Securities and Exchange Commission
                    Washington, D.C.  20549
                           FORM 10 KSB

(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
         For the fiscal year ended December 31, 2002
                                -OR-
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

 For the transition period from  ____________  to _____________

              Commission File Number:  0-19154

             AMERICAN ASSET MANAGEMENT CORPORATION
         (Name of small business issuer in its charter)

        NEW JERSEY                            22-2902677
(State or other jurisdiction of)(IRS Employer Identification No.)
 incorporation or organization)

  1280 ROUTE 46 WEST, PARSIPPANY, NEW JERSEY           07054
   (Address of principal executive offices)         (Zip  Code)

Issuer's telephone number, including area code:   (973) 299-8713

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

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

                    NO PAR VALUE COMMON STOCK
                         (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has
been subject to such filing requirements for the past 90 days. Yes X  No __

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB.   ( X )

For the year ended December 31, 2002, the issuer's revenues were $1,664,892.
As of March 24, 2003 the aggregate market value of the issuer's voting stock
held by non-affiliates computed by reference to the average bid and asked
prices of such stock, was $191,779.

As of March 24, 2003 the issuer has 1,316,989 shares of its no
par value Common Stock issued and 1,295,970 shares outstanding.

Documents incorporated by reference:   None

Transitional Small Business Disclosure Format: Yes ___  No _X_

10KSB REPORT

                                 PART I

ITEM 1.  DESCRIPTION OF BUSINESS

     "Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995:  Certain statements and discussions contained in this report are
not based on historical facts and contain forward looking statements that
involve a number of known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward looking statements.  Such factors include,
but are not limited to, those relating to competition, the ability of the
Company to successfully market new mortgage products and services, the economic
conditions in the markets served by the Company, the possibility of increased
interest rates which would adversely affect the real estate market, the ability
to hire and retain key personnel, and other risks detailed in this report and
in the Company's other filings with the Securities and Exchange Commission.
The words "believe", "expect", "intend", "anticipate" and "plan" and similar
expressions identify forward looking statements, readers are cautioned not to
place undue reliance on these forward looking statements, which speak only as
of the date the statement was made.


GENERAL

     American Asset Management Corporation (the "Company"), conducts its
business through two wholly-owned subsidiaries, Capital Financial Corp.
("Capital"), a licensed mortgage banking company in New Jersey and American
Asset Development Corporation ("Development"), which is engaged in the
development of residential real estate (the "Property") for sale in
Hunterdon County New Jersey. Unless otherwise indicated, all references to
the Company in this report include the Company and its subsidiaries.

The Company was incorporated in the State of New Jersey on July 1, 1988.

BUSINESS DEVELOPMENTS OF 2001 AND 2002

     During December 2001, the Company commenced an offering of up to
$600,000 of its 10% Series A Cumulative Participating Preferred Stock.
As of December 31, 2001, the Company had received and accepted one
subscription in the amount of $150,000 from one of its directors.  As of
March 30, 2002 the Company had received and accepted two additional
subscriptions aggregating $60,000 from non-affiliated accredited investors.

     During December 2002, the Company commenced an offering of up to $300,000
of it's 10% Series B Cumulative Convertible Participating Preferred Stock.
As of December 31, 2002, the Company had received and accepted one
subscription in the amount of $25,000 from one of it's directors.  There were
no subsequent subscriptions received by the Company as of March 24, 2003.

     On April 5, 2002 the Company moved its offices to Parsippany, NJ.



     In January 2002, the Company entered into an agreement with the principal
of a non affiliated New Jersey Limited Liability Corporation ("LLC") to
conduct its mortgage banking business.  The Company has licensed the LLC's
office, which is located in Flemington, New Jersey, as a branch office, with
the New Jersey Department of Banking, as well as four independent contractor
mortgage loan solicitors.  For approximately one year prior to this agreement
the Company had been receiving mortgage loan applications from the associate
principal of the LLC.  This office acts as a sales office only and engages in
writing mortgage loan applications which are forwarded to the Company's main
office for processing, underwriting and closing.  The LLC is compensated by
the Company based on a percentage basis when the loan closes.  The LLC and
its principal are responsible for all expenses attributable to this office
including compensation of the loan solicitors.

BUSINESS - CAPITAL FINANCIAL CORP.

     The Company, through Capital, is primarily engaged in mortgage banking
activities which involves the origination and sale of residential first
mortgage loans collateralized by one to four family homes.  The Company's
service area is the State of New Jersey and to date, its revenues have
primarily consisted of loan origination fees and interest received on
mortgage loans.  Capital acts either as a "banker" or as a "banker acting as
a broker".  When acting as a banker, Capital closes loans in its own name.
When acting as a broker, Capital does not make mortgage loans or close loans
in its own name, but receives compensation at closing from the borrower for
assisting in obtaining a mortgage from a third party investor (purchaser of
the mortgage) and/or from the investor for referring the loan to such
investor.

     Capital originates mortgage loans through direct solicitation of
borrowers by its own sales force, through media advertising in its service
area and through referrals from mortgage bankers, credit unions, real
estate brokers, accountants and attorneys.  Borrowers submit loan
applications which are processed by the Company's loan processors who
conduct credit checks, arrange for the property to be appraised and submit
fully processed loan application packages to potential investors for final
approval and commitment.  After an investor commits to purchase the loan
from Capital, the Company either uses its own funds, its warehouse line of
credit as discussed below, to fund and close the loan or has the loan funded
by the investor.  The loan documentation is then prepared and the loan is
closed in Capital's name at which time, if the loan has been funded by the
investor the loan is simultaneously assigned to the investor.  When Capital
closes a loan using its own funds, or its warehouse line of credit, the loan
is delivered to the investor after the loan is closed.

     The Company generally sells its loans on a loan-by-loan basis to mortgage
investors, which are usually savings banks.  The Company estimates that
approximately 85% of its loan applications typically close within 90 days from
the date of application.  During 2002, the Company sold loans to 11 different
investors two of which accounted for 70% of total revenues.  During 2001, the
Company sold loans to 17 different investors, three of which accounted for 80%
of total revenues.  The Company believes that there are numerous other
investors to which the Company could readily sell its loans if, for any reason,
it was unable to sell its loans to the above investors.  As of March 24, 2003,
the Company had agreements with approximately 25 investors, to which the
Company may sell its loans or refer applications to.

     The Company has a $9,000,000 warehouse line of credit from a mortgage
warehouse lender which provides the Company with a facility to borrow funds
secured by originated residential mortgage loans which will be temporarily
warehoused and then sold.  The warehouse line of credit, which expires on
March 31, 2004, is secured by the personal guarantee of the Company's
President.  The Company will borrow only against takeout commitments issued by
qualified investors who have pre-approved the loans and committed to purchase
the closed loan from the Company.  By using the warehouse funds instead of
"table funding", (funding provided by the investor who purchases the loan from
the Company), the Company has generally been able to receive more favorable
pricing from its investors which the Company believes has made it more
competitive in the market place.  The warehouse line has also allowed the
Company to sell loans to investors which do not table fund and only purchase
closed loans from it's correspondents, i.e. Capital.

     The interest rate currently being charged to the Company on borrowed
warehouse funds outstanding is variable at 1 3/4% over the prime lending rate
as quoted by the Wall Street Journal.  As of December 31, 2002, the Company
had borrowed $4,651,301 under this line of credit.

     While the Company generally utilizes one $9,000,000 warehouse line of
Credit for its daily mortgage loan funding operations, whenever possible the
Company employs its available cash to fund mortgage loans.  When the Company
uses its available cash rather than the warehouse line to fund a loan it
generates mortgage interest income, as well as saves interest costs and other
fees associated with using the warehouse credit line.

     On August 9, 2000 the Company was notified by U.S. Department of Housing
and Urban Development ("HUD") that its approval with the agency as a
non-supervised lender was upgraded to what is commonly referred to as Full
Eagle status.  This approval allows the Company to act in the capacity of a
mortgage banker rather than a mortgage broker to underwrite and close loans
in its own name and HUD will insure these loans without prior approval from
the Company's sponsoring investors, as previously required.  This approval
also allows the Company to expand its wholesale product line to include third
party origination of FHA loans through this new delegated underwriting
privilege.  Additionally, this approval allows the Company to be potentially
more competitive in the market place with these types of loans.

     During 2002 the Company experienced an increase in mortgage refinancings
as a result of a general decrease in mortgage interest rates during the year.
However, as a result of actions taken by Capital since 1994 to implement
other methods of securing purchase loan originations, including those
discussed below, the Company, to a certain extent, has lessened its prior
dependence on mortgage refinancings.  Nevertheless, the Company believes that
a significant increase in mortgage rates would adversely affect its ability to
close both the number of home purchase loans and refinance loans, which would
have an adverse effect on the Company's financial position.

     As part of its efforts to expand its ability to obtain loan originations,
the Company has hired a Vice President with approximately eight years mortgage
industry experience. He is responsible for secondary marketing, wholesale and
Internet development and assists management in the day-to-day operations of
the Company, as-well-as serving on the board of directors of Management and
Capital.


     Since 2000 the Company has primarily focused its efforts in the wholesale
area of mortgage origination and since January 2002 to complement its
wholesale business, utilizing its own retail sales force of loan originators.

     As of March 31, 2003, the Company estimates that it has approximately
30 wholesale correspondents which provide the Company with loan originations
on a regular basis which equals the number of wholesale correspondents it had
in March 2002.  The Company has established a closer business relationship with
one of its wholesale correspondents whose offices are located within the same
building as the Company's.  This close proximity provides an increased level of
service to the wholesale correspondent and the Company believes it has received
a larger percentage of the correspondent's overall mortgage production then it
had experienced in the past.

     In addition, because of the amount, regularity, and type of mortgage
Loans that this improved relationship now generates, the Company has a goal of
selling pools of mortgages, also referred to as "bulk sales", to institutional
and other investors rather than one mortgage loan at a time sales as it
presently conducts its business.  The Company believes it can negotiate
greater revenues per mortgage sold by this pooling method and received approval
during the quarter ended September 30, 2002 from a major institution to sell
mortgages in bulk, "pools", to that institutional investor.  The Company also
believes there are numerous other entities that it may make bulk sales to.
Further, the Company believes, though there can be no assurance, that through
pooling it can increase its wholesale customers and business volume, as a
result of being able to offer more competitive rates and higher compensation to
to its wholesale customers while still increasing its net revenues per loan on
a percentage basis.

     There can be no assurance the Company will be successful in its
relationships with wholesale correspondents and other loan originators as it
faces intense competition from the other lenders it competes with for this
business, many of which have greater resources and experience than the Company.

     During the fiscal year ending December 31, 2002, the Company continued
marketing its services to the public through the Internet using its website
home page linked to a major website belonging to a national provider of
mortgage loans and other financial statistics.  The national provider's
website provides the public with the Company's lending programs and interest
rates on a daily basis, in addition to the rates of other lenders that the
Company competes with. As a result of its marketing through the Internet, the
Company has received numerous inquiries which have resulted in mortgage loan
applications and closings from persons seeking mortgage financing. The Company
continues to be encouraged with the results its Internet marketing has provided
as an additional source of mortgage applications.

     To date, the number of domestic mortgages originated over the Internet,
relative to the total mortgage origination market is very small.  In 2002,
industry wide only a small percentage of total mortgage originations were
generated via the Internet.  However, according to certain mortgage banking
industry sources, by the year 2005 the Internet could comprise 25% to 30% of
total mortgage originations.  The Company's marketing strategy is to
supplement its current personal relationship based origination business with
marketing conducted over the Internet.  There can be no assurance that the
Company will be successful in the future in using the Internet as a source of
mortgage loan applications.


BUSINESS - AMERICAN ASSET DEVELOPMENT CORPORATION

     Development, which was incorporated in New Jersey in 1992 has been
involved in the development and sale of residential homes and lots on
property located in Hunterdon County, New Jersey.

     In connection with Development's activities in October 1996, the Company
received approval of and in December 1996 closed a construction mortgage
financing line of credit in the amount of $550,000.  The loan also provided
a letter of credit in the amount of $111,583 which the Company was required
to assign and deposit in escrow with certain municipal authorities in
connection with its development activities. The mortgage loan also provided
Development with $430,417 which was used to refinance a mortgage loan on the
property then owned by Development, funds to complete the balance of required
site improvements of the property and provided an interest reserve.  The
letter of credit currently expires in December 2003.  During March 1999, the
Company was able to reduce the letter of credit requirement to $39,000.  The
mortgage loan is secured by the personal guarantee of the Company's President.
The letter of credit is also guaranteed personally by the Company's President.
As of December 31, 2002 the mortgage loan still exists on the property to
further secure the letter of credit but has a zero balance.

     During December 2002, the Company borrowed $100,000 on its remaining
building lot through a mortgage and note, with a personal guarantee by the
Company's President, at a 10% rate of interest which is due on July 1, 2003.
As of March 21, 2003 the Company sold its remaining 1 building lot in
Hunterdon County, New Jersey for $175,000 and paid in full the mortgage on
the lot including all interest owed.  Accordingly the original mortgage on
the subdivision was also cancelled.

    As required by the Township,the Company has deposited $39,000 of the
Sales proceeds from the March 21, 2003 lot sale in an interest bearing escrow
account to guarantee the letter of credit which guarantees the balance of
all improvements to be completed as required by municipal authorities.

     During March of 2003, Development has transferred the escrow account of
$39,000 to Capital in partial repayment of monies Development owed to Capital.

SEASONALITY

     The mortgage banking industry and the sale of new homes and building
lots is generally subject to seasonal trends which reflect the pattern of new
home construction and resales of existing homes.  These sales typically peak
during the spring and summer seasons and decline to lower levels in the late
fall and winter seasons.

COMPETITION

     The market for mortgage based financing is highly competitive.  The
Company competes with numerous entities, primarily savings institutions,
commercial banks, insurance companies and other mortgage bankers, many of
which have more experience in mortgage based loans and have substantially
greater financial and other resources than the Company.  Competitive factors
include the ability to offer competitive interest rates, various types of
loan programs and services provided.

GOVERNMENT REGULATION AND ENVIRONMENTAL LAWS

     The Company's mortgage origination activities are subject to a variety
of Federal regulations, including but not limited to, the Equal Credit
Opportunity Act, Federal Truth-In-Lending Act and the Real Estate Settlement
Procedures Act and the regulations promulgated thereunder which prohibit
discrimination and require the disclosure of certain basic information to
applicants concerning credit terms and settlement costs.  Additionally,
pursuant to the regulations adopted by the State of New Jersey, the state has
the right to conduct financial and regulatory audits of loans under its
jurisdiction and to determine compliance with state disclosure requirements
and usury laws.  If the Company decides to expand its operations into other
states, it is anticipated that it will have to obtain the necessary permits
and/or licenses before it can commence operations in such states.  There can
be no assurance that the Company will be able to obtain such permits and/or
licenses in any additional state which the Company may plan to operate.

       With respect to its real estate development activities, the Company
is responsible for Development's compliance with Federal, State and local
regulations concerning protection of the environment, including but not
limited to, the New Jersey Fresh Water and Wetlands Act, soil erosion,
sedimentation and storm water management controls, various stream encroachment
regulations and local health department and zoning regulations.  The Company
believes it has complied with all necessary material regulations pertaining
to its material real estate development activities.

     Amendments to existing regulations and statutes, changes in regulatory
policies, adoption of new statutes and regulations applicable to the Company
and the Company's need to comply with additional regulations should the
Company expand into other jurisdictions could materially adversely affect the
Company's business in the future.

EMPLOYEES

     As of March 24, 2003, the Company had 6 employees, of whom 3 were
employed as executives or in administrative positions and 3 were employed in
the processing of mortgage loans and other clerical positions.  None of the
Company's employees are covered by collective bargaining agreements and the
Company believes that its relations with its employees are satisfactory.

ITEM 2.  DESCRIPTION OF PROPERTIES

     The Company's executive offices were located in Bernardsville, New
Jersey until April 5, 2002. On April 1, 2002 the Company entered into a new
30 month lease with a non-affiliate of the Company of an approximate 700
square foot office located in Parsippany, NJ.  The terms of this new lease
provided for monthly rent payments of $952 until October 1, 2002, and then
$999.60 per month until October 1, 2003 when the rent was to increase to
$1,049.58 per month.

     During December 2002, the Company expanded its square footage to a total
of 2,250 from 700 within the building by the mutual termination of the lease
it entered into on April 1, 2002 and negotiated a new lease with the same
landlord which commenced on January 1, 2003, for 36 months at a cost of
$3,660 per month.  The lease also provides the Company with a 2 year term
renewal option at a monthly rental of $3,880 per month.


ITEM 3.  LEGAL PROCEEDINGS

     During August 2001 the Company and the plaintiff's settled the action
commenced in March 1993 against the Company, its President, Richard G.
Gagliardi, and the brokerage firms of G. K. Scott & Co., Inc. and L. C.
Wegard & Co., Inc. in the Supreme Court of the State of New York, Queens
County, by two individuals who invested in the Company's 1989 private
offering of Common Stock.

     The settlement provides for the Company to receive all 21,019 shares
of the Company's Common Stock owned by the Plaintiffs, in exchange for
payment by the Company of $80,000 in total, payable in equal quarterly
payments, without interest, through September 2004.

     On March 25, 1999, a derivative action on behalf of two New Jersey
Limited liability companies (the "LLC's") was commenced against certain
defendants, including the Company, its President, the Company's wholly-owned
subsidiaries (collectively, the "Company Defendants"); and one of the
Company's former directors, Theodore P. Rica, Jr. ("Rica") in the Chancery
Division of the Superior Court of New Jersey, Union County.  The plaintiffs
allege that Rica and certain defendants other than the Company Defendants
("non-Company defendants"), misappropriated assets and opportunities of the
LLC's for their own use, engaged in self-dealing with respect to the LLC's,
breached the operating agreements of the LLC's, and converted and embezzled
assets and funds of the LLC's.

     The Company Defendants are alleged to have aided and abetted Rica in
converting the assets of the LLC's by accepting loans and payments from the
LLC's and Rica and repaying the loans to Rica in the form of cash and Company
stock.

     The plaintiffs seek declaratory and injunctive relief against the Company
Defendants; an accounting of (i) all shares of Company stock purchased by Rica
and certain non-Company defendants and (ii) all payments to or from the
Company and Rica and certain non-Company defendants; imposition of a lien or
equitable trust in favor of the LLC's on shares of Company stock issued in
the names of Rica and certain non-Company defendants; and certain unspecified
compensatory and punitive damages, attorneys' fees and costs.

     In April 1999, the Court granted a preliminary injunction, which, among
other things, enjoins the Company Defendants from allowing the transfer of any
Company stock held in the name of Rica and certain other non-Company defendants
and directs the Company Defendants to provide an accounting of all such stock.
The Company, while denying any wrongdoing, did not oppose plaintiffs'
application, as it did not adversely impact the Company.

     Counter defendants, including the Company defendants, have filed cross
claims against other defendants and each other for contribution and
indemnification.  The Company denies any wrongdoing and believes that the
claims against the Company Defendants are without merit, and intends to
defend the action vigorously.  The case is currently in the discovery stage
and the Company is unable to predict the outcome of this litigation at this
time.  However, it does not expect that the ultimate resolution to this matter
will have a material effect on its results of operations and financial
condition.

     On May 18, 1999, Rica submitted to the Company his resignation from the
Company's Board of Directors.

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

     The Company did not submit any matters to a vote of its security holders
during the fourth quarter of the year ended December 31, 2002.

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     In January 2002, the Company's Class B and Class C Common Stock
Purchase Warrants expired.

MARKET INFORMATION

     The Company's Common Stock is traded in the over-the-counter market and
since December 8, 1994, has been quoted on the OTC Bulletin Board of the NASD
under the symbol "AAMC".

    The following table sets forth, for the periods indicated, the range of
the high and low bid prices for the Company's Common Stock as reported by
the OTC Bulletin Board.  OTC Bulletin Board prices reflect inter-dealer
quotations, which do not reflect mark-ups, mark-downs or commissions and
may not represent actual transactions.

                     2002 PRICES FOR THE QUARTER ENDED

          March 31        June 30         Sept. 30       Dec. 31
         High   Low      High   Low      High   Low    High   Low
Common
Stock    0.70   0.40     0.70   0.40     0.80   0.40   0.70  0.40

                     2001 PRICES FOR THE QUARTER ENDED

          March 31        June 30         Sept. 30       Dec. 31
         High   Low      High   Low      High   Low    High   Low
Common
Stock   0.375  0.3125   0.375  0.37      0.40   0.15   0.50   0.30

HOLDERS

     The number of record holders of the Company's Common Stock was
approximately 125 as of March 24, 2003.  The Company believes that, in
addition, there are in excess of 300 beneficial owners of its Common Stock
whose shares are held in "street name".

DIVIDENDS

     To date, the Company has not paid any cash dividends on its Common Stock.
The payment of dividends, if any, in the future is within the discretion of
The Board of Directors and will depend upon the Company's earnings and will
also be subject to the rights of any holders of stock, such as Preferred Stock,
having preference of payment of dividends over holders of Common Stock.  The
Company's Board does not intend to declare any dividends on the Common Stock
in the foreseeable future, but instead intends to retain all earnings, if any,
for use in the Company's business operations.

RECENT SALES OF SECURITIES

     During the first quarter of 2002, the Company issued 60,000 shares of its
Series A Cumulative Convertible Participating Preferred Stock for approximately
$55,000 in net cash proceeds after payment of sales commissions.

     During December 2002, the Company commenced an offering of up to $300,000
of its 10% Series B, Cumulative Convertible Participating Redeemable Preferred
Stock.  As of December 31, 2002, the Company had received and accepted one
subscription in the amount of $25,000 from one of its directors.  There were no
subsequent subscriptions received by the Company as of March 24, 2003.

     The sale of these securities was made by the Company on a private basis
pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933 and/or Regulation D promulgated thereunder.

EQUITY COMPENSATION PLANS
     See Item 11 for information concerning securities authorized for issuance
under the Company's compensation plan.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2002 COMPARED TO THE YEAR ENDED DECEMBER 31, 2001

     Total revenues for the year ended December 31, 2002 were $1,664,892
compared to $1,963,740 for the year ended December 31, 2001, a decrease of
$298,848 or 15.2%.  The decrease is primarily attributable to an absence of
land sales during the year ended December 31, 2002 as compared to $490,077
during the year ended December 31, 2001 which was generated from American Asset
Development Corporation, the Company's wholly owned real estate development
subsidiary. Capital, the Company's wholly owned mortgage banking subsidiary,
had an increase of $33,969 or 37.9% in application and commitment fee income in
2002 from $89,591 to $123,560, and an increase of $234,272 or approximately
25.8% in mortgage origination fees from $907,196 during 2001 to $1,141,468
during 2002.  These increases were partially offset by a decrease in mortgage
interest income from Capital of $77,012 or approximately 16.1% from $476,876
during 2001 to $399,864 during the year ended December 31,2002.  The increase
in mortgage related originations was the result of an increase in amount of
$4,960,513 to $55,685,276 in total closings FOR the year ended December 31,
2002 FROM $50,724,763 in closings for 2001 and a small decrease in the number
of closings of 258 for 2002 and 284 mortgage closings during 2001.  This was a
result of the Company increasing its profit margins, lower interest rates
throughout most of the year, and by the Company's focus on building its
wholesale business and mortgage programs offered to the Company's
correspondents.  The decrease in mortgage interest income was a direct result
of lower interest rates on mortgages held for sale to institutions and other
investors, which was partially offset by the Company holding a greater number
of second mortgages in its warehouse facility which carry higher interest rates
and generate greater rates of interest to the Company than first mortgages.

     For the year ended December 31, 2002, Capital closed 258 residential
mortgage loans in the principal amount of approximately $55,685,276 compared
to 284 loans in the principal amount of approximately $50,724,763 in the prior
year, a decrease in number of 26 or approximately 9.2% and an increase in
amount of $4,960,513 or approximately 10.1%.  At December 31, 2002, the Company
had approximately 136 mortgage loan applications in process in the amount of
approximately $35,240,131 compared to approximately 91 mortgage loan
applications in process in the approximate amount of $17,608,219 at December
31, 2001, an increase in number of 45 or approximately 49.5% and an increase
in dollar amount of approximately $17,631,912 or 100.1%.  Of the 136 loans in
process as of December 31, 2002, 104 loans in the approximate amount of
$29,737,211, or 84.4% were from wholesale originations and 32 loans in the
approximately amount of $5,502,920 or 15.6% were originated by the Company's
retail sales personnel and from the Company's executive staff.

     Total operating expenses for the year ended December 31, 2002 were
$1,767,678, a decrease of $718,046 or 28.9% from the $2,485,724 incurred in
the prior year.  The $718,046 decrease in operating expenses was the result of
the absence of land development costs for the year ended December 31, 2002
compared to land development costs of $483,487 in the prior year, a decrease in
interest expense of $100,705 or approximately 35.6% to $182,462 from $283,167
in the prior year due to a smaller rate of interest charged on borrowed funds,
an increase of $106,141 or approximately 15.5% in commissions to $790,119 from
$683,978 in the prior year, a decrease in employee compensation and benefits of
$89,451 or approximately 20.2% to $353,605 from $443,056 from the prior year
and a decrease in other expenses of $150,544 or 25.4% to $441,492 from $592,036
in the prior year.  Other expenses are primarily attributable to legal and
accounting fees, associated warehouse and loan processing fees, and rent.
Expressed as a percentage of revenues, operating expenses decreased to
approximately 106.2% in 2002 from 126.6% in 2001, reflecting the decrease in
expenses and increase in revenues discussed above.

     Due to the foregoing, the Company incurred a loss attributable to common
stockholders of $123,446, or a $0.10 loss per share basic and diluted, for the
year ended December 31, 2002 compared to a loss of $521,984, or $.40 per share
for the year ended December 31, 2001.

     The Company had a deferred tax asset at December 31, 2002, arising from
federal and state net operating loss ("NOL") carryforwards of approximately
$3,600,000 and $3,200,000 respectively.  The NOL carryforwards expire between
2003 and 2022.  A valuation allowance has been recorded in the amount of
$1,432,473 at December 31, 2002, due to the uncertainty of future utilization
of the Company's NOL carryforwards.

     No provision for income taxes was made in 2002 and 2001 due to net
operating losses.

OTHER MATTERS

     The Executive Committee of the Company's Board of Directors has approved
the provision by the Company's external auditor, WithumSmith & Brown, of the
non-audit service of rendering tax advice. This disclosure is made pursuant to
Section 10A(i)(2) of the Securities Exchange Act, as added by Section 202 of
the Sarbanes-Oxley Act of 2002.


LIQUIDITY AND CAPITAL RESOURCES

     Throughout 2002 the Company continued to take actions that it believes
are necessary to improve future operating results.  Such actions included,
but were not limited to, moving its offices to Parsippany, New Jersey during
April 2002 and reducing the cost of rent, added additional outside sources of
mortgage loans from wholesale accounts such as other mortgage bankers and
brokers. During December 2002, the Company's warehouse line was increased from
$6,000,000 to $8,000,000 and during January 2003, the warehouse credit line was
increased to $9,000,000 as the Company's mortgage closings had increased to
require a greater credit line available to fund its monthly mortgage closing
obligations.  As of March 31, 2003, the $9,000,000 warehouse credit line was
renewed for one year and it will expire on March 31, 2004.

    The Company's capital resources during the year ended December 31, 2002,
have primarily been derived from revenues generated by its mortgage banking
operations, and through the sale of Preferred Stock.  The Company's cash
position increased in 2002 primarily as a result the proceeds of a mortgage
and note on a building lot owned by its real estate development subsidiary.

     On December 31, 2002 the Company had working capital of $185,904
compared to working capital of $254,285 on December 31, 2001.

     As of December 31, 2002, the Company had cash and cash equivalents of
$376,425 compared to $298,319 at December 31, 2001, an increase of $78,106 or
approximately 26.2%.  The increase was primarily attributable to net cash
provided by financing activities of $169,454, a net cash decrease of $90,512
used in operating activities, and by net cash used in investing activities
of $836.

    Net cash used in operating activities was the result of a net loss of
$102,786, decreases in prepaid expenses and other current assets of $17,905,
and increases in warehouse finance facility of $1,314,943.  These amounts were
partially offset by decreases in mortgage loans held for sale of $1,331,096 and
land development costs of $5,088, depreciation and amortization of $3,552, and
a decrease in deferred income of $6,354.

     Cash used in financing activities during the period ended December 31,
2002 was a $20,136 payment on a note payable and $15,410 in preferred stock
dividends paid.  This was partially offset by net cash of $80,000 provided by
the sale of $55,000 Series A Preferred Stock, $25,000 of Series B Preferred
Stock, and proceeds from issuance of notes payable from the Company's President
and one of its directors in the amount of $12,500 from each and the issuance of
a note and mortgage in the amount of $100,000 to an unaffiliated third party.

     The Company estimates that it will require additional capital in order
to successfully implement its existing operational plans. As a result, the
Company is seeking additional capital through, among other means, an infusion
of noncollateralized loans and the sale of additional equity in the Company.
However, there can be no assurance that the Company will be able to obtain
additional capital on terms acceptable to the Company.

     In the event the Company's plans change, its assumptions change or prove
to be inaccurate due to unanticipated expenses, delays, problems or otherwise,
the Company could be required to seek additional financing beyond the amounts
management currently estimates is needed to meet its capital requirements.

CRITICAL ACCOUNTING POLICIES

     Financial Reporting Release No. 60, released by the Securities and
Exchange Commission, requires all companies to include a discussion of
Critical accounting estimates or methods used in the preparation of
financial statements.

     MORTGAGE LOANS HELD FOR SALE - Mortgage loans held for sale represent
mortgage loans originated and held pending sale to interim and permanent
investors. The mortgages are carried at the lower of cost or market.  The
Company generally sells whole loans without servicing rights retained.  Gains
or losses on such sales are recognized at the time legal title transfers to the
investor based upon the difference between the sales proceeds from the final
investor and the basis of the loan sold, adjusted for net deferred loan fees
and certain direct costs and selling costs.  The Company defers net loan
origination fees as components of deferred income and prepaid expenses on the
balance sheet.  Such costs are not amortized and are recognized into income as
a component of the gain or loss upon sale.


ITEM 7.  FINANCIAL STATEMENTS

     This information appears in ITEM 13.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES

     None.


                                 PART III

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

The Company's executive officers and directors are as follows:

                                          POSITION WITH
      NAME                AGE              THE COMPANY
Richard G. Gagliardi      56          Chairman of the Board,
                                      President and Chief
                                      Executive Officer

Debra Lourie              47          Secretary and Director

Bernard Gitlow            76          Director

Spence Killam             34          Director

Russell D. Frayko         40          Director

     RICHARD G. GAGLIARDI has been Chairman, President and Chief Executive
Officer of the Company since its inception on July 1, 1988.  Mr. Gagliardi
was employed as a Registered Representative at the investment banking firm of
L. C. Wegard & Co., Inc. ("Wegard") from October 1989 to September 1991, and
served as a Vice President of Wegard from October 1989 to July 1991.

     DEBRA LOURIE has been a director of the Company since July 2000 and
Secretary of Capital Financial Corp. since January 2001 and Secretary of the
Company since September 1, 2002.  She has been a Senior Processor/Underwriter
for Capital Financial Corp since March 1996.  Since 1973 Ms. Lourie has held
numerous banking positions of increasing responsibility with several commercial
and savings banks in New Jersey.

     BERNARD GITLOW has been a director of the Company since June 1993.  He
has been Executive Vice President of Victor Kramer, Co., Inc. a consulting
company in the laundry and linen supply industry since August 1990.  Since
January 1988, Mr. Gitlow has also served as a consultant to the linen supply,
laundry and dry cleaning industry.

     SPENCE KILLAM has been a director of the Company since July 2000.  He has
been employed by Capital Financial Corp. as Vice President and Sales Manager
since November 1999.  Mr. Killam was the President of the Mortgage Finder from
August 1997 to October 1999 and served as Sales Manager for Capital Funding, a
Licensed New Jersey Mortgage Banker from October 1992 to August 1997.

     RUSSELL FRAYKO has been a director of the Company since June 2002.  He has
been employed as President of Joint Venture Antiques since 1983, a company in
the antique and modern furniture restoration and sales business.  Mr. Frayko is
also President of Joint Venture Promotions, an affiliate company involved in
the promotion of furniture and antique dealer trade shows.

     Directors are elected to serve until the next annual meeting of
shareholders or until their respective successors are elected and qualified.

     The executive officers of the Company are elected by the Company's Board
of Directors.  Each executive officer will hold office until his successor is
duly elected and qualified, until his resignation or until he shall be removed
in the manner provided by in the Company's By-Laws.

ITEM 10.  EXECUTIVE COMPENSATION

     The following table sets forth for the periods presented the compensation
paid by the Company and its subsidiaries for services rendered during the
fiscal year ended December 31, 2002 to the Company's Chief Executive Officer
(the "named executive").  No other executive officer of the Company received
an annual salary, bonus or other compensation in excess of $100,000 for the
fiscal year ended December 31, 2002.

                        SUMMARY COMPENSATION TABLE

                         ANNUAL COMPENSATION     LONG-TERM COMPENSATION
   Name and Principal                        Other Annual       Awards
   Position                Year    Salary    Compensation  Securities Under-
                                                            Lying Options(#)

 Richard G. Gagliardi     2002   $110,000      $12,225(1)            0
 Chairman of the Board,   2001    110,000       11,225(1)       25,000(2)
 President and Chief      2000    100,000       11,107(1)            0
 Executive Officer

(1)  Represents the approximate reimbursement cost of an automobile leased and
insured by Mr. Gagliardi for business purposes. Also includes a 2% contribution
aggregating approximately $2,000 during 2002 and 2001 in the Simple IRA
retirement plan established in June 1998 by Capital for all employees.

(2) Represents options granted to Mr. Gagliardi in his capacity as a director
of the Company

OPTION GRANTS IN THE LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

     No options were granted to the named executive during fiscal 2002.

     The following table sets forth information concerning the number of
options owned by the named executive and the value of any in-the-money
unexercised options owned by the named executive as of December 31, 2002.  No
options were exercised by the named executive during the year ended
December 31, 2002:


            AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES

                          Number of Securities    Value of Unexercised
                         Underlying Unexercised      In-The-Money
                       Options/SARs at 12/31/2002  Options/SARs at 12/31/2002

                       Exercisable  Unexercisable  Exercisable  Unexercisable

Richard G. Gagliardi      25,000               0           $0             $0

     The year-end values for unexercised in-the-money options represent the
positive difference between the exercise price of the options and the year-end
market value of the Company's Common Stock. An option is "in-the-money" if the
year-end fair market value of the Company's Common Stock exceeds the option
exercise price. The closing sale price of the Company's Common Stock on
December 31, 2002 was $0.40.


COMPENSATION OF DIRECTORS

     Directors of the Company receive $200 for each regular meeting they attend
and $400 for attending an annual meeting.  During 2002 the Company paid a total
of $1600 in director fees for Board of Director meeting attendance.  There were
no options granted during the year ended December 31, 2002.


STOCK OPTION PLAN

     In July 1992, shareholders of the Company ratified the adoption by the
Board of Directors of the Plan.  As of December 31, 2002, options to purchase
75,000 shares of the Company's Common Stock have been granted pursuant to the
Plan prior to the expiration of the Plan.  The Company's Stock Option plan was
terminated in July 2002 per the terms and conditions of the Plan.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information as of March 24, 2003
based on information obtained from the persons named below, with respect to
the beneficial ownership of shares of Common Stock by (i) each person known
by the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock, (ii) the named executive, (iii) each of
the Company's directors and (iv) all directors and executive officers as a
group:

                            AMOUNT AND NATURE      PERCENTAGE  OF
NAME AND ADDRESS  OF           BENEFICIAL            OUTSTANDING
BENEFICIAL OWNER             OWNERSHIP  (2)        SHARES  OWNED

Richard G. Gagliardi(1)       528,490 (5)              40.0%
Debra Lourie                   25,000 (5)               1.9%
Bernard Gitlow                180,751 (1)(6)           12.3%
Nathan Low                    149,000 (1)(3)           11.5%
Sunrise Foundation Trust       68,000 (1)(4)            5.3%
Brian Gonnelli                 68,000 (1)               5.3%
Spence Killam                  25,000 (5)               1.9%
Russell Frayko                 61,301 (8)(9)            4.7%

All directors and executive
officers as a group (five persons) 850,542 (6),(7),(8),(9) 52.7%

---------------------------------
(1)  The address of Mr. Gagliardi is 1280 Route 46 West, Parsippany, New Jersey
07054.  The address of Mr. Low and Sunrise Foundation Trust is 135 E. 57th
Street, New York, NY 10022.  The address of Mr. Gonnelli is 22 Kathryn Drive,
Whippany, NJ 07981.  The address of Mr. Gitlow is 1280 Route 46 West,
Parsippany, NJ 07054

(2)  Unless otherwise noted, the Company believes that all persons named in
the table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them.

(3)  According to a joint Schedule 13D filed with the Securities and Exchange
Commission represents (i) 31,000 shares of Common Stock owned by Mr. Low (ii)
68,000 shares of Common Stock owned by the Sunrise Foundation Trust, of which
Mr. Low is a trustee and  (iii) 50,000 shares of Common Stock owned by the
Nathan Low Individual Retirement Account f/b/o Low.

(4)  According to a joint Schedule 13D filed with the Securities and Exchange
Commission these shares are also beneficially owned by Nathan Low as reflected
in footnote 3 (iii) above.

(5)  Includes 25,000 shares of Common Stock which may be purchased upon
exercise of immediately exercisable options.

(6) Includes 175,000 shares of Common Stock issuable upon conversion of
150,000 shares of the Company's 10% Series A Cumulative Participating
Preferred Stock and 25,000 shares of the Company 10% Series B, Cumulative
Participating Preferred Stock.

(7) Includes 75,000 shares of Common Stock which may be purchased upon
exercise of immediately exercisable options.

(8) Includes 26,301 shares of Common Stock owned by Mr. Frayko's family.

(9) Includes 10,000 shares of Common Stock issuable upon conversion of 10,000
shares of the Company's 10% Series B, Cumulative Participating Preferred Stock.





EQUITY COMPENSATION PLAN

The following table provides certain information with respect to all of the
Company's equity compensation plans in effect as of December 31, 2002.


                   Number of Securities  Weighted Average  Number of Securities
                   to be issued upon     exercise price of  remaining available
                   exercise of out-      outstanding        for issuance under
                   standing options,     options, warrants  compensation plans
                   warrants and rights    and rights        (excluding securi-
                                                             ties reflected in
                                                              column (a))
Plan Category:             (a)                (b)                   (c)
Equity compensation
Plans approved by
security holders:        75,000             $0.40                    0

Equity compensation
Plans not approved by
Security holders (1):         0             $0                       0

Total                    75,000             $0.40                    0


ITEM 12   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During 2001, Bernard Gitlow, a director of the Company, purchased $150,000
of shares of the Company's 10% Series A Cumulative Convertible Participating
Preferred Stock in the Company's private offering of such stock.  In 2002,
Mr. Gitlow purchased $25,000 of shares of the Company's 10% Series B.


ITEM 13.  FINANCIAL STATEMENTS, REPORTS ON FORM 8-K AND EXHIBITS

(a)(1)  FINANCIAL STATEMENTS
                                                        PAGE NO.

Report of Independent Certified Public Accountants         F-1

Consolidated Balance Sheets - December 31, 2002 and 2001   F-2
Consolidated Statements of Operations -
 for the years ended December 31, 2002 and 2001            F-3
Consolidated Statement of Changes In Stockholders'
 Equity - for the years ended December 31, 2002 and 2001   F-4
Consolidated Statements of Cash Flows - for the years
 ended December 31, 2002 and 2001                          F-5
Notes to Consolidated Financial Statements             F-6 - F-17


(b)  CURRENT REPORTS ON FORM 8-K

     No reports on Form 8-K were filed by the Company during the quarter
ended December 31, 2002



(c)     EXHIBITS

      *3.1(a) Certificate of Incorporation as Amended
    ***3.1(b) Amendment to Certificate of Incorporation filed
                February 1995
       3.1(c) Amendment to Certificate of Incorporation filed
                January 1998
       3.1(d) Amendment to Certificate of Incorporation filed
                December 2001
       3.1(e) Amendment to Certificate of Incorporation filed
                December 2002
      *3.2    By-Laws
    **10.1    1992 Stock Option Plan
      21      Subsidiaries of the Company
      99.1    Certification of Principal Executive Officer and
              Chief Financial Officer, pursuant to Section 906
              of the Sarbanes-Oxley Act of 2002.


_________________________

  * Incorporated by reference to the corresponding exhibits in
    the Company's Registration Statement of Form S-1 (SEC File
    No. 33-34145).

 ** Incorporated by reference to the corresponding exhibit in the
    Company's Form 10-KSB for the year ended December 31, 1992.

*** Incorporated by reference to the corresponding exhibit in the
    Company's Form 10-KSB for the year ended December 31, 1994.



Item 14.  CONTROLS AND PROCEDURES

Within the 90 days prior to the filing date of this Annual Report on Form
10-KSB, an evaluation was carried out (the "Controls Evaluation"), under the
supervision and with the participation of Company's management, including its
Chief Executive Officer ("CEO") who is also the Chief Financial Officer
("CFO"), of the effectiveness of the Company's "disclosure controls and
procedures" (as defined in Section 13a-14 (c) and 15d-14 (c)  of the
Securities Exchange Act of 1934 ("Disclosure Controls")). Based upon that
evaluation, the CEO/ CFO has concluded that the Disclosure Controls are
effective to ensure that the information required to be disclosed by the
Company in reports it files or submits under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported as required by the
rules and forms of the Securities Exchange Commission.

The CEO/CFO notes that, since the date of the Controls Evaluation to the date
of this Annual Report on Form 10-KSB, there have been no significant changes
in the Company's internal controls or in other factors that could significantly
affect the internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.








INDEPENDENT AUDITORS' REPORT





To the Board of Directors and Stockholders,
American Asset Management Corporation and Subsidiaries:

We have audited the consolidated balance sheets of American Asset Management
Corporation and Subsidiaries as of December 31, 2002 and 2001, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended.  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 American Asset
Management Corporation and Subsidiaries as of December 31, 2002 and 2001, and
the consolidated results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.



                                                /s/WithumSmith+Brown P.C.

New Brunswick, New Jersey
February 13, 2003, except as to Notes 13(1) & (2),
for which the dates are March 21, 2003 and March 31, 2003 respectively











                                    F-1

               AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED  BALANCE SHEETS
                             DECEMBER 31, 2002 AND 2001
                                                          2002          2001
ASSETS
Current Assets:
 Cash                                                 $  376,425    $  298,319
 Mortgage loans held for sale                          4,742,984     3,411,888
 Prepaid expenses and other current assets                61,798        79,703
     Total Current Assets                              5,181,207     3,789,910

Land and Development Costs                               163,590       158,502
Property and Equipment, Net                                2,178         4,894
     TOTAL ASSETS                                     $5,346,975    $3,953,306

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Warehouse finance facility                           $4,651,301    $3,336,358
 Deferred income                                          11,637        17,991
 Accounts payable, accrued expenses and
  other current liabilities                              179,420       155,758
 Current maturities of notes payable                     152,945        25,518
     Total Current Liabilities                         4,995,303     3,535,625

Notes Payable, Net of Current Maturities                  18,064        40,627

Stockholders' Equity:
 Series B Cumulative Convertible Participating
 Preferred stock, no par value; 300,000 shares
 authorized, 25,000 and -0- shares issued and
 outstanding at December 31, 2002 and 2001,
 respectively (liquidation preference $25,000)            25,000            --
Series A Cumulative Convertible
 Participating Preferred stock, no par value;
 600,000 shares authorized, 210,000 and 150,000 shares
 issued and outstanding at December 31, 2002 and
 2001, respectively (liquidation preference $210,000
 and $150,000 at December 31, 2002 and 2001, respectively) 205,000     150,000
Common stock, no par value; 10,000,000 shares
 authorized; 1,316,989 shares issued and
 1,295,970 shares outstanding                         3,852,825     3,852,825
Additional paid-in capital                              231,207       231,207
Accumulated deficit                                  (3,909,279)   (3,785,833)
                                                        404,753       448,199
Treasury stock, at cost; 21,019 shares                  (71,145)      (71,145)
Total Stockholders' Equity                              333,608       377,054

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $5,346,975    $3,953,306



The Notes to Consolidated Financial Statements are an integral part of these
statements.



                                    F-2
             AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                        2002         2001
Revenues:

Mortgage origination fees                           $1,141,468    $  907,196
Land sales                                                 --        490,077
Application and commitment fees                       123,560         89,591
Mortgage interest income                              399,864        476,876

     Total Revenues                                 1,664,892      1,963,740


Expenses:
Employee compensation and benefits                    353,605        443,056
Commissions                                           790,119        683,978
Other expenses                                        441,492        592,036
Land development costs                                     --        483,487
Interest expense                                      182,462        283,167

     Total Expenses                                 1,767,678      2,485,724

    Net Loss                                       (  102,786)    (  521,984)

 Dividends on Preferred Stock                          20,660             --

Net Loss Attributable to Common Stockholders      $  (123,446)   $  (521,984)

Net Loss Per Common Share:

     Basic                                             $(0.10)        $(0.40)

     Diluted                                           $(0.10)        $(0.40)

Weighted Average Number of Shares of Common

     Stock Outstanding:

     Basic                                          1,295,970       1,309,944

     Diluted                                        1,295,970       1,309,944








The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                     F-3
              AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001



Series B         Series A
Cumulative      Cumulative
Convertible     Convertible
Participating  Participating              Addt'l
Pref'd Stock   Pref'd Stock   Common Stk   Paid-In    Accum'd Treasury Stk
Shares  Amt Shares  Amt Shares Amt Capital    Deficit     Shares  Amt    Total


Balance, January 1, 2001
--   --    --   $-- 1,316,989 $3,852,825 $231,207 $(3,263,849) --  $-- $820,183


Treasury Stock Purchased
--   --   --    --     --      --      --        --  (21,019) (71,145) (71,145)


Series A Preferred Stock Issued For Cash
--   -- 150,000 150,000 --      --      --         --    --      --     150,000


Net Loss
--   --   --     --     --      --       --    (521,984) --       --   (521,984)


Balance, December 31, 2001
-- 150,000 150,000 1,316,989 3,852,825 231,207(3,785,833)(21,019)(71,145)
                                                                        377,054


Series B Preferred Stock Issued For Cash
25,000 25,000 --   --    --     --    --        --     --     --      25,000


Series A Preferred Stock Issued For Cash,net of issuance costs of $5,000
--  --   60,000  55,000  --     --    --        --       --       --    55,000


Preferred Stock Dividends
--  --    --    --        --     --    --     (20,660)    --      --   (20,660)


Net Loss
--   --     --    --      --     --    --    (102,786)    --      --  (102,786)


Balance, December 31, 2002
25,000 $25,000 210,000 $205,000 1,316,989 $3,852,825 $231,207 $(3,909,279)
                                                     (21,019) $(71,145) $333,608













                    The Notes to Consolidated Financial Statements
                       are an integral part of these statements.



                                     F-4
             AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

                                                         2002          2001
Cash Flows From Operating Activities:
Net loss                                             $ (102,786)   $ (521,984)
Adjustments to reconcile net loss to net cash
 used in operating activities:
 Depreciation and amortization                            3,552         9,578
 Write off of commission advances and notes receivable       --        28,946
Changes in:
 Mortgage loans held for sale                        (1,331,096)      350,341
 Mortgage loans receivable                                   --        24,000
 Prepaid expenses and other current assets               17,905       (26,982)
 Land and development costs                              (5,088)      250,483
 Warehouse finance facility                           1,314,943      (354,100)
 Deferred income                                         (6,354)          369
 Accounts payable, accrued expenses and other
  current liabilities                                    18,412        22,093
Net Cash Used in Operating Activities                   (90,512)     (217,256)

Cash Flows Used In Investing Activities:
 Purchases of property and equipment                       (836)         (437)

Cash Flows From Financing Activities:
 Payments on notes payable                              (20,136)       (5,000)
 Proceeds from issuance of notes payable                125,000            --
 Proceeds from issuance of Series B Cumulative
Convertible Participating Preferred Stock                25,000            --
Proceeds from issuance of Series A Cumulative
 Convertible Participating Preferred Stock               55,000       150,000
 Payment of preferred stock dividends                   (15,410)           --
 Net Cash Provided By Financing Activities              169,454       145,000

Net Change in Cash                                       78,106       (72,693)

Cash at Beginning of Year                               298,319       371,012

Cash at End of Year                                    $376,425      $298,319

Supplemental Disclosure of Cash Flow Information:
 Cash paid during the years for:
  Interest                                           $  179,504    $  273,414
  Income taxes                                       $       --    $       --

Supplemental Schedule of Non-Cash Investing and
 Financing Activities:
 Purchase of treasury stock through the incurrence
  of a note payable                                  $       --    $   71,145
 Accrued preferred stock dividends
  charged to accumulated deficit                 $    5,250    $       --

The Notes to Consolidated Financial Statements are an integral part of these
statements.

                                    F-5

Note 1 - Significant Accounting Policies:

NATURE OF BUSINESS OPERATIONS
American Asset Management Corporation (the Company) through its two wholly
owned subsidiaries, Capital Financial Corp. (CFC) and American Asset
Development Corporation (AADC), is engaged in originating and selling loans
secured primarily by first mortgages on one-to-four family residential
properties (CFC) and real estate financing and development (AADC).  The
Company's mortgage banking subsidiary is a licensed mortgage banker in the
State of New Jersey.  The real estate project involves a parcel of land being
developed for sale in Hunterdon County, New Jersey.

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries.  All material intercompany accounts and
transactions have been eliminated in consolidation.

GEOGRAPHIC AND CUSTOMER CONCENTRATION AND SIGNIFICANT RISKS
The Company's mortgage banking activities are primarily concentrated in the
New Jersey market.

The Company's origination revenues are derived from loan sales to various
investors and interest revenue from the use of Company funds to fund loans.
During 2002, the Company sold loans to 11 different investors, two of which
accounted for 70 percent of total revenues.  During 2001, the Company sold
loans to 17 different investors, three of which accounted for 80 percent of
total revenues.  The remaining investors purchased less than 10 percent each of
the loans.

The Company receives all of its funds for mortgage banking activities from one
mortgage warehouse lender (see Note 7).

USE OF ESTIMATES
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions in determining the reported amounts of assets and liabilities
and disclosures 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.

PROPERTY AND EQUIPMENT
Property and equipment are stated at cost.  Depreciation and amortization are
computed by using the straight-line method over the estimated useful lives of
three to five years for computer equipment, furniture and fixtures and office
equipment, and over the term of the lease for leasehold improvements.  Repairs
and maintenance expenditures are expensed as incurred.  Expenditures for
betterments and major renewals are capitalized and, therefore, are included in
property and equipment.







                                    F-6
MORTGAGE LOANS HELD FOR SALE
Mortgage loans held for sale represent mortgage loans originated and held p
ending sale to interim or permanent investors.  The mortgages are carried at
the lower of cost or market.  The Company generally sells whole loans without
servicing rights retained.  Gains or losses on such sales are recognized at the
time legal title transfers to the investor based upon the difference between
the sales proceeds from the final investor and the basis of the loan sold,
adjusted for net deferred loan fees and certain direct costs and selling costs.
The Company defers net loan origination fees as components of deferred income
and prepaid expenses on the balance sheet.  Such costs are not amortized and
are recognized into income as a component of the gain or loss upon sale.

REVENUE AND COST RECOGNITION

GAIN ON SALE
The gain or loss on sales of mortgage loans held for sale to investors is
recognized upon purchase of the loan by the investor.  The Company records gain
on sale of mortgages in accordance with SFAS No. 140, which provides accounting
and reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities.  This statement also provides standards for
distinguishing transfers of financial assets that are sales from transfers that
are secured borrowings.  The Company does not engage in servicing mortgages
held for sale.  The components of the Company's gain or loss on sales of loans
are as follows:

   Origination Fees -
   The Company accounts for origination fee income on mortgages held for sale
   in conformity with Statement of Financial Accounting Standards No. 91.  This
   statement requires that origination fees be offset by their direct loan
   costs and the net deferred income is recognized at the time the loan is
   sold.

   Application and Commitment Fees -
   The Company's application fees for processing mortgage applications and
   commitment fees for committing to fund a loan are recorded in the statement
   of operations at the time the loan is sold or when the specific processing
   service (i.e. appraisal) has been provided and the fee is non-refundable.

   Loan Origination Costs -
   Loan fees, discount points and certain direct origination costs are recorded
   as a cost of the loan.  The Company estimates that direct loan origination
   costs, reported as operating expenses, were approximately $1,060,000 and
   $910,000 for the years ended December 31, 2002 and 2001, respectively.

INTEREST RECOGNITION
Interest income on mortgage loans held for sale is accrued as earned.  Interest
expense is recorded on outstanding borrowings on the Company's warehouse line
of credit based on the line's effective interest rate.  The gross amounts of
interest income and interest expense are presented as separate line items in
the statement of operations.

CONCENTRATION OF CREDIT RISK
The Company maintains cash balances, at times, with financial institutions in
excess of amounts insured by the Federal Deposit Insurance Corporation.
Management monitors the soundness of these institutions and considers the
Company's risk negligible.
                                       F-7
EARNINGS PER COMMON SHARE
Basic earnings per share excludes dilution and is computed by dividing loss
attributable to common stockholders by the weighted number of common shares
outstanding. Diluted earnings per share reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company.  Basic and diluted loss
per share for 2002 and 2001 are the same because the effect of outstanding
stock options and preferred stock conversions would be anti-dilutive.

STOCK-BASED COMPENSATION
As permitted by the provisions of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), the Company
follows Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" (APB 25) and related interpretations in accounting for its
employee stock option plans.  Under APB 25, if the exercise price of the
Company's employee stock options equals or exceeds the fair market value of the
underlying stock on the date of grant, no compensation expense is recognized.
Stock options and warrants issued to non employees are accounted for based on
the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable.

During 2001, the Company granted 80,000 options with an exercise price of $.40
per share.  These options vested immediately and were all exercisable.  There
was no compensation expense recognized as a result of this grant, as all
options issued under the Plan had exercise prices equal to, or in excess, of
the fair market value of the underlying common stock.  No options were granted
in 2002.

The following table illustrates the effect on net loss attributable to common
stockholders and net loss per common share, if the Company had applied the fair
value recognition provisions of SFAS 123, to stock-based employee compensation,
for the years ended December 31:

                                                            2002        2001

Net Loss, Attributable to Common Stockholders,
as Reported                                              $(123,446)  $(521,984)

Deduct:  Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects of $-0-              --     (21,759)

Pro Forma Net Loss                                       $(123,446)  $(543,743)

Net Loss Per Common Share:
     As Reported                                            $(0.10)     $(0.40)

     Pro Forma                                              $(0.10)     $(0.42)






                                   F-8



EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 145, "Rescission of SFAS
Statements No. 4, 44, and 64, Amendment of SFAS Statement No. 13, and Technical
Corrections" (SFAS No. 145), updates, clarifies and simplifies existing
accounting pronouncements.  SFAS No. 145 rescinds SFAS No. 4, "Reporting Gains
and Losses from Extinguishment of Debt."  SFAS No. 145 amends SFAS No. 13,
"Accounting for Leases," to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions.  The provisions of SFAS No. 145 related to SFAS
No. 4 and SFAS No. 13 are effective for fiscal years beginning and transactions
occurring after May 15, 2002, respectively.  Management believes that the
financial impact of SFAS No. 145 will not have a material effect on the
Company.


Statement of Financial Accounting Standards No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" (SFAS No. 146), requires the
Company to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or
disposal plan.  SFAS No. 146 replaces Emerging Issues Task Force (EITF) Issue
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)."  The provisions of SFAS No. 146 are to be applied
prospectively to exit or disposal activities initiated after December 31, 2002.


In November 2002, the FASB issued Statement of Financial Accounting Standards
No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure"
(SFAS No. 148).  This statement amends FASB Statement No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation and to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results.
SFAS No. 148 is effective for the Company's year ended December 31, 2002.  The
adoption of this statement in fiscal year 2002 did not have a significant
impact on the Company's financial position or results of operations.



NOTE 2 - FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following disclosure of the estimated fair value of financial instruments
as of December 31, 2002 and 2001 is made by the Company using available market
information and appropriate valuation methodologies.  However, considerable
judgment is required to interpret market data to develop the estimated fair
value.  Accordingly, the estimates presented herein are not necessarily
indicative of the amounts the Company could realize in a current market
exchange.  The use of different market assumptions and/or methodologies may
have a material effect on the estimated fair value amounts.




                                      F-9
                                  2002                             2001
                         Carrying     Estimated         Carrying     Estimated
                          Amount      Fair Value        Amount      Fair Value
Assets
  Mortgage loans
  held for sale        $4,742,984    $4,814,129       $3,411,888     $3,463,066

Liabilities
  Warehouse finance
  Facility             $4,651,301    $4,651,301       $3,336,358     $3,336,358

The fair value estimates as of December 31, 2002 and 2001 are based on
pertinent information available to management as of December 31, 2002 and 2001.
Although management is not aware of any factors that would significantly affect
the estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since those dates and,
therefore, current estimate of fair value may differ significantly from the
amounts presented herein.  The following describes the methods and assumptions
used by the Company in estimating fair values:

Mortgage loans held for sale - Fair value is estimated using the quoted market
prices from investors and commitments to purchase loans on a non-servicing
basis.

Warehouse finance facility - Rates currently available to the Company for debt
with similar terms and remaining maturities are used to estimate the fair value
of existing debt.

The fair value of the Company's notes payable approximate book value as of
December 31, 2002 and 2001.


NOTE 3 - PROPERTY AND EQUIPMENT:
Property and equipment at December 31 consist of:
                                                         2002        2001

     Computer Equipment                                $72,197     $71,902
     Furniture and Fixtures                             19,291      19,291
     Office Equipment                                   44,616      44,075
     Leasehold Improvements                              2,240       2,240
                                                       138,344     137,508
     Less Accumulated Depreciation and Amortization    136,166     132,614

     Property and Equipment, Net                        $2,178      $4,894

     Depreciation and amortization expense was $3,552 and $9,578 for the
     years ended December 31, 2002 and 2001, respectively.

NOTE 4 - RETIREMENT PLAN:
The Company maintains a SIMPLE individual retirement account plan under section
408(p) of the Internal Revenue Code whereby eligible employees are permitted
salary reduction contributions.  The Company may make nonelective contributions
equal to 2 percent of compensation for the calendar year to the SIMPLE IRA of
each eligible employee.  For the years ended December 31, 2002 and 2001, the
Company contributed $4,248 and $5,869 to employee retirement plans.

                                        F-10
NOTE 5 - ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:
Accounts payable, accrued expenses and other current liabilities consist of
the following at December 31:
                                                         2002          2001

     Accounts Payable                                  $120,030      $97,097
     Accrued Expenses and Other Current Liabilities      59,390       58,661
     Total                                             $179,420     $155,758


NOTE 6 - NOTES PAYABLE:
Notes payable consist of the following at December 31:
                                                        2002           2001
Note payable (face amount $50,000 and $75,000
at December 31, 2002 and 2001, respectively) -
imputed interest at 7.5 percent per annum,
quarterly payments of $6,250, personally
guaranteed by the Company's President,
final payment due September 2004                      $46,009         $66,145

Mortgage payable - interest at
10 percent per annum, secured by land,
entire balance including accrued interest
due July 2003                                         100,000             --

Stockholders' notes payable - interest at
10 percent per annum, entire balance
including accrued interest due July 2003               25,000             --
                                                      171,009         66,145
Less Current Maturities                               152,945         25,518

Notes Payable, Net of Current Maturities              $18,064        $40,627

Aggregate maturities of notes payable of the Company due within the next two
years ending December 31, are as follows:

                                 Year                  Amount

                                 2003                 $152,945
                                 2004                   18,064
                                 Total                $171,009

NOTE 7 - WAREHOUSE LINE OF CREDIT:
The Company has a warehouse line of credit of $9,000,000 (increased to
$9,000,000 from $8,000,000 in January 2003) with a financial institution, which
expires on March 31, 2003.  This line bears interest at prime plus 1.75
percent.  The prime rate at December 31, 2002 was 4.25 percent.  Funds from
this line of credit are used for short-term financing of mortgage loans held
for sale, and are secured by residential mortgage loans and a personal
guarantee of the Company's President.  The investor pays the line of credit at
the time of the closing.  As of December 31, 2002, twenty-two loans, amounting
to $4,742,984, had yet to be delivered to investors, resulting in a warehouse
loan payable of $4,651,301.  As of December 31, 2001, eighteen loans, amounting
to $3,411,888, had yet to be delivered to investors, resulting in a warehouse
loan payable of $3,336,358.

                                    F-11
Interest expense under the above line of credit was $178,173 and $281,498 for
the years ended December 31, 2002 and 2001, respectively.

The warehouse line of credit contains requirements for maintaining defined
levels of net worth and working capital and a compensating cash balance of
$10,000.


NOTE 8 - INCOME TAXES:
The was no provision for income taxes for the years ended December 31, 2002
And 2001, due to the losses generated in each year.  All deferred tax assets
are fully reserved for because it is more likely that the benefit from the
Company's net operating loss carryforwards will not be realized.

Deferred income taxes, consisting primarily of net operating loss
carryforwards, are summarized as follows at December 31:
                                                    2002           2001

Deferred Income Tax Asset                        $1,432,473    $1,380,534
Valuation Allowance                              (1,432,473)   (1,380,534)
Net Deferred Income Tax Asset                            --            --
Deferred Income Tax Liability                            --            --
Net Deferred Income Tax Liability               $        --   $        --

The Company has federal net operating loss carryforwards available to offset
future taxable income of approximately $3,600,000 at December 31, 2002, which
expire in 2003 through 2022, and state net operating loss carryforwards of
approximately $3,200,000, which expire in 2005 through 2010.

For the years ended December 31, 2002 and 2001, the Company's effective tax
rate differs from the federal statutory rate principally due to net operating
losses and other temporary differences for which no benefit was or has been
recorded.


NOTE 9 - STOCKHOLDERS' EQUITY:
On November 4, 2002, the Company authorized the issuance of 300,000 shares of
Series B Cumulative Convertible Participating Preferred Stock with no par
value.  The holder is entitled to annual dividends of $.10 per preferred share,
accruing from the date of original issuance and payable in cash on a quarterly
basis at a rate of $.025 per preferred share. The Series B Preferred Stock is
also entitled to an additional dividend of up to $0.04 per share if CFC
achieves certain specified levels of after-tax income.  Series B Preferred
shares rank senior to the common stock and pari passu with the Series A
Preferred Stock with respect to dividends and liquidating distributions or any
future capital stock that ranks junior to the preferred shares.  Each preferred
share may be converted by the holders thereof, at any time, into one share of
common stock of the Company at a conversion price equal to $1.00, subject to
certain adjustments, which include: payment of stock dividends on common stock,
common stock splits, or combinations affecting the common stock and
recapitalizations, mergers or reorganizations.

On December 10, 2002, the Company sold 25,000 shares of this Series B Preferred
stock to a Company director for $25,000.


                                         F-12

On December 3, 2001, the Company authorized the issuance of 600,000 shares of
Series A Cumulative Convertible Participating Preferred Stock with no par
value.  The holder is entitled to annual dividends of $.10 per preferred share,
accruing from the date of original issue and payable in cash on a quarterly
basis at a rate of $.025 per preferred share. The Series A Preferred Stock is
also entitled to an additional dividend of up to $0.04 per share if CFC
achieves certain specified levels of after-tax income. The Series A Preferred
shares rank senior to the common stock with respect to dividends and
liquidating distributions or any future capital stock that ranks junior to the
preferred shares.  Each preferred share may be converted by the holders
thereof, at any time, into one share of common stock of the Company at a
conversion price equal to $1.00, subject to certain adjustments, which include:
payment of stock dividends on common stock, common stock splits, or
combinations affecting the common stock and recapitalizations, mergers or
reorganizations.

Preferred stock holders have no voting rights, except where required by law or
upon conversion to common stock.

For the years ended December 31, 2002 and 2001, the Company sold 60,000 and
150,000 shares of this Series A Preferred stock to Company directors and
unrelated third parties for net proceeds of $55,000 and $150,000, respectively.
Cumulative unpaid dividends in arrearages on all preferred stock totaled $5,250
($.023 per share) and $740 ($.005 per share) at December 31, 2002 and 2001,
respectively.

In August 2001, the Company issued a note payable (See Note 6) to purchase
21,019 shares of its outstanding common stock as part of a litigation
settlement (See Note 10).


NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES:

OPERATING LEASES
The Company has entered into various operating lease agreements for office
space and office equipment.  The leases expire periodically through December
2005.

The future minimum rental commitments under noncancelable operating leases are
as follows:

                             Year                          Amount

                             2003                         $ 43,920
                             2004                           43,920
                             2005                           43,920
                             Thereafter                         --
                             Total                        $131,760

Rental costs under operating leases included in other expenses amounted to
$46,850 and $30,214 for the years ended December 31, 2002 and 2001,
respectively.



                                      F-13
PENDING LITIGATION
In March 1993, an action seeking compensatory and punitive damages was
commenced against the Company, the Company's President, and other companies by
two individuals who collectively invested in the Company's 1989 private
offering of common stock.  This action was settled on August 31, 2001.  The
terms of the settlement are that the Company will pay the plaintiff an initial
payment of $5,000 and twelve quarterly payments of $6,250 (see Note 6), and the
plaintiff will return to the Company 21,019 shares of Company common stock.  As
of December 31, 2001, the Company was in compliance with this settlement
agreement, however, the plaintiff had yet to deliver the stated shares to the
Company.  The plaintiff claims that he cannot turn over the shares as he never
took possession of them and they escheated to the State.  The burden to reclaim
the shares from the State remains with the plaintiff.

On March 25, 1999, the Company, its President, and the Company's wholly owned
subsidiary (CFC) (the Company Defendants) and one of the Company's former
directors together with other individuals were named in an action filed in the
Superior Court of New Jersey, Chancery Division by two New Jersey limited
liability companies (the LLCs).  The plaintiffs allege the Company's former
director and other defendants other than the Company Defendants (Other
Defendants) misappropriated assets and opportunities of the LLCs for their own
use, engaged in self-dealing with respect to the LLCs, breached the operating
agreements of the LLCs and converted and embezzled assets and funds of the
LLCs.  The Company Defendants are alleged to have aided and abetted the
Company's former director in converting the assets of the LLCs by accepting
loans and payments from the LLCs and the Company's former director and repaying
loans to the Company's former director in the form of cash and Company stock.
The LLCs seek declaratory and injunctive relief against the Company Defendants;
an accounting of (1) all shares of Company stock purchased by the Company's
former director and Other Defendants and (2) all payments to or from the
Company and the Company's former director and Other Defendants; imposition of a
lien or equitable trust in favor of the LLCs on shares of the Company's stock
issued to the Company's former director and Other Defendants; and certain
unspecified compensatory and punitive damages, attorney's fees and costs.

In April 1999, the Court granted a preliminary injunction, which among other
things, enjoins the Company's Defendants from allowing the transfer of any
Company stock held in the name of the Company's former director and Other
Defendants and directs the Company Defendants to provide an accounting of all
such stock.  The Company, while denying any wrongdoing, did not oppose
plaintiffs' application, as it did not adversely impact the Company.  The
Company denies any wrongdoing and believes that the claims are without merit
and intends to defend the action vigorously.  The case is in the discovery
stage and the Company is unable to predict the outcome of this litigation at
this time.  However, it does not expect that the ultimate resolution to this
matter will have a material effect on its results of operations and financial
condition.

WITH RESPECT TO ALL LITIGATION, AS ADDITIONAL INFORMATION CONCERNING THE
ESTIMATES USED BY THE COMPANY BECOME KNOWN, THE COMPANY REASSESSES ITS POSITION
BOTH WITH RESPECT TO ACCRUED LIABILITIES AND OTHER POTENTIAL EXPOSURES.
ESTIMATES THAT ARE PARTICULARLY SENSITIVE TO FUTURE CHANGE RELATE TO LEGAL
MATTERS, WHICH ARE SUBJECT TO CHANGE AS EVENTS EVOLVE AND AS ADDITIONAL
INFORMATION BECOMES AVAILABLE DURING THE LITIGATION PROCESS.


                                     F-14
OUTSTANDING LETTERS OF CREDIT
The Company, through it's wholly owned subsidiary AADC, is contingently
liable under an outstanding letter of credit in the amount of $39,000 at
December 31, 2002.  The letter of credit is secured by land owned by AADC and
is due to expire in December 2003.

MINIMUM NET CAPITAL REQUIREMENTS
CFC is a HUD nonsupervised loan correspondent, and as such is required to
maintain certain levels of minimum net worth and is subject to certain report
filing requirements.  CFC was in compliance with these requirements at December
31, 2002 and 2001.  The Company is required to file electronically CFC's HUD
report by April 30, 2003.

NOTE 11 - STOCK BASED COMPENSATION:
The Company had a 1992 Stock Option Plan, whereby the Company may grant
incentive and new qualified options to eligible participants that vest upon
grant date.  The plan provided for the issuance of options with terms of not
more than ten years.  The plan included a provision whereby stock options
granted by the Company may not exceed 100,000 shares of common stock, and
accordingly, has reserved 100,000 shares for this purpose. The plan terminated
on May 22, 2002, and no options have been granted after that date.
A summary of the stock option plan activity for the years ended December 31,
2002 and 2001 is presented below:
                                                   Options
                                Options          to Purchase          Options
                              to Purchase         Shares at         to Purchase
                                 Shares          Price Range           Shares
                                at $.40         $1.25 - $1.50        at $2.00
Outstanding and exercisable
at January 1, 2001:                 --                  --             10,000

Granted                         80,000                  --                 --
Exercised                           --                  --                 --
Expired                             --                  --            (10,000)
Forfeited                           --                  --                 --

Outstanding and exercisable
at December 31, 2001:           80,000                  --                 --

Granted                             --                  --                 --
Exercised                           --                  --                 --
Expired                             --                  --                 --
Forfeited                       (5,000)                 --                 --

Outstanding and exercisable
at December 31, 2002:           75,000                  --                 --

The fair value of the 2001 stock option grant, as disclosed in Note 1, was
estimated on the date of the grant using the Black-Scholes option pricing model
with the following assumptions for the grant: dividend yield of 0 percent,
risk-free interest rate 5.46 percent to 5.53 percent, expected life of two to
three years, and volatility of 1.27 to 1.29.

Options outstanding and exercisable as of December 31, 2002 are summarized
below:

                                         F-15
                                                       Weighted-Average
                                                     Remaining
         Range of              Number               Contractual     Exercise
      exercise prices        Outstanding            Life (Years)     Price
         $  0.40               75,000                   1.45        $  0.40

Options outstanding and exercisable as of December 31, 2001 are summarized
below:

                                                        Weighted-Average
                                                     Remaining
         Range of              Number               Contractual     Exercise
      exercise prices        Outstanding            Life (Years)     Price
         $  0.40               80,000                   2.45        $  0.40

NOTE 12 - SEGMENT REPORTING:
The Company has two primary operating segments including originating and
selling loans secured primarily by first mortgages on one-to-four family
residential properties (CFC) and real estate development (AADC).  The basis of
accounting and summary of accounting policies is described in Note 1 to the
financial statements.  Segment selection was based upon the nature of
operations as determined by management and all of the operations of these
segments are conducted in New Jersey.  Certain selected financial information
of these segments are described below:

2002                      CFC          AADC         PARENT          TOTAL

Revenues              $1,664,892     $       --   $      --      $1,664,892
Interest income       $  399,864     $       --   $      --      $  399,864
Interest expense      $  178,173     $       --   $   4,289      $  182,462
Depreciation expense  $    3,225     $       --   $     327      $    3,552
Segment profit (loss) $   41,684     $      855   $(145,319)     $ (102,780)

Identifiable assets   $5,327,197     $  276,012   $ 945,024      $6,548,233
Elimination of
  intercompany
  receivable          $ (156,620)    $ (100,150)  $ (944,488)    (1,201,258)
Net identifiable
  Assets              $5,170,577     $  175,862   $      536     $5,346,975

2002                      CFC          AADC         PARENT          TOTAL

Revenues              $1,473,663     $  490,077   $       --     $1,963,740
Interest income       $  476,876     $       --   $       --     $  476,876
Interest expense      $  281,498     $       --   $    1,669     $  283,167
Depreciation expense  $    9,087     $       --   $      491     $    9,578
Segment profit (loss) $ (268,670)    $  161,566   $ (414,880)    $  (521,984)

Identifiable assets   $3,978,215     $ 175,818    $  944,843     $5,098,876
Elimination of
  intercompany
  receivable            (194,582)       (6,500)     (944,488)    (1,145,570)
Net identifiable
assets                $3,783,633     $ 169,318    $      355     $3,953,306


                                        F-16
NOTE 13 - SUBSEQUENT EVENTS:

On March 21, 2003, AADC sold the remaining land lot for $175,000.  A portion of
the proceeds was used to repay the mortgage on the property (Note 6) including
accrued interest, and $39,000 was deposited in an escrow account to secure the
outstanding letter of credit (Note 10).

On March  31, 2003, the Company received notification from its warehouse lender
that the existing line of credit has been extended until March 31, 2004.














































                                      F-17

                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant cause this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                     AMERICAN ASSET MANAGEMENT CORPORATION
                                              (Registrant)



                                     /S/_Richard G. Gagliardi________
                04/09/03             Richard G. Gagliardi
                  Date               President




     In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.





                                     /S/_Richard G. Gagliardi________
                04/09/03                Richard G. Gagliardi
                  Date                  President
                                        (Principal Executive,
                                         Financial and Accounting
                                         Officer)
                                        (Signature)

                04/09/03             /S/_Debra Lourie________________
                  Date                  Debra Lourie
                                        Director
                                        (Signature)


                04/09/03             /S/_Bernard Gitlow______________
                  Date                  Bernard Gitlow
                                        Director
                                        (Signature)


                04/09/03             /S/_Spence Killam_______________
                  Date                  Spence Killam
                                        Director
                                        (Signature)


                04/09/03             /S/_Russell Frayko________________
                  Date                  Russell Frayko
                                        Director
                                        (Signature)



                              CERTIFICATION

     I, Richard G. Gagliardi, Chief Executive Officer and Chief Financial
Officer of American Asset Management Corporation , certify that:
1. I have reviewed this annual report on Form 10-KSB of American Asset
Management Corporation;
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 we 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 or not 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: April 9, 2003
                                          _s/Richard G. Gagliardi______
                                          Richard G. Gagliardi










                                 EXHIBIT INDEX



    EXHIBIT NO.                      DESCRIPTION

      3.1(c)    Amendment to Certificate of Incorporation filed
                January 1998

      3.1(d)    Amendment to Certificate of Incorporation filed
                December 2001

      3.1(e)    Amendment to Certificate of Incorporation filed
                December 2002

     21         Subsidiaries of the Company

     99.1       Certification of Principal Executive Officer and
                Chief Financial Officer, pursuant to Section 906
                of the Sarbanes-Oxley Act of 2002.



































                                                   Exhibit No. 21


                          SUBSIDIARIES OF THE COMPANY




                                                 JURISDICTION
   NAME                                        OF INCORPORATION


American Asset Development Corporation            New Jersey

Capital Financial Corp.                           New Jersey