $ 1,377,178
   Adjustments to reconcile net income to net
      cash provided by operating activities:
      Depreciation                                                                372,200       313,211       273,628
      Amortization                                                                 60,151        94,721        81,664
      Bad debt on other receivables                                                37,435            --            --
      Gain on disposition of property and equipment                                    --            --        (4,537)
      Loss on abandonment of property and equipment                                   965         4,715            --
      (Increase) decrease in prepaid expenses and other assets                   (145,651)      106,226       (69,820)
      (Increase) decrease in receivables                                         (591,105)      390,764      (402,484)
      Increase in mortgage loans held for sale                                 (1,008,115)   (1,363,009)   (1,228,396)
      Increase (decrease) in accounts and notes (operating) payable and
         accrued expenses                                                         225,103      (646,277)       63,461
      (Decrease) increase in bank overdraft                                             -      (108,360)      108,360
      Increase in deferred mortgage fee income                                     31,960         5,671        35,885
      Increase (decrease) in reserves on deposits                                  13,639       (53,406)       58,911
      Increase in deferred income tax liability                                    79,178        63,022            --
      (Decrease) increase in current income tax liability                         (59,861)       59,861            --
                                                                              -----------   -----------   -----------

         Net cash provided by operating  activities                           $   910,804   $    55,519   $   293,850
                                                                              ===========   ===========   ===========
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

As further discussed in Notes 1 and 17, as part of the acquisition of Ross
& Associates, Inc. ("Ross"), the Company held 112,000 shares in escrow as
"contingent" shares, pending the sole shareholder of Ross meeting the
requirements set forth in the purchase agreement. The sole shareholder of
Ross met the requirements and, in October 2002, the Company issued these
shares, increasing common stock and goodwill by $151,200.

On September 1, 2000, Esslinger, Wooten & Maxwell, Inc. ("EWM"), purchased
substantially all the assets of Ross & Associates, Inc. for $186,300 in stock of
the Company. As a result of this acquisition, accounted for as a purchase,
property and equipment of $46,875, accounts receivable of $41,500, and other
assets of $97,925 were recorded.

On September 1, 2000, EWM acquired substantially all the assets of The Daniels
Group, Inc. for $13,500 in stock of the Company. As a result of this
acquisition, accounted for as a purchase, property and equipment totaling
$13,500 was recorded.

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

                                  Page 7 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          PRINCIPLES OF CONSOLIDATION AND COMBINATION

          The accompanying consolidated financial statements include the
          accounts of First Reserve, Inc. and its wholly-owned subsidiaries,
          Esslinger, Wooten & Maxwell, Inc. ("EWM"), First Reserve Realty, Inc.
          ("FRRI"), First Reserve Management, Inc., First Reserve Equities,
          Inc., Embassy Financial Services, Inc. ("Embassy"), Columbia Title of
          Florida, Inc. ("Columbia"), and First Reserve Insurance, Inc.
          (collectively, the "Company"). During 2000, the Company created a new
          subsidiary, First Reserve Insurance, Inc. ("FRINS"). The results of
          operations for FRINS are included in the consolidated statements of
          income for the period from September 13, 2000 to December 31, 2000.

          All significant intercompany accounts and transactions have been
          eliminated in the consolidated financial statements.

          NATURE OF OPERATIONS

          EWM and FRRI are primarily engaged in the brokerage and management of
          residential and commercial real estate in South Florida. FRRI ceased
          operating in 1999 and became a dormant corporation.

          Embassy is a licensed residential mortgage lender that specializes in
          conventional, FHA, and VA first mortgages primarily in the South
          Florida area. Additionally, Embassy funds loans to be made in
          connection with its mortgage banking operations. Each loan is backed
          by a permanent loan "take-out commitment" from several national
          lenders of residential financing. The loans are purchased by the
          national lenders once permanent financing is secured. Embassy does not
          service these loans.

          Columbia is a title company engaged in the business of closing real
          estate and mortgage loan transactions, primarily in the South Florida
          area.

          FRINS is primarily engaged in insurance brokerage. On September 13,
          2000, FRINS signed an exclusive agreement with an insurance broker to
          market and sell insurance products to the clients of EWM and the
          Company. These insurance products include, but are not limited to,
          property and casualty, automobile, life, and health insurance
          policies.

          First Reserve Management, Inc. and First Reserve Equities, Inc. were
          dormant corporations and were dissolved in 2000.

                                  Page 8 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          BUSINESS COMBINATIONS

          On September 1, 2000, EWM acquired substantially all the assets of
          Ross & Associates, Inc. ("Ross"), in a business combination accounted
          for as a purchase. Ross was primarily engaged in the same activity as
          EWM. Under the terms of the agreement, Ross' sole shareholder received
          138,000 shares of common stock of the Company on the date of the
          acquisition. An additional 112,000 "contingent" shares of common stock
          of the Company were to be issued pending future gross commission
          income to be generated by the former shareholder of Ross from January
          1, 2001 to December 31, 2001. At December 31, 2001, the former
          shareholder of Ross had met the gross commission requirement. As
          further discussed in Note 16, an additional 112,000 shares of common
          stock of the Company were issued to Ross in October 2002 and goodwill
          in the amount of $151,200 was recorded for the year ended December 31,
          2002. Based on recent trading of the Company's stock, the fair value
          of the Company's stock price on the acquisition date was $1.35 per
          share. The total cost of the acquisition, including the contingent
          shares, was $337,500. The results of operations for Ross are included
          in the consolidated statements of income for the period beginning
          September 1, 2000.

          On September 1, 2000, EWM acquired substantially all of the assets of
          The Daniels Group, Inc. ("Daniels"), in a business combination
          accounted for as a purchase. Daniels was primarily engaged in the same
          activity as EWM. Under the terms of the agreement, Daniels' sole
          shareholder received 10,000 shares of common stock of the Company on
          the date of the acquisition. Additional cash consideration to the
          former shareholder of Daniels may be paid, pending the achievement of
          certain commission levels during four separate one-year periods,
          ending on August 31, 2004. If these commission levels are not achieved
          during these four separate one-year periods, no additional cash
          consideration will be paid. Due to the contingent nature of this cash
          consideration, the Company will record this transaction as additional
          compensation to the former shareholder of Daniels achieving the
          required commission levels. Based on recent trading of the Company's
          stock, the fair value of the Company's stock price on the acquisition
          date was $1.35 per share. The total cost of the acquisition was
          approximately $13,500. The results of operations for Daniels are
          included in the consolidated statements of income for the period
          beginning September 1, 2000.

                                  Page 9 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          REVENUE RECOGNITION

          EWM and FRRI earn commissions from the sale of commercial and
          residential real estate and from the management of rental properties.
          Revenues are recorded when the real estate sale is closed and the
          management fees are earned. All fees and revenues are included as
          "real estate management and brokerage" in the financial statements.
          Commission, fees, and other expenses related to these revenues are
          included as "commission, fees, and other incentives - real estate" in
          the financial statements.

          Embassy charges its customers for loan fees, ancillary fees, and
          interest related to mortgages for the purchase and refinancing of
          their homes. Mortgage loan origination revenues, offset by direct loan
          origination costs, are deferred and the net amount is recognized as a
          component of gain on sale of mortgage loans when the sale of the loan
          has been consummated. Mortgage loan origination revenue consists
          primarily of loan origination, application, and other fees paid by the
          borrowers and service release premiums paid by the investors. Embassy
          recognizes these fees when the related loan is delivered to the third
          party purchaser. All fees and revenues are included as "mortgage
          revenues" in the financial statements. Direct loan origination costs
          consist of commissions paid to Embassy's mortgage consultants,
          appraisal fees, and credit report fees paid to third parties. These
          costs are expensed when the loan is delivered to third party purchaser
          and are included in the financial statements as "commission, fees, and
          other incentives - mortgage." Interest on mortgage loans held for sale
          is recorded in income as earned when incurred.

          Columbia charges its customers title search, recording, and other
          ancillary fees related to mortgages for the purchase and refinancing
          of their homes. Columbia records revenues when the mortgage is
          "closed." All revenues are included as "title fees" in the financial
          statements. Commission, fees, and other expenses related to these
          revenues are included as "commission, fees, and other incentives -
          title" in the financial statements.

          FRINS records revenue as of the effective date of the insurance
          policy. Contingent revenue is recorded in income when received. All
          revenues are included as "insurance revenue" in the financial
          statements.

          Expenses for all companies are recorded when they are incurred.

          DIRECT ACQUISITION COSTS

          Direct acquisition costs are amortized on the straight-line method
          over five years. Amortization expense charged to operations for the
          years ended December 31, 2002, 2001, and 2000 was $13,399, $13,399,
          and $13,399, respectively.

                                  Page 10 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          CASH AND CASH EQUIVALENTS

          For purposes of the statement of cash flows, the Company considers all
          highly liquid debt instruments purchased with a maturity of three
          months or less to be cash equivalents, excluding cash held in trust.

          INTEREST-BEARING DEPOSIT WITH BANK

          At December 31, 2002, interest-bearing deposit with bank consists of a
          certificate of deposit held at a financial institution bearing
          interest at 2.25% per annum. This certificate of deposit matures in
          March 2003.

          CASH HELD IN TRUST

          The Company maintains separately designated Trust accounts for home
          buyers' earnest money, property owners, tenants, and other third
          parties. The Company holds such funds until sold properties are closed
          and leases have expired. Funds are disbursed in accordance with the
          settlement instructions or rental management agreements. These funds
          are not recorded in the Company's financial statements as they are
          held in a fiduciary capacity. At December 31, 2002 and 2001, the
          Company held $8,705,531 and $7,109,038 of funds in trust,
          respectively.

          PROPERTY AND EQUIPMENT

          Property and equipment are stated at cost and depreciated using
          straight-line and accelerated methods over the following estimated
          useful lives of the assets. Additions and improvements are
          capitalized, while routine repair and maintenance costs are expensed.

          Furniture and fixtures                 5 - 10 years
          Office equipment                       5 - 7 years
          Transportation equipment               5 years
          Leasehold improvements                 Shorter of the life of the
                                                 underlying lease or the
                                                 estimated useful life of the
                                                 improvement.
          Equipment held  under capital leases   Shorter of the life of the
                                                 underlying lease or the
                                                 estimated useful life of the
                                                 equipment.

          Depreciation expense charged to operations for the years ended
          December 31, 2002, 2001, and 2000, was $372,200, $313,211, and
          $273,628, respectively.

                                 Page 11 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          INCOME TAXES

          Deferred income tax assets and liabilities are computed annually for
          differences between the financial statements and tax bases of assets
          and liabilities that will result in taxable or deductible amounts in
          the future, based on enacted tax laws and rates applicable to the
          periods in which the differences are expected to affect taxable
          income.

          Valuation allowances are established when necessary to reduce deferred
          tax assets to the amount expected to be realized. Income tax expense
          is the tax payable or refundable for the period, minus the changes
          during the period in deferred tax assets and liabilities.

          Income taxes are provided for on all taxable income included in the
          consolidated financial statements in the period in which the income is
          reported for financial statement purposes. Accordingly, deferred
          income taxes (benefits) are provided for timing differences between
          financial and tax reporting. The principal items comprising these
          differences are the deferred recognition of operating losses for tax
          purposes, goodwill, and property and equipment.

          LONG-LIVED ASSETS

          The Company reviews its long-lived assets for impairment whenever
          events or changes in circumstances indicate that the carrying amount
          of an asset may not be recoverable.

          USE OF ESTIMATES

          The preparation of financial statements in conformity with accounting
          principles generally accepted in the United States of America 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.

          BUSINESS PROMOTION AND ADVERTISING

          Advertising and promotional costs are expensed as incurred. Total
          advertising and promotional expense for the years ended December 31,
          2002, 2001, and 2000 was approximately $1,560,000, $1,600,000, and
          $1,300,000, respectively.

          NON-COMPETITION AND CONSULTING AGREEMENTS

          Costs related to non-competition agreements entered into as part of
          the Company's acquisition of the assets of Ross and Daniels are being
          amortized over the period of the respective agreements, which is five
          years. Amortization expense charged to operations for the years ended
          December 31, 2002, 2001, and 2000, amounted to $19,585, $19,585, and
          $6,528, respectively.

                                  Page 12 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          LOAN COSTS

          The Company capitalizes loan costs and amortizes them over the terms
          of the respective loans. Amortization expense charged to operations
          for the years ended December 31, 2002, 2001, and 2000, amounted to
          $27,167, $0, and $0, respectively.

          COMPREHENSIVE INCOME

          The Financial Accounting Standards Board ("FASB") Statement of
          Financial Accounting Standards ("SFAS") No. 130, "Reporting
          Comprehensive Income," requires disclosure of non-owner changes in
          stockholder's equity, and is defined as net income plus direct
          adjustments to stockholder's equity. The Company did not have any
          items of comprehensive income.

          RECLASSIFICATIONS

          Certain prior year balances have been reclassified to conform with
          current year's presentation.

          RECENT PRONOUNCEMENTS

          In December 2002, the FASB issued SFAS No. 148, "Accounting for
          Stock-Based Compensation-Transition and Disclosure," ("SFAS 148").
          SFAS 148 amends SFAS No. 123, "Accounting for Stock-Based
          Compensation," to provide alternative methods of transition to SFAS
          123's fair value method of accounting for stock-based employee
          compensation. The Company does not have any stock-based compensation
          arrangements. The adoption of this standard will not have an impact of
          the Company's financial condition or results of operations.

          In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
          Associated with Exit or Disposal Activities," ("SFAS 146"), which
          supercedes Emerging Issues Task Force No. 94-3, "Liability Recognition
          for Certain Employment Termination Benefits and Other Costs to Exit an
          Activity." SFAS 146 requires companies to record liabilities for costs
          associated with exit or disposal activities to be recognized only when
          the liability is incurred instead of at the date of commitment to exit
          or disposal activity. Adoption of this standard is effective for exit
          or disposal activities that are initiated after December 31, 2002. The
          adoption of this standard will not have an impact on the Company's
          financial condition or results of operations.

          In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
          Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
          Technical Correction," ("SFAS 145"). SFAS 145 rescinds SFAS 4,
          "Reporting Gains and Losses from Extinguishment of Debt," which
          required all gains and losses from extinguishment of debt to be
          aggregated and, if material, classified as an extraordinary item, net
          of related income tax effect.

                                  Page 13 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          RECENT PRONOUNCEMENTS (CONTINUED)

          SFAS 145 requires that gains or losses from extinguishment of debt be
          classified as extraordinary items only if they meet the criteria of
          ABP Opinion No. 30, "Reporting the Results of Operations - Reporting
          the Effects of Disposal of a Segment of Business, and Extraordinary,
          Unusual, and Infrequently Occurring Events and Transactions" and is
          effective beginning after May 15, 2002. The adoption of this standard
          will not have an impact on the Company's financial condition or
          results of operations.

          In October 2001, the FASB issued SFAS No. 144, "Accounting for the
          Impairment of Long-Lived Assets," ("SFAS 144"). SFAS 144 supercedes
          SFAS 121, "Accounting for the Impairment or Disposal of Long-Lived
          Assets and for Long-Lived Assets to be Disposed of," and APB Opinion
          No. 30. SFAS No. 144 retains the fundamental provisions of SFAS 121
          for: 1) recognition and measurement of the impairment of long-lived
          assets to be held and used; and 2) measurement of long-lived assets to
          be disposed of by sale. The adoption of this standard will not have an
          impact on the Company's financial condition or results of operations.

          In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
          Retirement Obligations," ("SFAS 143"). SFAS 143 addresses financial
          accounting and reporting for obligations associated with the
          retirement of tangible long-lived assets and the associated retirement
          costs. The Company does not expect the adoption of SFAS 143 to have an
          impact on the Company's financial condition or results of operations.

          Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill
          and Other Intangible Assets," ("SFAS 142"). SFAS 142 changes the
          accounting for goodwill and other intangible assets. Under this
          standard, goodwill and intangible assets with indefinite lives are no
          longer amortized, but are subject to an annual impairment test. The
          Company will perform its annual impairment review during the second
          quarter of each year commencing in the second quarter of 2002. Under
          SFAS 142, goodwill impairment is deemed to exist if the net book value
          of the reporting unit exceeds its estimated fair value. The Company's
          reporting units are generally consistent with the operating segments
          identified in Note 6 - Business Segment Information. The Company
          completed the annual impairment analysis for the real estate
          management and brokerage and title company segments during the second
          quarter of 2002, and determined that there was no goodwill impairment.
          The Company will routinely perform a detailed valuation analysis in
          connection with the application of this statement, which may result in
          future charges.

                                  Page 14 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 2 - RECEIVABLES

          Receivables consist primarily of open trade accounts that have not
          been reduced by an allowance for doubtful accounts, as management
          considers all receivables to be fully collectible.

NOTE 3 - MORTGAGE LOANS HELD FOR SALE

          Mortgage loans held for sale consist primarily of residential mortgage
          loans made in connection with Embassy's mortgage banking operations
          and are reported at the lower of cost or market value. The method used
          to determine this amount is the commitment price from the national
          lenders utilizing the individual loan method. Net unrealized losses,
          if any, are recognized through a valuation allowance by charges to
          income. Each loan is fully backed by a permanent loan "take-out
          commitment" from several national lenders of residential financing.
          The mortgage loans are purchased by the national lenders once
          permanent financing is secured, usually within 30 days of original
          funding.

NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS, AND RELATED ADOPTION OF SFAS NO.
         142

          The Company has accounted for the excess of the acquisition costs of
          certain subsidiaries over the fair value of identifiable assets as
          goodwill. Through December 31, 2001, this goodwill was being amortized
          over periods ranging from 15 to 40 years. Amortization expense charged
          to operations for the years ended December 31, 2002, 2001, and 2000,
          was $0, $61,737, and $61,737, respectively.

          As of December 31, 2002 and December 31, 2001, the Company's
          intangible assets and related accumulated amortization consisted of
          the following:

          Intangible assets not subject to amortization for periods after
          January 1, 2002:

<TABLE>
<CAPTION>
                                      December 31, 2002                        December 31, 2001
                           --------------------------------------   --------------------------------------
                                         Accumulated                              Accumulated
                              Gross     Amortization       Net         Gross     Amortization       Net
                           ----------   ------------   ----------   ----------   ------------   ----------
<S>                        <C>            <C>          <C>          <C>            <C>          <C>
          Goodwill         $1,591,415     $(215,293)   $1,376,122   $1,440,215     $(215,293)   $1,224,922

          Intangible assets subject to amortization:

          Non-compete
             agreement     $   97,925     $ (45,698)   $   52,227   $   97,925     $ (26,113)   $   71,812
          Direct
             acquisition
             costs             66,993       (59,574)        7,419       66,993       (46,175)       20,818
          Loan costs           81,500       (27,167)       54,333           --             --           --
                           ----------     ---------    ----------   ----------   -----------    ----------
          Total            $  246,418     $(132,439)   $  113,979   $  164,918     $ (72,288)   $   92,630
                           ==========     =========    ==========   ==========   ===========    ==========
</TABLE>

          Intangible assets subject to amortization are included on the balance
          sheet as a component of deposits and other assets.

                                  Page 15 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS, AND RELATED ADOPTION OF SFAS NO.
         142 (CONTINUED)

          The following table sets forth reported net income and earnings per
          share, as adjusted to exclude goodwill amortization expense:

<TABLE>
<CAPTION>
                                                     Year ended          Year ended          Year ended
                                                 December 31, 2002   December 31, 2001   December 31, 2000
                                                 -----------------   -----------------   -----------------
<S>                                                  <C>                 <C>                 <C>
             Net income, as reported                 $1,894,905          $1,188,380          $1,377,178
             Goodwill amortization, net of tax               --              38,506              61,737
                                                     ----------          ----------          ----------

                Net income, as adjusted              $1,894,905          $1,226,886          $1,438,915
                                                     ==========          ==========          ==========

          Basic earnings per share:
             Net income, as reported                 $     0.37          $     0.18          $     0.20
             Goodwill amortization, net of tax               --               0.005                0.01
                                                     ----------          ----------          ----------

                Net income, as adjusted              $     0.37          $    0.185          $     0.21
                                                     ==========          ==========          ==========

          Diluted earnings per share:
             Net income, as reported                 $     0.36          $     0.18          $     0.20
             Goodwill amortization, net of tax               --               0.005                0.01
                                                     ----------          ----------          ----------

                Net income, as adjusted              $     0.36          $    0.185          $     0.21
                                                     ==========          ==========          ==========
</TABLE>

NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS

          The following assumptions were used to estimate the fair value of each
          class of financial instruments for which it is practicable to estimate
          that value:

               Cash and Cash Equivalents

               The carrying amounts of cash and cash equivalents approximate
               their fair value.

               Interest-Bearing Deposit with Bank

               The carrying amount of interest-bearing deposit with bank
               approximates its fair value.

               Mortgage Loans Held for Sale

               Fair values of mortgage loans held for sale are based on the
               outstanding commitment price from investors. The carrying amount
               approximates their fair value.

               Commitment to Extend Credit

               The fair value of mortgage commitments (see Note 12) to extend
               credit is estimated by comparing Embassy's cost to acquire
               mortgages to the current price for similar mortgage loans, taking
               into account the terms of the commitments and creditworthiness of
               the counter parties. At December 31, 2002 and 2001, there were no
               commitments outstanding.

                                 Page 16 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

               Notes Payable and Warehouse Line of Credit - Bank

               The fair values of the notes payable and warehouse line of credit
               (collectively, "notes payable") are estimated based upon current
               rates offered to the Company for debt of the same remaining
               maturities. Carrying amounts of the notes payable are reasonable
               estimates of their fair values.

               Capital Leases

               The carrying amounts of capital leases approximate their fair
               value.

          The estimated fair values of the Company's financial instruments at
          December 31, 2002 and 2001, were as follows:

<TABLE>
<CAPTION>
                                                  December 31, 2002         December 31, 2001
                                               -----------------------   -----------------------
                                                Carrying      Fair        Carrying       Fair
                                                 Amount       Value        Amount        Value
                                               ----------   ----------   ----------   ----------
<S>                                            <C>          <C>          <C>          <C>
          Cash and cash equivalents            $1,693,280   $1,693,280   $2,333,012   $2,333,012
          Interest-bearing deposit with bank   $  100,000   $  100,000   $       --   $       --
          Mortgage loans held for sale         $4,430,140   $4,430,140   $3,422,025   $3,422,025
          Notes payable                        $8,609,544   $8,609,544   $4,277,379   $4,277,379
          Capital leases                       $    9,238   $    9,238   $   17,287   $   17,287
</TABLE>

NOTE 6 - BUSINESS SEGMENT INFORMATION

          The Company's operations are principally managed on a product services
          basis and are comprised of five reportable segments: Esslinger, Wooten
          & Maxwell, Inc. ("EWM"), Embassy Financial Services, Inc. ("Embassy"),
          Columbia Title of Florida, Inc. ("Columbia"), First Reserve Insurance,
          Inc. ("FRINS"), and First Reserve, Inc. ("First Reserve"). EWM's
          product services consist of residential and commercial real estate
          brokerage and relocation services. Embassy's product services have
          been in the capacity of a mortgage lender and mortgage broker in the
          South Florida area, specializing in conventional, FHA, and VA
          mortgages. Columbia's product has been in the capacity of a title
          company. FRINS has been in the capacity of insurance broker. First
          Reserve's capacity has been as a holding company.

          Revenue, net income (loss), EBITDA, which is defined as earnings
          before interest, taxes, depreciation, and amortization, and
          identifiable assets for these segments are as follows:

                                  Page 17 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 6 - BUSINESS SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
                                                            Year ended December 31, 2002
                                    ----------------------------------------------------------------------------
                                    Esslinger,     Embassy      Columbia      First
                                     Wooten &     Financial     Title of     Reserve       First
                                     Maxwell,     Services,     Florida,    Insurance,   Reserve,
                                        Inc.         Inc.          Inc.        Inc.         Inc.        Total
                                    -----------   ----------   ----------   ----------   ---------   -----------
<S>                                 <C>           <C>          <C>           <C>         <C>         <C>
          Revenue                   $46,280,266   $1,890,067   $1,947,239    $32,457     $      --   $50,150,029
          EBITDA                    $ 3,692,952   $  118,560   $  182,760    $30,184     $(156,536)  $ 3,867,920
          Net income (loss)         $ 1,939,396   $  (32,594)  $   96,950    $18,826     $(127,673)  $ 1,894,905
          Identifiable
             assets at period end   $ 6,571,442   $4,733,097   $  475,304    $29,209     $ 235,357   $12,044,409
</TABLE>

<TABLE>
<CAPTION>
                                                            Year ended December 31, 2001
                                    ----------------------------------------------------------------------------
                                    Esslinger,     Embassy      Columbia      First
                                     Wooten &     Financial     Title of     Reserve       First
                                     Maxwell,     Services,     Florida,    Insurance,   Reserve,
                                        Inc.         Inc.          Inc.        Inc.         Inc.        Total
                                    -----------   ----------   ----------   ----------   ---------   -----------
<S>                                 <C>           <C>          <C>           <C>         <C>         <C>
          Revenue                   $37,555,259   $2,015,642   $1,704,810    $15,486     $      --   $41,291,197
          EBITDA                    $ 2,044,941   $  236,943   $  209,999    $11,757     $(119,448)  $ 2,384,192
          Net income (loss)         $   968,063   $   62,229   $  171,929    $ 7,082     $ (20,923)  $ 1,188,380
          Identifiable
             assets at period end   $ 5,506,278   $3,676,133   $  303,358    $17,726     $ 184,269   $ 9,687,764
</TABLE>

<TABLE>
<CAPTION>
                                                            Year ended December 31, 2000
                                    ----------------------------------------------------------------------------
                                    Esslinger,     Embassy      Columbia      First
                                     Wooten &     Financial     Title of     Reserve       First
                                     Maxwell,     Services,     Florida,    Insurance,   Reserve,
                                        Inc.         Inc.          Inc.        Inc.         Inc.        Total
                                    -----------   ----------   ----------   ----------   ---------   -----------
<S>                                 <C>           <C>          <C>            <C>        <C>         <C>
          Revenue                   $30,252,462   $1,493,631   $1,081,051     $2,070     $      --   $32,829,214
          EBITDA                    $ 1,890,985   $  164,313   $   58,875     $1,501     $(224,600)  $ 1,891,074
          Net income (loss)         $ 1,582,083   $   72,565   $   44,393     $1,501     $(323,364)  $ 1,377,178
          Identifiable
             asset at period end    $ 4,595,612   $2,420,673   $  232,447     $3,025     $ 269,073   $ 7,520,830
</TABLE>

                                  Page 18 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                       DECEMBER 31, 2002, 2001, AND 2000

NOTE 7 - NOTES PAYABLE

          At December 31, 2002 and 2001, Embassy has warehouse lines of credit
          with a local bank totaling $5,000,000 and $3,500,000, respectively, to
          provide financing for mortgage loans that it originates. The lines of
          credit are collateralized by the mortgage loans held for sale.
          Advances on the lines of credit can only be drawn with evidence of a
          committed residential mortgage loan. The lines of credit cannot be
          used to fund any single residential mortgage in excess of $1,000,000.
          The notes are due on demand, bear interest ranging from prime less
          3.75% to prime plus .5%, but no less than 4.5% (4.5% at December 31,
          2002 and 2001), and are payable in monthly installments of interest
          only on the unpaid principal balance. Embassy had approximately
          $615,000 and $122,000 available for additional mortgage loan financing
          at December 31, 2002 and 2001, respectively.

          At December 31, 2002 and 2001, notes payable consisted of the
          following:

<TABLE>
<CAPTION>
                                                                        December 31,   December 31,
                                                                           2002           2001
                                                                        ------------   ------------
<S>                                                                     <C>            <C>
          EWM's mortgage note payable with an unrelated third party,
             interest at 7.5% per year for the first year. After the
             first year, interest at the Wall Street Journal prime
             rate with a 12% ceiling and a 7.5% floor (7.5% at
             December 31, 2002), payable in interest only monthly
             installments, maturing in February 2007, secured by the
             underlying
             real estate.                                                 $400,000       $400,000

          EWM's mortgage note with an unrelated third party, interest
             at 7.5% per year for the first year. After the first
             year, interest at the Wall Street Journal prime rate
             with a 12% ceiling and a 7.5% floor (7.5% at December
             31, 2002), payable in interest only monthly
             installments, maturing on February 2007, secured by the
             underlying real estate.                                       500,000             --

          First Reserve's note payable with an unrelated third party
             lender, interest at 9.5% per year, payable in interest
             only monthly installments, principal due on January 31,
             2004, unsecured, personally guaranteed by a stockholder
             of the Company.                                               500,000        500,000

</TABLE>

                                  Page 19 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                       DECEMBER 31, 2002, 2001, AND 2000

NOTE  7 -  NOTES PAYABLE (CONTINUED)

<TABLE>
<CAPTION>
                                                                            December 31,   December 31,
                                                                               2002           2001
                                                                            ------------   ------------
<S>                                                                        <C>             <C>
          EWM's note payable with a financial institution, interest
             at prime plus 1% per year, monthly installments of
             $25,000 principal, plus interest, plus additional
             interest of 2% per year from the closing date until the
             loan is paid in full, maturing in April 2004, secured
             by EWM's investment in First Reserve's stock, EWM's
             assets, as well as the common stock of First Reserve
             that is owned by the Company's two largest stockholders
             and personally guaranteed by one of these stockholders.          2,825,000            --
                                                                             ----------      --------
                                                                              4,225,000       900,000
          Less current portion                                                  300,000       400,000
                                                                             ----------      --------
                                                                             $3,925,000      $500,000
                                                                             ==========      ========
</TABLE>

          Principal payments and amortized discount on the notes payable for the
          next five years and in the aggregate are as follows:

          2003      $  300,000
          2004       3,025,000
          2005              --
          2006              --
          2007         900,000
                    ----------
                    $4,225,000
                    ==========

          Total interest expense under these notes for the years ended December
          31, 2002, 2001, and 2000, was approximately $380,000, $168,000, and
          $138,400, respectively.

NOTE 8 - CAPITAL LEASES

          During 1999, the Company entered into a lease of certain equipment
          under a capital lease expiring in the year 2003. The assets and
          liabilities under the capital lease are recorded at the lower of the
          present value of the minimum lease payments or the fair value of the
          asset and are included in net property and equipment. The assets are
          depreciated over the lesser of their estimated useful lives or the
          term of the lease. Depreciation of assets under capital leases is
          included in depreciation expense for the years ended December 31,
          2002, 2001, and 2000.

                                  Page 20 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                       DECEMBER 31, 2002, 2001, AND 2000

NOTE 8 - CAPITAL LEASES (CONTINUED)

          Minimum future lease payments under the capital lease
             for the next year andin the aggregate are as follows:

           2003                                                     $9,947

           Less amount representing interest                           709
                                                                    ------

              Present value of net minimum lease payment            $9,238
                                                                    ======

          Interest rate on the capitalized lease is 13.9% and is imputed based
          on the lower of the Company's incremental borrowing rate at the
          inception of the lease or the lessor's implicit rate of return.
          Imputed interest expense for the years ended December 31, 2002, 2001,
          and 2000, was approximately $1,900, $2,900, and $3,800, respectively.

NOTE 9 - EMPLOYMENT AGREEMENTS

          On April 19, 2002, the Company entered into new employment agreements
          with two executives. These new agreements supersede the previous
          agreements, which were to expire in 2003. The new agreements provide
          for base salaries to be increased annually by a minimum of 3%, plus
          benefits. The executives are also entitled to a bonus of up to 5% of
          the Company's "pre-tax net income," as defined in the agreement, as
          determined by the Company's compensation committee, which may be up to
          50% of the executives' salary. The terms of the contracts are for two
          years expiring in April 2004, with the option of the executives to
          extend employment for an additional two years. In the event of
          termination without cause or change in control (as defined in the
          agreement), the Company must pay the executives severance compensation
          for a period of two years (or the remainder of the executives' term if
          shorter) plus benefits.

          EWM has an employment agreement with the president of its Commercial
          Sales Division. This agreement provides for a base salary, commission,
          and bonus incentives based on real estate closings, and additional
          bonus and benefits at the discretion of the Company's Board of
          Directors. The term of the contract is for five years, expiring in
          April 2003, and may be terminated for cause. In the event of
          termination without cause, EWM is liable for all salary, payments, and
          benefits for the remaining term of the agreement.

          During 2001, Embassy entered into an agreement with an officer
          guaranteeing said officer a minimum salary during the first year of
          employment. This agreement was extended a second year.

                                  Page 21 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                       DECEMBER 31, 2002, 2001, AND 2000

NOTE 9 - EMPLOYMENT AGREEMENTS (CONTINUED)

          Minimum future commitment under these employment agreements are as
          follows:

          2003      $761,456
          2004       229,862
                    --------
                    $991,318
                    ========

          The total commitment, excluding incentives and bonuses, for the years
          ended December 31, 2002, 2001, and 2000 was $972,831, $791,230, and
          $770,516, respectively.

NOTE 10 - OPERATING LEASES

          The Company had entered into several real estate, automobile, and
          equipment leases accounted for as operating leases. These leases
          expire in various years through 2009. As a result of the mergers with
          Ross and Daniels, the Company assumed operating lease agreements
          expiring at various dates.

          Certain of the real estate leases are subject to annual escalation
          based on a Price Index, annual increases in operating expenses, or a
          fixed percentage increase.

          Minimum future lease payments under all operating leases for the next
          five years and in the aggregate are as follows:

          Years ending
          December 31,
          ------------
              2003       $1,625,215
              2004        1,391,811
              2005        1,200,935
              2006          564,238
              2007          514,384
           Thereafter     1,194,841
                         ----------
                         $6,491,424
                         ==========

          Rent expense under these leases for the years ended December 31, 2002,
          2001, and 2000 was approximately $1,890,000, $1,720,000, and
          $1,300,000, respectively.

                                  Page 22 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                       DECEMBER 31, 2002, 2001, AND 2000

NOTE 11 - NON-COMPETITION AND CONSULTING AGREEMENTS

          In connection with the acquisition of the assets of Ross and Daniels
          ("Sellers"), the Company entered into non-competition, consulting, and
          cooperation agreements that expire at various dates through 2005.
          Future payments, as called for in the agreements, are contingent upon
          the fulfillment of the terms of these agreements by the sellers and
          provide for certain percentage payments of the net commission income
          of various sales office locations.

NOTE 12 - COMMITMENTS AND CONTINGENCIES WITH OFF-BALANCE SHEET RISK

          In February 2002, EWM entered into an exclusive marketing and sales
          management agreement with a Miami Beach developer to sell off the
          remaining unit inventory of two luxury beach-front condominium
          buildings in Miami Beach, Florida. The agreement is for a twelve-month
          period or until all the units are sold, but in no event prior to the
          payoff by the developer of its bank's construction loan. Under the
          terms of the agreement, EWM will become the exclusive agent for the
          buildings, will staff and support the buildings' sales center, and
          provide other marketing and advertising services. The developer will
          reimburse EWM for the cost of maintaining the sales center. EWM will
          earn a commission on each unit sold, as defined in the agreement.
          Additionally, the agreement has an incentive clause whereby EWM
          receives additional compensation if the units are sold within two
          separate specified time periods.

          EWM also entered into an exclusive marketing and sales management
          agreement with a South Florida developer to sell off the unit
          inventory of a residential and office development in South Florida.
          The agreement is in effect until all the residential units and office
          space is sold and closed. Under the terms of the agreement, EWM will
          become the exclusive agent for the development, will staff and support
          the development's sales center, and provide other marketing and
          advertising services. The developer will reimburse EWM for the cost of
          maintaining the sales center. EWM will earn a commission on each unit
          sold, as defined in the agreement. Additionally, the agreement has an
          incentive clause whereby EWM receives additional compensation if the
          units are sold within two separate specified time periods.

          EWM also entered into an exclusive marketing and sales agreement with
          another South Florida developer to sell off the unit inventory of a
          condominium development in South Florida. The agreement is in effect
          until all the units are sold. Under the terms of the agreement, EWM
          will become the exclusive agent for the development and provide other
          marketing and advertising services. EWM will earn a commission on each
          unit sold, as defined in the agreement.

                                  Page 23 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                       DECEMBER 31, 2002, 2001, AND 2000

NOTE 12 - COMMITMENTS AND CONTINGENCIES WITH OFF-BALANCE SHEET RISK (CONTINUED)

          The Company has experienced credit risk in connection with its bank
          accounts. At various times during the year, it maintained deposits
          with financial institutions in excess of amounts insured by the FDIC.
          The exposure to the Company is solely dependent on daily bank balances
          and the financial strength of the respective institutions.

          The Company sells its services to homeowners and buyers. The Company
          is affected by the cyclical nature of the residential real estate
          industry and the availability of financing for the home buyer.

          The Company conducts most of its business in the South Florida area
          and is affected by the cyclical nature of the residential real estate
          industry in this region.

          Embassy is a party to financial instruments with off-balance sheet
          risk in the normal course of business to meet the financing needs of
          its customers. These financial instruments include commitments to
          extend credit to customers and forward commitments to sell mortgage
          loans to investors. The instruments involve to varying degrees,
          elements of credit and interest rate risk in excess of the amount
          recognized in the financial statements.

          Embassy uses the same credit policies in making commitments and
          conditional obligations as it does for making loans. In the opinion of
          management, Embassy's outstanding commitments do not reflect any
          unusual risk.

          Commitments to extend credit are agreements to lend to a customer as
          long as there is no violation of any condition established in the
          contract. Commitments generally have fixed expiration dates or other
          termination clauses and may require payment of a fee. Since many of
          the commitments are expected to expire without being drawn upon, the
          total commitment amounts do not necessarily represent future cash
          requirements. Loan applications must be approved by the Company's
          underwriting department, before a commitment is issued, for compliance
          with underwriting criteria of the Federal National Mortgage
          Association ("FNMA"), the Federal Home Loan Mortgage Corporation
          ("FHLMC"), or other investors. There were no commitments outstanding
          at December 31, 2002 and 2001.

          Embassy customarily sells, without recourse, all of its mortgage loans
          to various party lenders. Embassy does not engage in any direct
          efforts to manage the interest rate risk associated with the time a
          loan is originated to the time it is sold to the third party lender.
          However, prior to making a loan, Embassy locks the interest rate with
          the lender. Since loans are sold within 30 days of funding, management
          believes any interest rate fluctuations during this period would not
          be material to the financial statements.

                                  Page 24 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 13 - CONCENTRATIONS OF CREDIT RISK

          At December 31, 2002, Embassy obtained permanent loan "take-out
          commitments" from two national lenders of residential financing in the
          amount $4,298,290. At December 31, 2001, Embassy obtained a permanent
          loan "take-out commitment" from one national lender in the amount of
          $3,422,025, comprising of 97% and 100% of Embassy's loans held for
          sale, respectively.

          Embassy sold 73% of its loans held for sale to three national lenders.
          Management believes that the risk associated with these loans is
          reduced because each loan is backed by a permanent loan "take-out
          commitment" from these lenders prior to originating the loan.

          Columbia underwrites title insurance primarily with one national title
          company. Management believes that should the title company not be able
          to underwrite policies, it can select other title companies it has
          relationships with.

          FRINS has an exclusive agreement with a local insurance broker to
          market and sell insurance products to the clients of EWM and the
          Company. Management believes that should the broker be unable to
          fulfill its obligations, it can enter into similar agreements with
          other brokers.

NOTE 14 - INCOME TAXES

          Provision (benefit) is made for the tax effects of timing differences
          as described in Note 1. The provision for income taxes for the years
          ended December 31, 2002, 2001, and 2000, is based upon current
          statutory rates and is summarized as follows:

                            December 31, 2002
                    ----------------------------------
                     Current     Deferred     Total
                    ----------   --------   ----------
          Florida   $  158,494    $11,573   $  170,067
          Federal      923,411     67,605      991,016
                    ----------    -------   ----------
                    $1,081,905    $79,178   $1,161,083
                    ==========    =======   ==========

                          December 31, 2001
                    ------------------------------
                    Current    Deferred    Total
                    --------   --------   --------
          Florida   $ 85,944    $ 9,082   $ 95,026
          Federal    467,930     53,940    521,870
                    --------    -------   --------

                    $553,874    $63,022   $616,896
                    ========    =======   ========

                                  Page 25 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 14 - INCOME TAXES (CONTINUED)

                         December 31, 2000
                    ----------------------------
                    Current   Deferred    Total
                    -------   --------   -------
          Florida   $    25      $--     $    25
          Federal    16,337       --      16,337
                    -------      ---     -------
                    $16,362      $--     $16,362
                    =======      ===     =======

          Deferred tax assets have been provided for deductible temporary
          differences related to net operating losses. Deferred tax liabilities
          have been provided for taxable temporary differences related to
          accumulated depreciation and amortization. Deferred income taxes
          related to the following at December 31, 2002, 2001, and 2000:

<TABLE>
<CAPTION>
                                                               December 31,
                                                     -------------------------------
                                                       2002        2001       2000
                                                     ---------   --------   --------
<S>                                                  <C>         <C>        <C>
          Deferred tax assets (liabilities):
             Net operating loss                      $  46,621   $ 52,923   $ 63,334
             Non-compete agreement                      11,464      6,551        856
             Property and equipment                   (128,373)   (89,705)   (31,079)
             Goodwill                                  (71,912)   (32,791)   (10,821)
                                                     ---------   --------   --------
                                                      (142,200)   (63,022)    22,290
          Less valuation allowance                          --         --    (22,290)
                                                     ---------   --------   --------
                Net deferred tax asset (liability)   $(142,200)  $(63,022)  $     --
                                                     =========   ========   ========
</TABLE>

          The provision for income taxes computed differed from the amount
          obtained by applying the federal and state statutory income tax rates
          to income before income taxes. The sources and tax effects of the
          difference are as follows:

<TABLE>
<CAPTION>
                                                             December 31,
                                                  ---------------------------------
                                                     2002         2001       2000
                                                  ----------   --------   ---------
<S>                                               <C>          <C>        <C>
          Federal  and  state  statutory  rate
             applied  to  pre-tax income          $1,207,115   $619,900   $ 473,804
          Other                                      (46,032)    19,286    (167,936)
          Change in valuation allowance                   --    (22,290)   (289,506)
                                                  ----------   --------   ---------
                                                  $1,161,083   $616,896   $  16,362
                                                  ==========   ========   =========
</TABLE>

          At December 31, 2002, the Company's net operating loss ("NOL")
          carryforwards for income tax purposes amounted to approximately
          $181,000, and are available to offset future taxable income through
          the year 2015. However, the amount of NOL that can be utilized is
          limited to approximately $9,000 per year.

                                  Page 26 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 15 - PROFIT SHARING PLAN

          The Company has a deferred tax savings plan, which qualifies under
          section 401(k) of the Internal Revenue Code. The plan covers all
          employees having at least one year of service during which they have
          worked at least 1,000 hours, provided they have attained the age of
          21. The plan allows the Company to make voluntary contributions to the
          plan for eligible participants.

          Participants  are 100% vested in their  contributions  to the plan and
          vest in the Company's contribution as follows:

          Years of Total Service   Vesting Percentage
          ----------------------   ------------------
             Less than 2                     0%
                       2                    20%
                       3                    40%
                       4                    60%
                       5                    80%
                       6 or more           100%

          For the years ended December 31, 2002, 2001, and 2000, employer
          contributions to the plan were $16,499, $19,203, and $14,583,
          respectively.

          The Company is deemed to be a controlled group under the Employee
          Retirement Income Security Act of 1974 ("ERISA") regulations. As such,
          all employees of all the subsidiaries of the Company, must be covered
          under the Plan.

NOTE 16 - LEGAL AND OTHER SETTLEMENTS

          In February 1995, the Company and a majority shareholder of the
          Company, as guarantor, entered into an agreement with an unrelated
          third party to guarantee that the Company would be responsible for
          certain portions of the obligations on a building managed by a
          subsidiary of the Company, First Reserve Equities, Inc., provided that
          such building was sold after December 31, 1995. In the event that the
          building was sold after 1995, the Company would be obligated to pay to
          the third party any shortfall between the net sales proceeds and the
          balance of the note owed on the building, up to a maximum of
          $1,000,000. The building was sold subsequent to December 31, 1995, but
          no notice had been given to the Company, nor had any collection
          proceedings been initiated against the Company until mid-1998. On July
          13, 1998, a settlement agreement was reached with the third party in
          the amount of $1,200,000 covering the $1,000,000 guarantee and an
          additional $200,000 for paying late. The Company paid $250,000 on the
          date the agreement was signed and the remaining balance of $950,000
          was financed under a promissory note over four years bearing no
          interest.

                                  Page 27 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 16 - LEGAL AND OTHER SETTLEMENTS (CONTINUED)

          The $200,000 was treated as imputed interest and will be amortized
          over the life of the note under the interest method using an effective
          rate of 10.175%. For the years ended December 31, 2002, 2001, and
          2000, total interest expense related to this note amounted to $0,
          $17,310, and $51,448, respectively. The Company paid off this note at
          a discount in July 2001, which resulted in a gain of $8,137.

          Also, included in general and administrative expenses are costs
          incurred by EWM in settling various disputes arising with customers or
          tenants in the ordinary course of business. These costs amounted to
          $5,000, $0, and $0 for the years ended December 31, 2002, 2001, and
          2000.

NOTE 17 - STOCKHOLDERS' EQUITY

          On April 26, 2002, EWM acquired 1,778,825 shares of common stock of
          First Reserve, Inc. (its parent company) from a majority shareholder
          for $3,500,000. EWM also agreed to purchase an additional 127,059
          shares for $250,000 in cash within 30 days of the original purchase
          date. In addition, EWM agreed to purchase the remaining shares owned
          by this stockholder, 254,117 shares for $500,000 in cash on or prior
          to June 30, 2002. The total purchase price of these shares through
          June 30, 2002 was $4,250,000 or $1.97 per common share. EWM's
          investment in the parent company is presented in the financial
          statements as a reduction of stockholders' equity. As part of the
          agreement, the 1,000,000 stock warrants previously issued to this
          stockholder were cancelled.

          Under the new agreement, the former stockholder has the option to
          purchase, on or before June 30, 2007, up to 5% of the then-outstanding
          shares of common stock of the Company at a purchase price equal to 90%
          of the fair market value of the shares.

          WARRANTS

          During 1998, the Company reissued 1,000,000 warrants ("new warrants")
          to a majority shareholder in exchange for 1,000,000 warrants
          previously issued by the Company on November 30, 1997 ("original
          warrants"). These original warrants were issued as part of an
          agreement with the shareholder of the Company to convert preferred
          shares and accrued dividends into common shares. The original warrants
          were exercisable from the date of issuance and expire on November 30,
          2002. No other consideration was given to the Company for these
          warrants. The original warrants were canceled and new warrants were
          issued on August 31, 1998. All terms and conditions of the original
          warrants remained the same with the exception of the expiration date,
          which was changed from November 30, 2002 to August 31, 2003.

                                  Page 28 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 17 - STOCKHOLDERS' EQUITY (CONTINUED)

          WARRANTS (CONTINUED)

          The first warrant grants this majority shareholder the right to
          purchase 500,000 shares of the Company's common stock at the initial
          exercise price of $3 per share. The second warrant grants the same
          majority shareholder the right to purchase another 500,000 shares of
          the Company's common stock at the initial exercise price of $3.50 per
          share. The warrants are valid, beginning on August 31, 1998, for a
          period of five years and expire on August 31, 2003. These warrants
          were cancelled in 2002 as a result of EWM's purchase of First Reserve
          stock.

          In accordance with the warrant agreement, the exercise price of these
          warrants are to be adjusted each time the Company sells shares of
          common stock for a consideration per share less than the warrant
          exercise price per share, or issue any shares of common stock as a
          stock dividend, or subdivide or combine the outstanding shares of
          common stock into a greater or lesser number of shares. In no event
          shall the exercise price be adjusted in excess of the exercise price
          in effect immediately prior to such repricing. As a result of this
          provision in the warrant agreement, during 1998, the warrants'
          exercise price had been adjusted. The first warrant has an adjusted
          exercise price of $2.57 per share, and the second warrant has an
          adjusted exercise price of $2.96 per share.

          The following is a summary of the activity of the Company's warrants
          for the years ended December 31, 2001, and 2000:

<TABLE>
<CAPTION>
                                                                    Year ended
                                                             December 31, 2001
                                                        --------------------------
                                                                       Weighted
                                                        Number of     Average of
                                                         Warrants   Exercise Price
                                                        ---------   --------------
<S>                                                     <C>             <C>
          Outstanding at beginning of year              1,000,000       $2.77
          Granted                                              --       $  --
          Canceled                                             --       $  --
          Exercised                                            --       $  --
                                                        ---------       -----
          Outstanding at end of year                    1,000,000       $2.77
                                                        =========       =====
          Exercisable at end of year                    1,000,000
                                                        =========

             Weighted  average fair value of warrants
                outstanding at December 31, 2001                        $ .42
                                                                        =====
</TABLE>

                                  Page 29 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 17 - STOCKHOLDERS' EQUITY (CONTINUED)

          WARRANTS (CONTINUED)

<TABLE>
<CAPTION>
                                                                Year ended
                                                            December 31, 2000
                                                        --------------------------
                                                                       Weighted
                                                        Number of     Average of
                                                        Warrants    Exercise Price
                                                        ---------   --------------
<S>                                                     <C>              <C>
          Outstanding at beginning of year              1,000,000        $2.77
          Granted                                              --        $  --
          Canceled                                             --        $  --
          Exercised                                            --        $  --
                                                        ---------         ---
          Outstanding at end of year                    1,000,000        $2.77
                                                        =========        =====
          Exercisable at end of year                    1,000,000
                                                        =========
             Weighted  average fair value of warrants
                outstanding  at December 31, 2000                        $ .47
                                                                         =====
</TABLE>

          The weighted average fair value was estimated using the Black-Scholes
          option pricing model based on the weighted average market price at
          date of grant of $1.35 and $1.35 for 2001 and 2000, respectively. The
          following assumptions were used to estimate fair value of the options
          for 2001 and 2000, risk-free interest rate of 5.2%, expected
          volatility of 80%, and an estimated life of the options of five years.

          The following is a summary of the status of the stock warrants
          outstanding at:

                                  December 31, 2000
                                ---------------------
                                                        Weighted
                                   Weighted Average     Average
                    Number      Remaining Contractual   Exercise      Number
          Price   Outstanding           Life             Price      Exercisable
          -----   -----------   ---------------------   --------    -----------
          $2.57      500,000          1.7 years           $2.57       500,000
          $2.96      500,000          1.7 years           $2.96       500,000
                   ---------
                   1,000,000                              $2.77
                   =========

                                  December 31, 2000
                                ---------------------
                                                        Weighted
                                   Weighted Average     Average
                    Number      Remaining Contractual   Exercise      Number
          Price   Outstanding           Life             Price      Exercisable
          -----   -----------   ---------------------   --------    -----------
          $2.57      500,000          2.7 years           $2.57       500,000
          $2.96      500,000          2.7 years           $2.96       500,000
                   ---------
                   1,000,000                              $2.77
                   =========

                                  Page 30 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 17 - STOCKHOLDERS' EQUITY (CONTINUED)

          CONTINGENT SHARES

          Under the terms of the September 1, 2000 asset acquisition agreement
          between EWM and Ross, the sole shareholder of Ross would receive an
          additional 112,000 "contingent" shares of common stock of the Company,
          pending future gross commission income to be generated by the sole
          shareholder of Ross over a 12-month "review" period, beginning January
          1, 2001. The former shareholder of Ross met the gross commission
          income requirements stated in the agreement. These shares were issued
          October 3, 2002. As a result, the Company recorded common stock and
          goodwill in the amount of $151,200 or $1.35 per share, which was the
          fair value per share at the time the conditions were met. These shares
          are included in the basic earnings per share calculation.

          TREASURY STOCK

          In October 2000, the Company entered into an agreement with a
          shareholder to purchase 200,000 shares of common stock owned by this
          shareholder at $1.35 per share for a total purchase price of $270,000.

          In January 2001, the Company entered into an agreement with a
          shareholder to purchase 25,000 shares of common stock owned by this
          shareholder at $1.35 per share for a total purchase price of $33,750.

          In July 2001, the Company entered into an agreement with a shareholder
          to purchase 15,000 shares of common stock owned by this shareholder at
          $1.35 per share for a total of $20,250.

          In September 2001, the Company entered into an agreement with a
          shareholder to purchase 200,000 shares of common stock owned by this
          shareholder at $1.35 per share for a total of $270,000.

          In April 2002, the Company purchased 39,700 shares of common stock
          from a shareholder at $1.35 per share for a total purchase price of
          $53,595.

NOTE 18 - EARNINGS PER SHARE

          Basic earnings per share ("EPS") was computed by dividing net income
          by the weighted average number of common shares outstanding during the
          period. Diluted EPS were determined on the assumption that the
          contingent shares were exercised at the beginning of the period, or at
          time of issuance, if later.

                                  Page 31 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 18 - EARNINGS PER SHARE (CONTINUED)

          The following is the calculation of earnings per share for the years
          ended December 31, 2002, 2001, and 2000:

<TABLE>
<CAPTION>
                                                             Year ended     Year ended     Year ended
                                                            December 31,   December 31,   December 31,
                                                                2002           2001           2000
                                                            ------------   ------------   ------------
<S>                                                          <C>            <C>            <C>
          Basic earnings per common share:
             Numerator
                Net income before extraordinary items
                   applicable to common stockholders         $1,894,905     $1,188,380     $1,377,178
                Extraordinary items, net                             --             --             --
                                                             ----------     ----------     ----------

                Income applicable to common stockholders     $1,894,905     $1,188,380     $1,377,178
                                                             ==========     ==========     ==========

             Denominator
                Weighted average common shares                5,103,315      6,633,858      6,768,847
                                                             ==========     ==========     ==========

                   Basic EPS                                 $     0.37     $     0.18     $     0.20
                                                             ==========     ==========     ==========

          Diluted earnings per common share:
             Numerator
                Net income before extraordinary items
                   applicable to common stockholders         $1,894,905     $1,188,380     $1,377,178
                Extraordinary items, net                             --             --             --
                                                             ----------     ----------     ----------

                Income applicable to common stockholders     $1,894,905     $1,188,380     $1,377,178
                                                             ==========     ==========     ==========

             Denominator
                Weighted average common shares                5,103,315      6,633,858      6,768,847
                Weighted average contingent common shares       149,651            307             --
                                                             ----------     ----------     ----------

                   Total                                      5,252,966      6,634,165      6,768,847
                                                             ==========     ==========     ==========

                   Diluted EPS                               $     0.36     $     0.18     $     0.20
                                                             ==========     ==========     ==========
</TABLE>

                                  Page 32 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 18 - EARNINGS PER SHARE (CONTINUED)

          For the years ended December 31, 2001 and 2000, warrants to purchase
          500,000 shares of common stock at $2.58 and $2.58 per share,
          respectively, and 500,000 shares of common stock at $2.99 and $2.98
          per share, respectively, were outstanding, but were not included in
          the computation of diluted EPS because the warrants' exercise price
          was greater than the average market price of the common shares. As a
          result of EWM's acquisition of First Reserve's stock, these warrants
          were cancelled during 2002.

          The former shareholder has the option to purchase, on or before June
          30, 2007, up to 5% of the then-outstanding shares of common stock of
          the Company at a purchase price equal to 90% of the fair market value
          of the shares. For the year ended December 31, 2002, this option
          amounted to 219,367 shares of common stock at $1.77 per share, which
          is included in the computation of diluted EPS.

NOTE 19 - RELATED PARTY TRANSACTIONS

          Related parties consist of entities associated by common ownership or
          controlled by officers or directors of the Company.

          EWM rents an office building from a corporation owned by a minority
          shareholder. The lease is on a month-to-month basis and calls for a
          monthly rent of $6,440.

          EWM rents an office building from a corporation owned by minority
          shareholders. The lease is for a period of ten years expiring in March
          2009, with an option to renew for two successive five-year terms. The
          lease calls for an annual rent of $95,480, plus all applicable sales
          taxes, with an annual increase in rent of 3% per year over the prior
          year's base rent.

          EWM rents an office building from a minority shareholder. The lease is
          for a period of five years expiring in 2005, with an option to renew
          for two five-year terms. The lease calls for an annual rent of
          $60,000, plus all applicable sales tax, with an annual rental increase
          based on the Consumer Price Index, with a ceiling of 3%.

          EWM charges $5,000 per month for administrative fees to a corporation
          owned by a shareholder of the Company.

                                  Page 33 of 36

<PAGE>

                      FIRST RESERVE, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000

NOTE 19 - RELATED PARTY TRANSACTIONS (CONTINUED)

          EWM receives referral fee income from a corporation owned by two
          shareholders of the Company. These fees are net of commissions and
          other expenses incurred from listings referred to EWM by this
          corporation.

          The Company had the following balances and transactions with related
          parties for the years ended December 31, 2002, 2001, and 2000:

<TABLE>
<CAPTION>
                                                 Year ended          Year ended          Year ended
                                             December 31, 2002   December 31, 2001   December 31, 2000
                                             -----------------   -----------------   -----------------
<S>                                               <C>                 <C>                 <C>
          Prepaid and other current assets        $ 85,000            $ 25,000            $ 15,000
          Revenues                                $ 23,846            $ 22,037            $ 28,438
          Other income                            $ 60,000            $ 60,000            $ 60,000
          Expenses                                $298,071            $348,119            $274,165
</TABLE>

NOTE 20 - UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME

          The assets and liabilities of Ross and Daniels (the "acquired
          companies"), are reflected in the accompanying consolidated financial
          statements. The results of operations of the acquired companies are
          included in the consolidated results from September 1, 2000 for Ross
          and Daniels. The following pro forma consolidated statement of income
          gives effect to the acquisitions of all of the outstanding shares of
          Ross and Daniels as if they had occurred on January 1, 2000 after
          giving effect to certain adjustments, including increased amortization
          of goodwill generated from the acquisitions. The pro forma adjustments
          are based upon available information and certain assumptions that the
          Company believes are reasonable.

          This unaudited pro forma consolidated information does not purport to
          represent what the actual results of operations would have been
          assuming the acquisitions had taken place on the dates assumed above,
          nor do they purport to predict the results of operations in future
          periods:

                                           Year ended
                                       December 31, 2000
                                       -----------------
          Total revenue                   $33,567,735
                                          ===========

          Net income                      $ 1,298,652
                                          ===========

          Earnings per share:
             Basic                        $      0.19
                                          ===========
             Weighted average shares        6,768,847
                                          ===========
             Diluted                      $      0.19
                                          ===========
             Weighted average shares        6,768,847
                                          ===========

                                  Page 34 of 36

<PAGE>

                    FIRST RESERVE, INC. AND SUBSIDIARIES
               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     DECEMBER 31, 2002, 2001, AND 2000

NOTE 21 - SELECTED QUARTERLY DATA (UNAUDITED)

          Following is a summary of the Company's quarterly results of
          operations for the years ended December 31, 2002, 2001, and 2000.
          Earnings Before Interest, Taxes, Depreciation, and Amortization
          ("EBITDA") is defined as net income (loss) before income taxes,
          interest expense, depreciation, and amortization.

<TABLE>
<CAPTION>
                                          First        Second         Third        Fourth
                                         Quarter       Quarter       Quarter       Quarter        Year
                                       -----------   -----------   -----------   -----------   -----------
<S>                                    <C>           <C>           <C>           <C>           <C>
          Calendar Year 2002
             Revenues                  $10,482,070   $14,810,897   $12,539,384   $12,317,678   $50,150,029
             EBITDA                    $   341,305   $ 1,458,749   $ 1,064,659   $ 1,003,207   $ 3,867,920
             Operating income (loss)   $   174,610   $ 1,300,868   $   891,111   $   819,072   $ 3,185,661
             Net income (loss)         $   102,024   $   827,725   $   494,711   $   470,445   $ 1,894,905

          Earnings per share:
             Basic                     $      0.02   $      0.16   $      0.11   $      0.11   $      0.37
                                       ===========   ===========   ===========   ===========   ===========
             Weighted average shares     6,475,050     5,083,554     4,387,349     4,387,349     5,103,315
                                       ===========   ===========   ===========   ===========   ===========
             Diluted                   $      0.02   $      0.16   $      0.11   $      0.10   $      0.36
                                       ===========   ===========   ===========   ===========   ===========
             Weighted average shares     6,587,050     5,242,655     4,606,716     4,611,830     5,252,966
                                       ===========   ===========   ===========   ===========   ===========
</TABLE>

<TABLE>
<CAPTION>
                                          First        Second        Third        Fourth
                                         Quarter      Quarter       Quarter       Quarter       Year
                                       ----------   -----------   -----------   ----------   -----------
<S>                                    <C>          <C>           <C>           <C>          <C>
          Calendar Year 2001
             Revenues                  $9,512,420   $10,917,062   $11,076,229   $9,785,486   $41,291,197
             EBITDA                    $  342,092   $ 1,039,925   $   739,345   $  262,830   $ 2,384,192
             Operating income (loss)   $  197,683   $   853,197   $   556,311   $   85,902   $ 1,693,093
             Net income (loss)         $  171,876   $   549,562   $   388,373   $   78,569   $ 1,188,380

          Earnings per share:
             Basic                     $     0.03   $      0.08   $      0.06   $     0.01   $      0.18
                                       ==========   ===========   ===========   ==========   ===========
             Weighted average shares    6,694,772    6,690,050      6,674,778    6,535,920     6,633,858
                                       ==========   ===========   ===========   ==========   ===========
             Diluted                   $     0.03   $      0.08   $      0.06   $     0.01   $      0.18
                                       ==========   ===========   ===========   ==========   ===========
             Weighted average shares    6,806,772    6,690,050      6,674,778    6,537,137     6,634,165
                                       ==========   ===========   ===========   ==========   ===========
</TABLE>

                                  Page 35 of 36

<PAGE>

                    FIRST RESERVE, INC. AND SUBSIDIARIES
               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     DECEMBER 31, 2002, 2001, AND 2000

NOTE 21 - SELECTED QUARTERLY DATA (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
                                          First       Second       Third        Fourth
                                         Quarter      Quarter     Quarter       Quarter       Year
                                       ----------   ----------   ----------   ----------   -----------
<S>                                    <C>          <C>          <C>          <C>          <C>
          Calendar Year 2000
             Revenues                  $5,860,272   $9,463,680   $8,140,384   $9,364,878   $32,829,214
             EBITDA                    $  (52,450)  $  873,400   $  630,241   $  439,883   $ 1,891,074
             Operating income (loss)   $ (149,772)  $  755,586   $  504,264   $  275,651   $ 1,385,729
             Net income (loss)         $ (158,803)  $  740,502   $  490,502   $  304,977   $ 1,377,178

          Earnings per share:
             Basic                     $    (0.02)  $     0.11   $     0.07   $     0.04   $      0.20
                                       ==========   ==========   ==========   ==========   ===========
             Weighted average shares    6,767,050    6,767,050    6,783,314    6,768,847     6,768,847
                                       ==========   ==========   ==========   ==========   ===========
             Diluted                   $    (0.02)  $     0.11   $     0.07   $     0.04   $      0.20
                                       ==========   ==========   ==========   ==========   ===========
             Weighted average shares    6,767,050    6,767,050    6,783,314    6,768,847     6,768,847
                                       ==========   ==========   ==========   ==========   ===========
</TABLE>

NOTE 22 - REGULATORY MATTERS

          HUD Requirements

          Embassy is a nonsupervised loan correspondent for purposes of the U.S.
          Department of Housing and Urban Development ("HUD"). As such, 24 - CFR
          Part 202 of the HUD handbook requires Embassy to have an Adjusted Net
          Worth of at least $100,000 Embassy is in compliance with this
          requirement.

          State of Florida Requirements

          On July 1, 1999, Embassy became a licensed mortgage lender under
          Chapter 494 of the State of Florida. As such, Embassy is required to
          have a minimum net worth of $250,000. Embassy is in compliance with
          this requirement.

NOTE 23 - SUBSEQUENT EVENT

          On January 24, 2003, EWM acquired for $26,150, 15,000 Class A units of
          Residence, LLC, a real estate magazine publisher, which will enable
          the Company to advertise its listing nationwide.

          Subsequent to the year end, EWM acquired a minority interest in the
          RELO(R) Network for $75,000. The RELO(R) Network is the nation's
          largest relocation organization. It will provide EWM with membership
          in the RELO(R) Network's nationwide network of over 700 other
          suppliers of relocation services

                               Page 36 of 36

<PAGE>

                                  EXHIBIT INDEX

Exhibit No.                              Description
-----------   ------------------------------------------------------------------

21            Subsidiaries of the registrant.

23.1          Consent of McClain and Company, L.C.

99.1          Certificate Pursuant to 18 U.S.C. Section 1350, as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 executed
              by the Chief Executive Officer of the Company.

99.2          Certificate Pursuant to 18 U.S.C. Section 1350, as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 executed
              by the Principal Financial Officer of the Company.