[DESCRIPTION]    COVER
              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, 2000
                                -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)

150 MORRISTOWN ROAD, BERNARDSVILLE, NEW JERSEY         07924
   (Address of principal executive offices)         (Zip  Code)

Issuer's telephone number, including area code:   (908)  766-1701

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)

CL. B COM. STOCK PURCHASE WTS.     CL. C COM. STOCK PURCHASE WTS.
      (Title of Class)                      (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, 2000, the issuer's revenues were
$1,552,814
As of March 27, 2001 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
$196,456.

As of March 27, 2001 the issuer has 1,316,989 shares of its no
par value Common Stock issued and outstanding.

Documents incorporated by reference:   None

Transitional Small Business Disclosure Format: Yes ___  No _X_

<PAGE>
[DESCRIPTION]    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 for sale in New Jersey. Unless otherwise
indicated, all references to the Company in this report include
the Company and its subsidiaries.

HISTORY OF THE COMPANY

     The Company was incorporated on July 1, 1988 to engage in
real estate financing and investing.  In October 1988, the
Company became a limited partner of Murray Hill Estates at
Franklin, L.P. ("Murray Hill"), a New Jersey limited partnership
established for the purpose of acquiring a property ("Property")
located in Hunterdon County, New Jersey.  In January 1990, the
Company was elected successor general partner of Murray Hill for
the purpose of obtaining subdivision approvals necessary to
develop the property owned by Murray Hill.  In February 1992,
Murray Hill received preliminary approval for the subdivision of
the Property.  SEE BUSINESS - AMERICAN ASSET DEVELOPMENT
CORPORATION.

     In July 1992, the Company formed Development which acquired
substantially all of the assets of Murray Hill in exchange for an
aggregate of 29,600 shares of Common Stock of the Company and the
assumption of all of the liabilities of Murray Hill.

     In July 1989, the Company formed American Asset Mortgage
Corporation ("Mortgage") to provide mortgage banking services in
New Jersey.

     In July 1991, the Company acquired all of the outstanding
stock of Capital Financial Corp., a New Jersey licensed mortgage
banking company.  In June 1992, Capital was merged with and into
Mortgage and the name of the surviving subsidiary was changed to
Capital Financial Corp.

     In June 1998, the Company completed the private sale of
230,000 shares of its Common Stock at $3.00 per share to a small
number of institutional and other accredited investors.  These
investors were granted certain "piggy back" registration rights
with respect to the shares sold in the offering.

    On July 1, 1998 holders of the Company's Series A, 5%
Cumulative Convertible Preferred Stock converted all 68,750
shares of the Preferred Stock outstanding into 137,500 shares of
no par value Common Stock.  Accordingly the Company paid the last
semi-annual dividend to the holders of the preferred shares on
that date.


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
made primarily for the construction of single family residences.
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, the Company either uses its own funds or 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 it is simultaneously assigned to the
investor.  When Capital closes a loan with its own funds, or its
warehouse line of credit, the loan is delivered to the investor
after the closing for purchase.

     The Company generally sells its loans on a loan-by-loan
basis to mortgage investors, primarily savings banks.  The
Company estimates that generally 85% of its loan applications
close within 90 days from the date of application.  During 2000,
the Company sold 31, 27, 27, 22 and 21 of its 189 closed loans
(22%, 15%, 15%, 15%, and 11% respectively of the total loans
closed), to 5 of 24 investors, which included one savings bank,
three mortgage bankers and two commercial banks.  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 30,
2001, the Company has arrangements with approximately 30
investors to which the Company may sell its loans or refer
applications to.

     In May 1995, the Company obtained a $5,000,000 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 is secured by the
personal guarantees 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" (using an investors
funds), 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
correspondents.  As of March 24, 2000, the interest rate charged
to the Company on borrowed warehouse funds outstanding was
variable at 2% over the lending rate as quoted by the Wall Street
Journal.  In March 2001, the line was increased to $6,000,000 at
1 3/4% over the prime lending rate.

     During October 1999, the Company received a commitment from
another warehouse credit line lender to provide the Company with
an additional warehouse credit line in the amount of $5,000,000
at an interest rate which varies between 2 1/2% and 3 1/2% over
the Prime 1 Commercial Paper Rate.  The Company closed on this
credit line during December 1999 but did not commence utilization
of it until January 2000.  The Company continued to utilize this
credit line until December 2000, at which time the credit line
expired.  All closed loans that were in this warehouse were sold
and delivered to investors during January 2001.  The credit line
was then closed.

     As a result of a general decrease in mortgage interest rates
during 2000, the Company saw an increase in mortgage
refinancings.  This market which had been in a general decline
since a three year peak in December 1994, continued to be less
significant to the Company through 1998 at which time it began to
revive.  During the 1995 period, Capital first implemented other
methods of securing purchase loan originations, including those
discussed below which, to a certain extent, has lessened the
Company's dependence on mortgage refinancings through December
31, 2000.  As part of it's loan origination strategies the
Company hires various sales personnel  In November 1999 the
Company hired a Vice President with approximately 7 years
mortgage industry experience.  He is responsible for secondary
marketing, wholesale and Internet development and also assists
management in the day-to-day operations of the Company.

     In October 1996, the Company entered into an agreement to
offer its mortgage products on an electronic network system
of thirty-one mortgage bankers which originated applications
through a real estate broker branch office system located
throughout New Jersey.  The applications were forwarded to
Capital for processing and closing.  The Company compensated
the network of originators with a commission based on closed
loans originated by the network.  The Company believes it was one
of approximately twelve lenders which offered mortgage products
through this system.  In February 1997, the network was acquired
by another network which operated in a similar manner to the
original network. In July 1997, the Company became a lender on
this new network.  Both networks operated in a similar manner but
continued as separate entities until July 1997 at which time a
majority of the mortgage bankers from the acquired network were
terminated. Since July 1997, the Company has continued to receive
business from former mortgage network personnel of the original
network.  In August 1997, the Company entered into an agreement
with a new network which was formed as an independent unit by
former network mortgage banking originators. During 2000, the
Company continued to receive mortgage loans from this new
network.  Throughout 2000 and to date the Company has focused its
efforts in the wholesale area of mortgage origination rather than
utilizing its own retail sales force of loan originators that in
the past have not been cost effective for the Company.

     In January 2000, the Company estimated that it had two
wholesale correspondents which provided the Company with loan
originations on a regular basis.  As of March 30, 2001, the
Company estimates that it has approximately 30 such wholesale
correspondents.  There can be no assurance the Company will be
successful in these relationships 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, 2000, the Company
continued marketing its services to the public through the
Internet using its website home page on a major website belonging
to a national provider of mortgage loans and other financial
statistics.  The Company's website provides the public with its
lending programs and interest rates on a daily basis, in addition
to the rates of other lenders that the Company competes with.
During the fiscal year ending December 31, 2000, the Company has
received numerous inquiries which have resulted in mortgage loan
applications from persons seeking mortgage financing.

     The Company continues to be encouraged with the results the
Internet has provided as an additional source of mortgage
applications.  In addition, the Company has identified and is
seeking to link its website with other national and regional
websites that provide mortgage rate listings and information to
potential customers.

     To date, the number of domestic mortgages originated over
the Internet, relative to the total mortgage origination market
is very small.  In 2000, industry wide only 1.2% 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.

     During the first quarter of 1999, the Company applied for
a license as a mortgage banker in the State of Connecticut and is
considering applying for mortgage banking licenses in other
states.  The Company's license was approved by the State of
Connecticut in June of 1999.  In January 2000, the Company
decided not to renew its license in the State of Connecticut as
the Company determined that the amount of business derived from
there was not cost effective for the Company.  During June 1999,
the Company made an application to license itself as a mortgage
banker of second mortgages in the State of New Jersey.  In July
1999, the license was approved.  There can be no assurance that
the Company will apply for or be granted licenses in any
additional states.

     The Company utilizes one $6,000,000 warehouse line of credit
for its daily mortgage loan funding operations. However, whenever
possible the Company employs its available cash to fund mortgage
loans since the use of available cash generates mortgage interest
income, as well as saves interest costs and other fees associated
with the Company utilizing its warehouse credit line. This
warehouse line is maintained with a mortgage warehouse lender
which enables the Company to borrow funds secured by residential
mortgage loans that are temporarily accumulated or warehoused and
then sold. At December 31, 2000, the Company had borrowed
$3,690,458, which represented twenty closed loans ready for sale.
These funds were borrowed from the Company two warehouse credit
lines, one of which expired on December 31, 2000 and was closed.


BUSINESS - AMERICAN ASSET DEVELOPMENT CORPORATION

     In May 1992, Development was incorporated as a New Jersey
corporation to acquire Murray Hill, obtain final subdivision
approval, complete physical improvements to the Property and sell
the subdivided lots.  The principal asset acquired by Development
from Murray Hill in July 1992, was approximately 40 acres of
undeveloped land located in Franklin Township, Hunterdon County,
New Jersey.  In connection with the acquisition of Murray Hill,
Development assumed an existing liability of a loan payable to
Development's parent company which was secured by a first
mortgage on the Property in the principal amount of $667,575 as
of June 1, 1992.  Subsequent to the acquisition, the Company
transferred the mortgage receivable in the amount of $675,326 to
Capital.  Development continued to seek final subdivision
approval from authorities, which was received in October 1993,
subject to completing certain improvements or by posting
performance bonds or a letter of credit in lieu thereof.

     In February 1995, the Company entered into a revised
contract of sale for a lot included in the Property containing an
uninhabitable farmhouse and a fieldstone barn for $148,000, of
which payments of $10,000 were received.  At closing, the Company
received an additional $5,000 and agreed to provide the purchaser
a one-year interest only first mortgage in the principal amount
of $133,000 bearing interest at 9 1/2%.   The Company transferred
title to the purchaser in April 1997.  In May 1997, the Company
sold the mortgage, without recourse, to a non-affiliate of the
Company for $110,000.

     In March 1995, the Company entered into a contract to sell
one three (3) acre building lot for $125,000, for which a down
payment of $25,000 was received.  Under the terms of the
contract, the Company agreed to finance $100,000 of the purchase
price for six months, without interest, to be secured by a first
mortgage and personal note on the lot securing the buyers
obligation to the Company.

     In May 1995, the Company agreed to sell an additional five
and one half (5 1/2) acre building lot to the same individual it
contracted to sell a lot to during March 1995,  for the sum of
$100,000. The Company received a nonrefundable deposit of
$50,000.  In December 1995, the Company received a letter from
the individual requesting to void the contract for the 5 1/2 acre
lot and to apply this deposit to the March 1995 contract
for the 3 acre lot resulting in a total deposit on the 3 acre lot
of $75,000.  During January 1996, the Company consented to the
request and title was transferred to the buyer in August 1998.
At this time the Company also provided the buyer with a $330,000
credit line secured by a five month first mortgage on the
property and its improvements and the personal guarantee of the
buyer.  The mortgage matured in January 1999 and was extended by
the Company until April 1999.  During the third quarter of 1999
the mortgage became delinquent and the Company declared it in
default.  During January 2000, the Company filed a complaint in
foreclosure and for possession against the borrower in relation
to the outstanding mortgage receivable.  The mortgage was settled
and paid in full during February 2000 and all claims against the
borrower were dismissed by the Company.

     In January 1996, the Company entered into a contract to sell
to a real estate development corporation, 5 building lots which
range in size from 3 to 5 1/2 acres for a total purchase price of
$487,500.  The Company received a total of $340,000 in
nonrefundable deposits and in December 1996 the contract was
cancelled and the related deposit was converted to 34,000 shares
of Series A Cumulative Convertible Preferred Stock of the
Company.

     In August 1996, the Company entered into a contract to sell
one 3 acre building lot for $110,000 of which a down payment of
$11,000 was received.  The contract was amended in September 1996
to provide for cancellation and the return of the buyers deposit
in the event the Company is unable to transfer title on a fully
approved single family building lot.  In addition, during
September 1996 the Company, through Capital, agreed to provide
the buyer of this lot with a Construction/Permanent mortgage
loan to construct a single family residence.  The Company closed
title to this lot during February 1997 and construction commenced
utilizing the services of an affiliate of the Company to act as
General Contractor.  The affiliate company is majority owned by a
director of the Company.  The construction of the house was
completed in July 1997.

     In October 1996, the Company received approval of and
accepted a commitment issued by a commercial bank for a
construction mortgage financing line of credit in the amount of
$550,000.  In December 1996, the Company closed on the
construction mortgage financing line of credit in the amount of
$550,000.  The loan provides a letter of credit in the amount of
$111,583 which the Company assigned and deposited in escrow with
municipal authorities during January 1997 to guarantee Franklin
Township adequate funds to complete the balance of required site
improvements on the Property if the Company fails to complete the
required improvements.  The mortgage loan further provided
$430,417 which was used to refinance the mortgage loan which was
on the property, funds to complete the balance of required site
improvements and provided an interest reserve.  The loan was due
one year from the closing date, however, the bank at the request
of the Company had extended the term through July 1998.  The
letter of credit was extended for four additional one year
periods, first to December 1998, then 1999, 2000 and 2001.
During the fourth quarter 1998, the Company requested that the
municipal authorities reduce the amount of the letter of credit
because most of the improvements to the property had been
completed by the Company.  During March 1999, the Company
received a resolution executed by municipal authorities granting
the Company's request to reduce the letter of credit to $39,000.
The mortgage loan had been secured by the personal guarantees of
the Company's President and Executive Vice President.

     In February, March and June 1997, the Company transferred
title to and received payment in full on 3 unimproved building
lots to 3 non-affiliates of the Company in the amount of $97,500,
$110,000 and $110,000 respectively.  Proceeds from these sales
were used to pay down mortgage debt owed to a commercial bank and
the balance provided working capital to the Company.  On the
first two of three lots sold, the Company arranged construction
financing through Capital and construction management through an
affiliate of the Company.  The homes were completed by July of
1997.

     In January 1998, the Company executed a contract of sale for
an additional lot in the amount of $110,000 and received $11,000
as a deposit.  In April 1998, the Company received an additional
deposit of $70,000 bringing the total deposit to $81,000.  In
October 1998, the Company received the balance of the purchase
price and transferred title to this lot to the purchaser.  The
Company arranged construction financing through Capital, however,
construction management is through a non-affiliate of the
Company.

     In July 1998, the Company executed a contract of sale for a
building lot in the amount of $120,000 and received $12,000 as an
initial deposit.  The Company closed on the sale and transferred
title to the purchaser of this lot during September 1998.

     In August 1999, the Company entered into an agreement to
sell one of its building lots for $149,000.  At that time the
Company received a $1,000 deposit.  During October 1999, the
Company received an additional deposit of $13,900.  The Company
agreed to provide the purchase of this lot with an approved
septic design as a condition of sale.  Accordingly, the septic
design approval was granted by municipal authorities, the Company
received the full balance due and transferred title to this lot
in February 2000.

     In August 1999, the Company entered into an agreement to
sell one of its building lots and to construct a single family
residence.  The Company received a $1,000 deposit and with a
balance due of $38,700 upon approval of final construction plans
and specifications.  In November, 1999 the Company was informed
by the buyers architect that the final blueprints were completed.
In February 2000, the Company was informed that the buyer wished
to cancel the contract of sale and accordingly, the Company
returned the $1,000 deposit to the buyers thereby cancelling the
contract.

     On March 3, 2000, the Company entered into a contract to
sell one of its building lots and construct a single family
residence for approximately $480,000.  The contract was approved
during April 2000.  After the buyers finalized all architectural
issues such as plans and specifications and the Company completed
engineering and other required sitework, a building permit was
issued during October 2000.  The Company expects to complete the
construction of the house during May 2001 and transfer title to
the buyer shortly thereafter during the second quarter of 2001.
The terms of the contract provide for a $1,000 initially held in
escrow by the buyer's realtor and the balance of approximately
$47,000 is to be paid within 10 days of contract approval.  These
deposits were released to the Company upon mortgage approval and
the Company's President has personally guaranteed the deposit in
the event of default by the Company of it's performance under the
contract.  The buyers have been approved for a mortgage through a
non-affiliate of the Company.  The contract further provides for
an additional buyers deposit of approximately $73,400 be paid at
the time of closing when title to the residence is transferred to
the buyers from the Company and the remainder of the purchase
price is to be paid to the Company with the proceeds of a
mortgage loan.

     As of March 30, 2001, the Company owns 2 building lots in
its Hunterdon County, New Jersey real estate development and has
one contract of sale pending.  In September 1998, the Board of
Directors authorized the Company to build up to two, at any one
time, single family, colonial style homes on the lots, on
speculation and offer them for sale to prospective buyers.  The
Company believes that construction costs for each home to be
built will be approximately $225,000 and it will afford it a
better opportunity to obtain a profit from the transaction then
if it sold an undeveloped lot.  Although there can be no
assurance that the Company will be successful in this
undertaking, the Company has retained an on-site construction
manager who is a non-affiliate of the Company, to assist the
Company in this construction project.  In December 1999
construction was completed on one house and the house was sold
during November 2000.


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.  With respect to its real estate activities, generally,
and the development and sale of Murray Hill property,
specifically, the Company competes with other real estate
developments and sellers of individual homes.

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, 2001, the Company had 10 employees, of whom
3 were executives, 3 were employed in the processing of mortgage
loans and other clerical positions and 4 were part time loan
officers.  None of the Company's employees are covered by
collective bargaining agreements and the Company believes that
its relations with its employees are satisfactory.

SEGMENT INFORMATION

     See Note 12 of Notes to Consolidated Financial Statements
for certain information regarding the Company's operating
segments.

ITEM 2.  DESCRIPTION OF PROPERTIES

     The Company's executive offices occupy approximately 700
square feet of a total area of approximately 2,800 square feet of
office space it shares with Capital and Development that is
located in Bernardsville, New Jersey.  The 2,800 sq. ft. office
is leased from an unaffiliated third party pursuant to a lease
which expires in March 2002.  The lease provides for a monthly
rental of $5,484 through March 2002.

     As described in ITEM 1, "Business - American Asset
Development Corporation", as of March 30, 2001, the Company
owns 1 unimproved building lot and 1 improved building lot within
a subdivision consisting of approximately 7 acres of land in
Franklin Township, Hunterdon County, New Jersey.

ITEM 3.  LEGAL PROCEEDINGS

     In March 1993, an action was commenced 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 a total of $250,000 in the Company's
1989 private offering of Common Stock (the "1989 Offering").  The
plaintiffs alleged that, in connection with their investments in
the 1989 Offering, certain of the defendants misrepresented or
failed to disclose certain material facts concerning the Company
and the 1989 Offering.  The plaintiffs are seeking damages
against the parties, including compensatory damages of $1,000,000
and punitive damages of $5,000,000.  The Company and its
President subsequently moved to dismiss the complaint, and, by
Order dated January 10, 1994, the Court dismissed with prejudice
the motion filed by the Company and Mr. Gagliardi and dismissed
with prejudice the claims of unjust enrichment and conversion
contained in the complaint and dismissed the plaintiffs' breach
of contract claims with leave to amend.  On February 25, 1994,
plaintiffs filed an amended complaint containing allegations
similar to the original breach of contract allegations, which the
Company again moved to dismiss.  In August 1994, the Court
reaffirmed its dismissal of the unjust enrichment and conversion
claims but allowed the breach of contract and fraud claims to
proceed.  The Company believes that the claims are totally
without merit and intends to continue to vigorously defend the
action.

     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 AAMC 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.

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

     In May 2000, a complaint was filed against American Asset
Development (AAD) in the Superior Court of New Jersey, Chancery
Division, Hunterdon County, seeking specific performance of a
real estate contract and unspecified damages resulting from AAD's
alleged intentional delay in closing the contract.  A mandatory
non-binding arbitrator heard the complaint and filed in favor of
AAD.  However, the plaintiff filed a trial de novo and a new
hearing is scheduled for May 2001.  The Company is unable to
predict the outcome of this litigation at this time.

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, 2000.

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     In January 2001, the Company extended the expiration date
of the Company's Class B and Class C Common Stock Purchase
Warrants from January 29, 2001 until January 29, 2002.


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.

                     2000 PRICES FOR THE QUARTER ENDED

          March 31        June 30         Sept. 30       Dec. 31
         High   Low      High   Low      High   Low    High   Low
Common
Stock   1.00  0.75      1.25  0.5625   0.75  0.375  0.6875 0.3125

                     1999 PRICES FOR THE QUARTER ENDED

          March 31        June 30         Sept. 30       Dec. 31
         High   Low      High   Low      High   Low    High   Low
Common
Stock  3.625   1.75     3.75   1.3125   1.50   0.9375 1.625  0.75

HOLDERS

     The number of record holders of the Company's Common Stock
was approximately 125 as of March 30, 2001.  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.


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

YEAR ENDED DECEMBER 31, 2000 COMPARED TO THE YEAR ENDED
DECEMBER 31, 1999

     Total revenues for the year ended December 31, 2000 were
$1,552,814 compared to $1,072,189 for the year ended December 31,
1999, an increase of $480,625 or 44.8%.  The increase is
primarily attributable to an increase in revenues generated from
land sales made by Development of $578,153 as compared to an
absence of land sales during 1999 and to a lesser extent an
increase of $119,685 or 58.7% in revenues generated by Capital
from $203,655 in 1999 to $323,340 during 2000.  These were
partially offset by a decrease in application and commitment fee
income of $41,012 from $111,680 to $70,668 or 36.8%, and a
decrease of $176,201 or approximately 23.3% in mortgage
origination fees from $756,854 during 1999 to $580,653 during the
year ended December 31, 2000.  The decrease in mortgage related
originations and revenues was the result of a decreased amount of
mortgage closings during the year as a result of the loss of
sales and executive personnel while the Company focused on
building its wholesale mortgage business.  The increase in
mortgage interest income was a direct result of the Company's
adding second mortgages to its product line which carry higher
rates of interest to the Company.

     For the year ended December 31, 2000, Capital closed 189
residential mortgage loans in the principal amount of
approximately $35,728,544 compared to 234 loans in the principal
amount of approximately $48,602,120 in the prior year, a decrease
in number of 45 or approximately 19.3% and a decrease in amount
of $12,873,576 or approximately 26.5%.  At December 31, 2000, the
Company had approximately 65 mortgage loan applications in
process in the amount of approximately $15,594,832 compared to
approximately 13 mortgage loan applications in process in the
approximate amount of $2,999,581 at December 31, 1999, an
increase in number of 52 or approximately 500% and an increase in
dollar amount of approximately $12,595,251 or 419.9%.  Of the 65
loans in process as of December 31, 2000, 59 loans in the
approximate amount of $14,236,832, or 91.3% were from wholesale
originations and 6 loans in the approximately amount of
$1,358,000 or 8.7% were originated by the Company's retail part
time sales personnel and from the Company's executive staff.

     Total operating expenses for the year ended December 31,
2000 were $1,976,284, an increase of $639,117 or 47.8% from the
$1,337,167 incurred in the prior year.  The $639,117 increase
in operating expenses was the result of an expense of $563,176 in
land development costs in the current period from an absence of
land development costs in the prior year.  An increase in
interest expense of $99,686 or approximately 151.9% to $165,311
from $65,625 in the prior year, an increase of $140,968 or
approximately 46.7% in commissions to $442,677 from $301,709 in
the prior year.  These increased costs were partially offset by
decreases in other expenses of $147,471 or 27.1% to $396,693 from
$544,164 in the prior year.  The increased expenses were
primarily attributable to land development costs in the current
period as compared to an absence of land development costs in the
prior period and to a lesser extent increases in commissions and
interest expense.  Expressed as a percentage of revenues,
operating expenses increased to approximately 47.7% in 2000 from
41.3% in 1999, reflecting expenses increasing at a greater rate
than the 44.8% increase in revenues.

     Due to the foregoing, the Company incurred a loss from
operations of $423,470, or a $0.32 loss per share basic and
diluted, for the year ended December 31, 2000.

     The Company had a deferred tax asset at December 31, 2000,
arising from net operating loss ("NOL") carry forwards of
approximately $2,700,000.  The NOL carryforwards expire between
2001 and 2012.  A valuation allowance has been recorded in the
amount of $1,169,983 at December 31, 2000, due to the uncertainty
of future utilization of the Company's NOL carry forwards.

     No provision for income taxes was made in 2000 due to the
net operating loss and in 1999 due to the utilization of net
operating loss carryforwards.


LIQUIDITY AND CAPITAL RESOURCES

     Throughout 2000 the Company continued to take actions that
it believes are necessary to improve future operating results.
Such actions included, but were not limited to, recruiting a
wholesale account executive to its marketing staff to seek
additional outside sources of mortgage loans from wholesale
accounts such as other mortgage bankers and brokers.  During the
fourth quarter of 2000 the Company allowed one of its two
$5,000,000 warehouse credit lines to expire and renewed the other
credit line for a one year period to December 2001 at $4,000,000.
This warehouse credit line was subsequently increased to
$6,000,000 during March 2001 as the Company's mortgage closings
have increased to require a greater credit line available to fund
its monthly mortgage closing obligations.

     The Company's capital resources during the year ended
December 31, 2000, have primarily been derived from revenues
generated by its mortgage banking operations and to a lessor
extent by land sales.  The Company's cash position increased in
2000 primarily as a result of sales of real estate.  On December
31, 1999 the Company had working capital of $397,163 compared to
working capital of $461,155 on December 31, 2000.

    As of December 31, 2000, the Company had cash and cash
equivalents of $371,012 compared to $340,906 at December 31,
1999, an increase of $30,106 or approximately 8.8%.  The increase
was primarily attributable to net cash provided by the sale of
real estate of $352,278, which was partially offset by net cash
used in operating activities of $423,470. There was no net cash
used in financing activities, which was partially offset by net
cash provided by investing activities of $2,619.

    Net cash used in operating activities was the result of a
net loss of $423,470 and increases in mortgage loans held for
sale of $3,522,229, prepaid expenses and other current assets of
$30,735 and decreases in accounts payable of $47,113.  These
amounts were partially offset by increases in mortgage loans
receivable of $218,273, depreciation and amortization of $10,527
and deferred income of $13,522.

    There was no net cash used in financing activities during the
period ended December 31, 2000. These were partially offset by
net cash of $2,619 provided by investing activities due to the
net difference of $3,327 in purchases of fixed assets and
proceeds from notes receivable of $5,946.

     During the fourth quarter of 2000, the Company had completed
and sold for approximately $425,000 a single family home on one
of the four unimproved building lots owned by the Company
contained in it's Hunterdon County subdivision, which the Company
built on speculation.  As of December 31, 2000, the Company owns
two building lots, one improved and one unimproved.

     On July 13, 2000 the Company entered into a contract to sell
a building lot which contains a house the Company built on
speculation.  During August, 2000, the contract was approved
after attorney review.  The terms of the contract provided for a
$21,000 deposit to be held in escrow by the buyer's realtor.  The
balance of the buyer's deposit of approximately $23,590 was paid
upon transfer of title during November 2000.  As of November 7,
2000 the buyer was approved for a mortgage loan made through a
non-affiliate of the Company.  The balance of the purchase price,
aggregating approximately $383,300 was paid to the Company with
the proceeds of a mortgage loan at the time of transfer of title.

     As of March 2001, the Company owns one improved and one
unimproved building lots in its Hunterdon County, New Jersey real
estate development; one of which , as of March 2000, is under
contract to build a house and transfer title to the buyer which
the Company expects during the second quarter of 2001.

     On August 9, 2000 the Company was notified by U.S.
Department of Housing and Urban Development ("HUD") that is
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
expend 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 June of 1999 the Company became licensed as a
mortgage banker in the State of Connecticut.  In September 2000
the Company decided not to renew this mortgage banking license as
it was not cost effective to do so.  Accordingly, since September
30, 2000 the Company is only licensed as a mortgage banker for
first and second mortgages in the State of New Jersey.

     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.

ITEM 7.  FINANCIAL STATEMENTS

     This information appears in a separate section of this
report following Part III.


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

     On January 11, 2000 the Company dismissed its principal
independent auditor, Grant Thornton, LLP, and on January 11, 2000
the Company engaged WithumSmith+Brown, as its principal
independent auditor who reported on the financial statements
of the Company for the years ended December 31, 1999 and 2000.


                                 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      54          Chairman of the Board,
                                      President and Chief
                                      Executive Officer

Lynn K. Gagliardi         43          Executive Vice President,
                                      Secretary and Director

Bernard Gitlow            74          Director

Spence Killam             32          Director

Debra Lourie              45          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.

     LYNN K. GAGLIARDI has been Secretary and a director of the
Company since its inception and Executive Vice President from
July 1992.  From October 1989 to June 1991, Ms. Gagliardi served
as Assistant Operations Manager and a Registered Representative
of Wegard.  Lynn K. Gagliardi is the former wife of Richard G.
Gagliardi.

     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 Finding, a licensed
New Jersey Mortgage Banker from October 1992 to August 1997.

     DEBRA LOURIE has been a director of the Company since July
2000 and Secretary of Capital Financial Corp. since January 2001.
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.

     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, 2000
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, 2000.


                         SUMMARY COMPENSATION TABLE
                            ANNUAL COMPENSATION

   Name and Principal                          Other Annual
   Position               Year    Salary       Compensation
 Richard G. Gagliardi     2000   $100,000       $11,225(1)
 Chairman of the Board,   1999    100,000        11,107(1)
 President and Chief      1998    100,000         9,431(1)
 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 $2,000
during 2000 and 1999 in the Simple IRA retirement plan
established in June 1998 by Capital for all employees.  See
"Compensation of Directors" for a description of certain shares
of Common Stock received by Mr. Gagliardi in his capacity as a
director of the Company.

     In July 2000, the Board of Directors voted on and authorized
an incentive bonus plan for the President based on profitability.
Provided Capital attains quarterly profits of $100,000 or more,
the President will receive a quarterly bonus of 7.5% which will
be reviewed and paid quarterly when earned.

     No options or stock appreciation rights were granted to or
exercised by the named executive during the fiscal year ended
December 31, 2000.  In addition, the named executive did not own
any options to purchase Common Stock of the Company or stock
appreciation rights as of December 31, 2000.


COMPENSATION OF DIRECTORS

     During 2000 the Company accrued and paid director fees of
$1,200 for Board of Director meeting attendance.  Pursuant to the
Company's 1992 Stock Option Plan (the "Plan"), directors are
eligible to receive non-qualified options, and in addition,
directors who are employees of the Company are also eligible to
receive incentive options.

STOCK OPTION PLAN

     In July 1992, shareholders of the Company ratified the
adoption by the Board of Directors of the Plan.  The Plan
authorizes the grant of incentive and non-qualified options to
purchase up to 100,000 shares of the Company's Common Stock and
is administered by the Board of Directors.  Only employees of the
Company are eligible to receive incentive stock options pursuant
to the Plan. As of December 31, 2000, options to purchase 10,000
shares of the Company's Common Stock have been granted pursuant
to the Plan and options to purchase 90,000 shares of the
Company's Common Stock were available for grant under the Plan.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

     The following table sets forth certain information as of
March 30, 2001 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)       503,490 (3)              38.2%
Lynn K. Gagliardi              12,911 (4)                *
Bernard Gitlow                  9,177 (5)                *
Nathan Low                    179,000 (1)(6)           13.6%
Sunrise Foundation Trust       68,000 (1)(7)            5.1%
Brian Gonnelli                 68,000 (1)               5.1%
Spence Killam                  10,000                   *
Debra Lourie                        0                   0

All directors and executive
officers as a group (five persons) 533,882 (5)     40.6%

* less than 1%
---------------------------------
(1)  The address of Mr. Gagliardi is 150 Morristown Road, Suite
108, Bernardsville, New Jersey 07924.  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.

(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)  Does not include shares beneficially owned by Lynn K.
Gagliardi, Mr. Gagliardi's former wife, as to which he disclaims
beneficial ownership.

(4)  Does not include shares owned by Richard G. Gagliardi, Ms.
Gagliardi's former husband, as to which she disclaims beneficial
ownership.

(5)  Includes 3,426 shares of Common Stock which may be purchased
by Mr. Gitlow upon exercise of immediately exercisable warrants.

(6)  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) 30,000 shares of Common Stock
issuable upon the exercise of warrants owned by Mr. Low (iii)
68,000 shares of Common Stock owned by the Sunrise Foundation
Trust, of which Mr. Low is a trustee and (iv) 50,000 shares of
Common Stock owned by the Nathan Low Individual Retirement
Account f/b/o Low.

(7)  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 7(iii) above.


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, 2000 and 1999   F-2
Consolidated Statements of Operations -
 for the years ended December 31, 2000 and 1999            F-3
Consolidated Statement of Changes In Stockholders'
 Equity - for the years ended December 31, 2000 and 1999   F-4
Consolidated Statements of Cash Flows - for the years
 ended December 31, 2000 and 1999                          F-5
Notes to Consolidated Financial Statements             F-6 - F-16


(b)  CURRENT REPORTS ON FORM 8-K

     No reports on Form 8-K were filed by the Company during the
fiscal quarter ended December 31, 2000.

(c)     EXHIBITS

      *3.1(a) Certificate of Incorporation as Amended
    ***3.1(b) Amendment to Certificate of Incorporation filed
                February 1995
      *3.2    By-Laws
      *4.3    Form of Warrant Agreement between the Company and
                Continental Stock Transfer and Trust Company, as
                Warrant Agent
    **10.1    1992 Stock Option Plan
      10.2    Lease agreement for Capital Financial Corp. -
                Bernardsville, NJ
      21      Subsidiaries of the Company


_________________________

  * 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.

<PAGE>
<AUDIT-REPORT> REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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, 2000 and 1999, 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 generally accepted
auditing standards. 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, 2000 and 1999 and the
consolidated results of their operations and their cash flows for
the years then ended in conformity with generally accepted
accounting principles.



/s/WithumSmith+Brown
New Brunswick, New Jersey
March 14, 2001
                                 F-1

           AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                         DECEMBER 31, 2000 AND 1999

ASSETS:                                    2000          1999
Current Assets:
Cash and cash equivalents              $   371,012    $   340,906
Mortgage loans held for sale             3,762,229        240,000
Mortgage loans receivable                   24,000        242,273
Notes receivable, net                       28,946         34,892
Prepaid expenses and other current assets   52,721         21,986
     Total Current Assets                4,238,908        880,057

Land and Development Costs                 408,985        761,263
Property and Equipment, Net                 14,035         21,235

     TOTAL ASSETS                       $4,661,928     $1,662,555

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Warehouse finance facility             $ 3,690,458     $  234,024
Deferred income                             17,622          4,100
Accounts payable, accrued expenses and
other current liabilities                  133,665        180,778
     Total Current Liabilities           3,841,745        418,902

Commitments and Contingencies

Stockholders Equity:
Common stock, no par value;
10,000,000 shares authorized;
issued & outstanding 1,316,989 shares
in 2000 and 1999                         3,852,825     3,852,825
Additional paid-in capital                 231,207       231,207
Accumulated deficit                     (3,263,849)   (2,840,379)
Total Stockholders' Equity                 820,183     1,243,653

TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY                    $4,661,928    $1,662,555

The Notes to the 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, 2000 AND 1999

                                           2000           1999
Revenues:
Mortgage origination fees             $   580,653    $   756,854
Land sales                                578,153             --
Application and commitment fees            70,668        111,680
Mortgage interest income                  323,340        203,655
     Total Revenues                     1,552,814      1,072,189

Expenses:
Employee compensation and benefits        408,424        425,669
Commissions                               442,677        301,709
Other expenses                            396,693        544,164
Land development costs                    563,179             --
Interest expense                          165,311         65,625
     Total Expenses                     1,976,284      1,337,167

Loss Before Provision for Income Taxes (  423,470)      (264,978)
Provision for Income Taxes                    --             --
Net Loss                               (  423,470)      (264,978)
Dividends on Preferred Stock                  --              --
Loss Available for Common Stockholders $ (423,470)    $ (264,978)
Net Loss Per Common Share:
     Basic                             $     (.32)    $     (.20)
     Diluted                           $     (.32)    $     (.20)

Weighted Average Number of Shares of Common
Stock Outstanding:
     Basic                              1,316,989      1,316,649
     Diluted                            1,316,989      1,316,649

The Notes to the Consolidated Financial Statements are an
integral part of these statements.
                                   F-3

         AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
             FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


                                    Add'l
Common Stock       Preferred Stock  Paid-In  Accumulated
Shares   Amount    Shares  Amount   Capital  Deficit      Total
------- ---------- ------ -------- -------- ------------ --------
Balance, January 1, 1999
1,315,293 $3,845,825  --  $  --  $231,207 $(2,575,401) $1,501,631


Issuance of Common Stock for
Accrued Director's Fees
  1,696     7,000     --     --         --         --       7,000


Net Loss for the Year Ended 1999
    --        --      --       --       --   (264,978) (264,978)

Balance, December 31, 1999
1,316,989 3,852,825   --       --   231,207 (2,840,379) 1,243,653


Net Loss for the Year Ended 2000
     --         --    --       --       --    (423,470) (423,470)

Balance, December 31, 2000
1,316,989 $3,852,825  --   $   -- $231,207 $(3,263,849) $ 820,183

The Notes to the 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, 2000 AND 1999

                                           2000           1999
Cash Flows From Operating Activities:
 Net loss                              $ (423,470)    $ (264,978)
 Adjustments to reconcile net loss
 to net cash provided by (used in)
  operating activities:
  Depreciation and amortization            10,527          8,722
  Changes in operating assets
   and liabilities:
   Mortgage loans held for sale        (3,522,229)     1,515,009
   Mortgage loans receivable              218,273       (242,273)
   Prepaid expenses and
   other current assets                   (30,735)        64,962
   Land and development costs             352,278       (187,748)
   Warehouse finance facility           3,456,434     (1,129,212)
   Deferred income                         13,522        (51,760)
   Accounts payable & accrued expenses    (47,113)        45,239
   Net Cash Provided by (Used In)
   Operating Activities                    27,487       (242,039)

Cash Flows From Investing Activities:
 Purchases of fixed assets                 (3,327)       (21,706)
 Proceeds from notes receivable             5,946         27,930
Net Cash Provided By Investing Activities   2,619          6,224

Cash Flows From Financing Activities:
 Payments of loans payable                     --        (31,364)
Net Increase (Decrease) in Cash
 and Cash Equivalents                      30,106       (267,179)

Cash and Cash Equivalents,
 Beginning of Year                        340,906        608,085

Cash and Cash Equivalents,
 End of Year                           $  371,012     $  340,906

Supplemental Disclosure of Cash Flow Information:

Cash paid during the year for
  Interest                             $  165,311     $   65,625
  Income Taxes                         $      --      $      --

Supplemental Schedule of Non-Cash Investing
 and Financial Activities:
Issuance of common stock to
 reduce an accrued liability           $      --      $    7,000

The Notes to the Consolidated Financial Statements are an
 integral part of these statements.
                                 F-5


       AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Significant Accounting Policies:

ORGANIZATION
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 2000, the Company sold loans to 24
different investors, five of which individually accounted for 78%
of total revenues.  During 1999 two investors accounted for 35%
of total revenues.  The remaining investors purchased less than
10% each of the loans.

The Company receives all of its funds for mortgage banking
activities from two mortgage warehouse lenders (see Note 6).

USE OF ESTIMATES
In preparing financial statements in conformity with generally
accepted accounting principles, 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.

RETIREMENT PLAN
The Company has a voluntary Simple IRA plan for its employees.
Employer contributions to this plan included as a charge to
operations were $4,532 and $9,554 for the years ended December
31, 2000 and 1999, respectively.

PROPERTY AND EQUIPMENT AND DEPRECIATION AND AMORTIZATION
Fixed assets are stated at cost.  Depreciation and amortization
are computed by using the straight-line method over the estimated
useful lives of three years for computer equipment and leasehold
improvements and five years for furniture and fixtures and office
equipment, for both financial reporting and income tax purposes.

                                F-6


       AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Significant Accounting Policies (Continued):

MORTGAGE LOANS HELD FOR SALE
Mortgage loans held for sale are reported at the lower of cost or
market value which approximates fair value (see Note 2).
Management establishes a reserve allowance when needed, for
potential losses on a loan-by-loan basis.  No reserve was
required for the mortgages held for sale at December 31, 2000 and
1999.

REVENUE 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. 125, 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.

 ORIGINATION FEES
 The Company accounts for origination fee income on mortgages
 held for sale or mortgage loans receivable 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 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.


INCOME TAXES
The Company files its Federal income tax return on a consolidated
basis and its state income tax returns on an entity basis.

Deferred income tax assets and liabilities are computed for
temporary differences between financial statement and tax bases
of assets and liabilities that will result in future taxable and
deductible amounts, based on enacted tax laws and rates to
periods in which the differences are expected to affect taxable
income.  Valuation allowances are established, when necessary, to
reduce deferred tax assets to the amounts expected to be
realized.

CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments
purchased with an original maturity of three months or less to
be
cash equivalents.

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


AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Significant Accounting Policies (Continued):

EARNINGS PER COMMON SHARE
Earnings per common share are based on the weighted average
number of common shares outstanding.  In March 1999, the
Financial Accounting Standards Board issued Statement No. 128
("SFAS No. 128"), "Earnings Per Share", which requires dual
presentation of the basic and diluted earnings per share on the
face of the statements of operations.  Basic earnings per share
excludes dilution and is computed by dividing income available to
common stockholders less Preferred Stock dividends by the
weighted number of common shares outstanding. Basic and diluted
loss per share for 2000 and 1999 are the same because the effect
of outstanding stock options would be anti-dilutive.

RESERVE FOR BAD DEBTS
A reserve for bad debts has been provided for on all commission
advances and notes receivable turned over for collection.  The
reserve was $67,195 at December 31, 2000 and 1999.

NEW ACCOUNTING STANDARDS
In March 1999, the American Institute of Certified Public
Accountants issued Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Developed for or
Obtained for Internal Use." The SOP was effective for the Company
beginning in fiscal 2000.  The SOP requires the capitalization of
certain costs to develop or obtain software for internal use and
also requires that certain costs be expensed.  The adoption of
this SOP did not have a material impact on the Company's
consolidated financial statements.

In June 1998, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 133,
("SFAS 133") "Accounting for Derivative Instruments and Hedging
Activities".  SFAS 133 establishes new accounting and reporting
standards for derivative financial instruments and for hedging
activities. SFAS 133 requires the Company to measure all
derivatives at fair value and to recognize them in the balance
sheet as an asset or liability, depending on the Company's rights
or obligations under the applicable derivative contract.
Subsequent to the issuance of SFAS 133, the FASB has received
many requests to clarify certain issues causing difficulties in
implementation.  In June 2000, the FASB issued SFAS 138, which
responds to those requests by amending certain provisions of SFAS
133.  These amendments include allowing foreign-currency
denominated assets and liabilities to qualify for hedge
accounting, permitting the offsetting of selected inter-entity
foreign currency exposures that reduce the need for third party
derivatives and redefining the nature of interest rate risk to
avoid sources of ineffectiveness.  The Company expects to adopt
SFAS 133 and the corresponding amendments of SFAS 138 in the
first quarter of 2001.  SFAS 133, as amended by SFAS 138, is not
expected to have a material impact on the Company's combined
results of operations, financial position and cash flows.

                               F-8

       AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Fair Value of Financial Instruments:
The following disclosure of the estimated fair value of financial
instruments as of December 31, 2000 and 1999 is made by the
Company using available market information and appropriate
valuation methodologies.  However, considerable judgment is
necessarily 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.
                          2000                     1999
                  Carrying    Estimated     Carrying   Estimated
                   Amount     Fair Value     Amount    Fair Value
Assets
Mortgage loans
 held for sale  $3,762,229   $3,762,229    $  240,000  $  240,000
Mortgage loan
 receivable     $   24,000   $   24,000    $  242,273  $  242,273

Liabilities
Warehouse finance
 facility       $3,690,458   $3,690,458    $  234,024  $  234,024

The fair value estimates as of December 31, 2000 and 1999 are
based on pertinent information available to management as of
December 31, 2000 and 1999.  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 and mortgage loan receivable: 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.

Note 3 - Property and Equipment:
Property and equipment at December 31 consist of:
                                         2000           1999

Computer equipment                   $   71,466      $   68,139
Furniture and fixtures                   19,291          19,291
Office equipment                         44,075          44,075
Leasehold improvements                    2,240           2,240
                                        137,072         133,745
Less:  Accumulated
 depreciation and amortization          123,037         112,510

Property and Equipment, Net          $   14,035      $   21,235

Depreciation and amortization expense was $10,527 and $8,722 for
the years ended December 31, 2000 and 1999, respectively.

                                F-9

       AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Land and Development Costs:
Land and development costs are comprised of an initial investment
in capitalized loans of $675,000 to acquire the land, issuance of
148,000 shares of common stock in 1992 with a fair market value
of $259,000 to acquire the minority interest and cumulative
development costs incurred of $789,729 through December 31, 2000.
During 2000 and 1999, $563,179 and $-0- of land and development
costs were charged to expense, respectively, for the lots sold
during the year.  At December 31, 2000 and 1999, no allowance for
net realizable value was established as revenues from the
remaining land and development are anticipated to exceed related
costs.

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:
                                         2000            1999

Accounts payable                     $   21,125       $  108,806
Accrued development costs                45,200           23,000
Accrued expenses and
 other current liabilities               67,340           48,972
   Total                             $  133,665       $  180,778

Note 6 - Warehouse Lines of Credit:
On October 14, 1999, the Company entered into a warehouse line of
credit of $4,000,000 with a financial institution which expires
December 15, 2001.  Funds from this line of credit are used for
short-term financing of mortgage loans held for sale and mortgage
loan receivable, 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, 2000, nine loans amounting to $1,967,909 had
yet to be delivered to investors, resulting in a warehouse loan
payable of $1,928,885.  As of December 31, 1999, one loan
amounting to $240,000 had yet to be delivered to investors,
resulting in a warehouse loan payable of $234,024.

On March 3, 1995, the Company had entered into another warehouse
line of credit of $5,000,000 with a financial institution.  This
line expired on December 31, 2000.  As of December 31, 2000,
eleven loans amounting to $1,794,320 had yet to be delivered to
investors resulting in a warehouse loan payable of $1,761,573.
As of December 31, 1999, there were no outstanding borrowings
related to this line of credit.

Interest expense under the above lines of credit was $165,311 and
$65,625 for the years ended December 31, 2000 and 1999,
respectively.

Note 7 - Income Taxes:
The provision for income taxes consists of the following for the
years ended December 31:
                                          2000            1999

     Current                            $    --         $    --
     Deferred                                --              --
     Benefit of net operating
      loss carryforwards                     --              --
          Total                         $    --         $    --

                                F-10

       AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Income Taxes (Continued):

Deferred income taxes are summarized as follows at December 31:

                                          2000           1999

   Deferred Income Tax Asset          $1,169,983     $1,018,056
   Valuation Allowance                (1,169,983)    (1,018,056)
   Net Deferred Income Tax Asset             --             --
   Deferred Income Tax Liability             --             --
   Net Deferred Income Tax Liability  $      --      $      --

The Company has net operating loss carryforwards available to
offset future taxable income of approximately $2,700,000 at
December 31, 2000, which expire in 2001 through 2012.

For the years ended December 31, 2000 and 1999, 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 8 - Stockholders' Equity:
The Company has outstanding Class B Warrants each of which
entitles the holder to purchase .20941 share (adjusted) of Common
Stock at an exercise price of $19.10 per whole share until
January 29, 2001.  The Company also has outstanding Class C
Warrants each of which entitles the holder to purchase .20977
share (adjusted) of Common Stock at an exercise price of $21.45
per whole share until January 29, 2001.

The Company previously issued warrants to purchase up to 30,000
shares of the outstanding Common Stock of the Company at $4.00
per share in consideration for certain research and public
relations services performed.  These warrants are exercisable
upon issuance and expire in March 2001.

The Company issued 1,696 shares of Common Stock during 1999, to
satisfy an obligation for 1998 directors' fees payable of $7,000.


                                F-11

       AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 9 - Related Parties:
Notes receivable includes a demand note from the Company's former
Chief Financial Officer.  The note accrues interest at 8% per
annum and the outstanding principal balance was $20,446 as of
December 31, 2000 and 1999, net of an allowance of $11,000 for
uncollectibility.

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 March 2002.

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

        2001                            $     65,100
        2002                                  16,450
        2003                                     --
        Total Minimum Lease Payments    $     81,550

Rental costs under operating leases included in other operating
expenses amounted to $60,240 and $48,899 for the years ended
December 31, 2000 and 1999, respectively.

PENDING LITIGATION
In March 1993, an action seeking compensatory damages of
$1,000,000 and punitive damages of $5,000,000 was commenced
against the Company, the Company's President, and other
companies. In the complaint, the plaintiffs, two individuals who
collectively invested a total of $250,000 in the Company's 1989
private offering of common stock, claim fraud, unjust enrichment,
conversion, breach of fiduciary duty and breach of contract.  The
Company's President and the Company moved to dismiss the
complaint and by Order dated January 10, 1994 the court dismissed
with prejudice the claims of unjust enrichment and conversion and
dismissed the breach of contract claims with leave to amend.  On
February 25, 1994, the plaintiffs filed an amended complaint
containing allegations similar to those in the original breach of
contract allegations, which the Company again moved to dismiss.
In August 1994 the Court reaffirmed its dismissal of the unjust
enrichment and conversion claims, but allowed the breach of
contract and fraud claims to proceed.

Although the Company believes that it has meritorious defenses to
this action, 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.

                                F-12

       AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 10 - Commitments and Contingent Liabilities:

Pending Litigation (Continued)
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.

In May 2000, a complaint was filed against American Asset
Development (AAD) in the Superior Court of New Jersey, Chancery
Division, Hunterdon County, seeking specific performance of a
real estate contract and unspecified damages resulting from AAD's
alleged intentional delay in closing the contract.  A mandatory
non-binding arbitrator heard the complaint and filed in favor of
AAD.  However, the plaintiff filed a trial de novo and a new
hearing is scheduled for May 2001.  The Company is unable to
predict the outcome of this litigation at this time.

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 administration and
litigation process.

                                F-13

       AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 11 - Stock Based Compensation:

STOCK OPTIONS
The Company adopted a 1992 Stock Option Plan, effective November
22, 1992, whereby the Company may grant incentive and new
qualified options to eligible participants that vest upon grant
date.  The plan provides for the issuance of options with terms
of not more than ten years.  The plan includes a provision
whereby stock options granted by the Company may not exceed
100,000 shares of common stock. The plan shall terminate on May
22, 2002, unless terminated sooner; and no option shall be
granted after that date.  The plan is administered by the Board
of Directors.

During 1999, the Company granted 10,000 options with an exercise
price of $2 per share.  There were no options granted during
2000.  A summary of the stock option plan activity for the years
ended December 31, 2000 and 1999 is presented below:

                                     Options
                                   to Purchase          Options
                                    Shares at         to Purchase
                                   Price Range           Shares
                                  $1.25 - $1.50         at $2.00

Outstanding and exercisable
     at January 1, 1999:              67,000                --

Granted                                  --              10,000
Exercised                                --                 --
Expired                                  --                 --
Forfeited                            (47,000)               --
Outstanding and exercisable
     at December 31, 1999:            20,000             10,000

Granted                                  --              10,000
Exercised                                --                 --
Expired                              (20,000)               --
Forfeited                                --                 --

Outstanding and exercisable
     at December 31, 2000                --              10,000

The fair value of the 1999 stock option grant was $6,140 and was
estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions for the grant:
a dividend yield of 0%, a risk-free interest rate 5.71%, an
expected life of two years, and a volatility of 1.11.

                              F-14

       AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 11 - Stock Based Compensation (Continued):

Options outstanding and exercisable as of December 31, 2000 are
summarized below:

                                            Weighted-Average
                                        Remaining
Range of                   Number      Contractual     Exercise
exercise prices          Outstanding   Life (Years)      Price

$2.00                       10,000         .83           $2.00

Options outstanding and exercisable as of December 31, 1999 are
summarized below:

                                            Weighted-Average
                                        Remaining
Range of                   Number      Contractual     Exercise
exercise prices          Outstanding   Life (Years)      Price

    $1.25                  20,000         .33           $1.25
    $2.00                  10,000        1.92           $2.00

The Company applies APB Opinion No. 25 and related
interpretations in accounting for the plan.

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:

2000                     CFC       AADC      PARENT       TOTAL

Revenues            $  974,661   $ 578,153 $     --   $1,552,814
Interest income        323,340       --          --      323,340
Interest expense       165,311       --          --      165,311
Depreciation expense    10,036       --          491      10,527
Segment profit(loss)  (293,628)   14,774    (144,616)   (423,470)

Identifiable assets $5,875,797  $832,151  $2,494,150  $9,170,560
Elimination of
 intercompany
 receivable         (1,669,499) (387,314) (2,451,819) (4,508,632)
Net identifiable
 assets             $4,206,298 $ 444,837  $   10,793  $4,661,928

                               F-15



       AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12 - Segment Reporting (Continued):

1999                     CFC       AADC      PARENT       TOTAL

Revenues            $  868,534   $    --   $     --   $  868,534
Interest income        203,655        --         --      203,655
Interest expense        65,625        --         --       65,625
Depreciation expense     8,317        --         405       8,722
Segment profit(loss)   (14,036)   (22,794)  (228,148)   (264,978)

Identifiable assets $2,359,169   $799,893 $2,464,150  $5,653,212
Elimination of
 intercompany
 receivable         (1,479,308)    (3,626)(2,507,723) (3,990,657)
Net identifiable
 assets             $  879,861   $796,267 $  (13,573) $1,662,555

Note 13 - Subsequent Events:
In January 2001, the Company extended the expiration date of the
Company's Class B and Class C Common Stock Purchase Warrants from
January 29, 2001 until January 29, 2002.

In March 2001, the Company requested, and was granted, an
increase of $2,000,000 on its existing warehouse credit line,
thereby increasing their borrowing limit to $6,000,000.

                               F-16


</AUDIT-REPORT>
<PAGE>
                                  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________
                 04/12/00               Richard G. Gagliardi
                  Date                       President
                                            (Signature)

     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________
                04/12/01                Richard G. Gagliardi
                  Date                  President
                                        (Principal Executive,
                                         Financial and Accounting
                                         Officer)
                                        (Signature)


                                 /S/_Lynn K. Gagliardi___________
                04/12/01                Lynn K. Gagliardi
                  Date                  Executive Vice President
                                       (Signature)


                04/12/01        /S/_Bernard Gitlow______________
                  Date                  Bernard Gitlow
                                        Director
                                        (Signature)


                04/12/01        /S/_Spence Killam_______________
                  Date                  Spence Killam
                                        Director
                                        (Signature)


                04/12/01        /S/_Debra Lourie________________
                  Date                  Debra Lourie
                                        Director
                                        (Signature)



<PAGE>





                                 EXHIBIT INDEX



    EXHIBIT NO.                      DESCRIPTION

     10.6       Lease agreement for Capital Financial,
                Bernardsville, NJ

     21         Subsidiaries of the Company





<PAGE>
                                                   Exhibit No. 21


                          SUBSIDIARIES OF THE COMPANY




                                                 JURISDICTION
   NAME                                        OF INCORPORATION


American Asset Development Corporation            New Jersey

Capital Financial Corp.                           New Jersey