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, 2001
                                -OR-
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

 For the transition period from  ____________  to _____________

              Commission File Number:  0-19154

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

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

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

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

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

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

                    NO PAR VALUE COMMON STOCK
                         (Title of Class)


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

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.   ( X )

For the year ended December 31, 2001, the issuer's revenues were
$1,963,740.  As of March 27, 2002 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 $460,433.

As of March 29, 2002 the issuer has 1,316,989 shares of its no
par value Common Stock issued and 1,295,970 shares outstanding.

Documents incorporated by reference:   None

Transitional Small Business Disclosure Format: Yes ___  No _X_


10KSB REPORT

                                 PART I

ITEM 1.  DESCRIPTION OF BUSINESS

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


GENERAL

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

The Company was incorporated on July 1, 1988.

RECENT DEVELOPMENTS

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

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

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

BUSINESS - CAPITAL FINANCIAL CORP.

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

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

     The Company generally sells its loans on a loan-by-loan basis to mortgage
investors, which are usually savings banks.  The Company estimates that
approximately 85% of its loan applications typically close within 90 days from
the date of application.  During 2001, the Company sold 170, 33, and 24 of its
284 closed loans to 3 of the total of 17 investors who purchased loans from
Capital, which included one savings bank, a mortgage banker and one commercial
bank.  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, 2002, the Company had
agreements with approximately 25 investors, to which the Company may sell its
loans or refer applications to.

     The Company has a $6,000,000 warehouse line of credit from a
mortgage warehouse lender which provides the Company with a facility to
borrow funds secured by originated residential mortgage loans which will be
temporarily warehoused and then sold.  The warehouse line of credit, which
expires on March 31, 2003, is secured by the personal guarantee of the
Company's President.  The Company will borrow only against takeout
commitments issued by qualified investors who have pre-approved the loans
and committed to purchase the closed loan from the Company.  By using the
warehouse funds instead of "table funding", (funding provided by the investor
who purchases the loan from the Company), the Company has generally been able
to receive more favorable pricing from its investors which the Company
believes has made it more competitive in the market place.  The warehouse
line has also allowed the Company to sell loans to investors which do not
table fund and only purchase closed loans from it's correspondents,
i.e. Capital.

     The interest rate currently being charged to the Company on borrowed
warehouse funds outstanding is variable at 1 3/4% over the prime lending rate
as quoted by the Wall Street Journal.  As of December 31, 2001, the Company
had borrowed $3,411,888 under this line of credit.

     While the Company generally utilizes one $6,000,000 warehouse line of
Credit for its daily mortgage loan funding operations, whenever possible the
Company employs its available cash to fund mortgage loans.  When the Company
uses its available cash rather than the warehouse line to fund a loan it
generates mortgage interest income, as well as saves interest costs and other
fees associated with using the warehouse credit line.

     The Company previously had another available warehouse credit line in
the amount of $5,000,000 until December 2000, at which time the credit line
lender ceased it's operations.  All closed loans that were funded using this
warehouse were sold and delivered to investors during January 2001.  The
credit line was then closed.

     On August 9, 2000 the Company was notified by U.S. Department of Housing
and Urban Development ("HUD") that its approval with the agency as a
non-supervised lender was upgraded to what is commonly referred to as Full
Eagle status.  This approval allows the Company to act in the capacity of a
mortgage banker rather than a mortgage broker to underwrite and close loans
in its own name and HUD will insure these loans without prior approval from
the Company's sponsoring investors, as previously required.  This approval
also allows the Company to 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 2001 the Company experienced an increase in mortgage refinancings
as a result of a general decrease in mortgage interest rates during the year.
However, as a result of actions taken by Capital since 1994 to implement
other methods of securing purchase loan originations, including those
discussed below which the Company, to a certain extent, has lessened its
prior dependence on mortgage refinancings.  Nevertheless, the Company
believes that a significant increase in mortgage rates would adversely
affect its ability to close both the number of first time loans and
refinanced loans.

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

     Since late 1996, the Company offered its mortgage products on an
electronic network system of mortgage bankers which originated applications
through a real estate broker branch office system located throughout New
Jersey.  The applications obtained through the network 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.
Since 2000 the Company has primarily 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.

      As of March 30, 2002, the Company estimates that it has approximately
30 wholesale correspondents which provide the Company with loan originations
on a regular basis compared to two wholesale correspondents in January 2000.
In February 2002, the Company commenced negotiations with one of its
wholesale correspondents to employ the key personnel of the correspondent as
mortgage loan originators for the Company.  If successful, the Company would
also extend offers of employment to various persons now associated with these
originators in processing and administrative positions.  There can be no
assurance that the Company will be successful in these negotiations and that
if successful there is no assurance that these persons will add sufficient
loan originations to the Company's business to have a favorable impact on the
Company's overall business.  There can be no assurance the Company will be
successful in its relationships with wholesale correspondents and other loan
originators as it faces intense competition from the other lenders it competes
with for this business, many of which have greater resources and experience
than the Company.

     During the fiscal year ending December 31, 2001, the Company continued
marketing its services to the public through the Internet using its website
home page linked to a major website belonging to a national provider of
mortgage loans and other financial statistics.  The national provider's
website provides the public with the Company's lending programs and interest
rates on a daily basis, in addition to the rates of other lenders that the
Company competes with. As a result of its marketing through the Internet, the
Company has received numerous inquiries which have resulted in mortgage loan
applications and closings from persons seeking mortgage financing. The Company
continues to be encouraged with the results its Internet marketing has provided
as an additional source of mortgage applications.

     To date, the number of domestic mortgages originated over the Internet,
relative to the total mortgage origination market is very small.  In 2001,
industry wide only a small percentage of total mortgage originations were
generated via the Internet.  However, according to certain mortgage banking
industry sources, by the year 2005 the Internet could comprise 25% to 30% of
total mortgage originations.  The Company's marketing strategy is to
supplement its current personal relationship based origination business with
marketing conducted over the Internet.  There can be no assurance that the
Company will be successful in the future in using the Internet as a source of
mortgage loan applications.

     During 2001 the Company updated its own website to give the website a
fresh look. The Company's website provides potential customers with an
on-line mortgage application and streamlined Internet mortgage approval
process.  In addition, the Company has identified and is seeking to link
it's website with other national and regional websites that provide
mortgage rate listings and information to potential customers.

BUSINESS - AMERICAN ASSET DEVELOPMENT CORPORATION

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

     In connection with Developments activities in October 1996, the Company
received approval of and in December 1996 closed a construction mortgage
financing line of credit in the amount of $550,000.  The loan also provides
a letter of credit in the amount of $111,583 which the Company was required
to assign and deposit in escrow with certain municipal authorities in
connection with its development activities. The mortgage loan also provided
Development with $430,417 which was used to refinance a mortgage loan on the
property then owned by Development, funds to complete the balance of required
site improvements of the property and provided an interest reserve.  The
letter of credit currently expires in December 2002.  During March 1999, the
Company was able to reduce the letter of credit requirement to $39,000.  The
mortgage loan is secured by the personal guarantees of the Company's President
and Executive Vice President.  As of December 31, 2001 the mortgage loan still
exists on the property to further secure the letter of credit but has a zero
balance.

     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 completed the house during
May 2001 and transferred title to the buyer in June of 2001.  The Company was
paid in full for the balance of the purchase price by the buyer at the time of
closing when title to the residence was transferred to the buyers from the
Company.

     As of March 30, 2002, the Company owns 1 building lot in Hunterdon County.
New Jersey, which is not under contract of sale. The Board of Directors
authorized the Company to build up to two, at any one time, single family,
colonial style homes on the lot, on speculation and offer them for sale to
prospective buyers. At the present time the Company has decided not to build
a house on speculation and is offering the final lot it owns for sale with a
build to suit option.  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 the construction of the build to suit house on the lot when and if
it obtains a buyer for the lot and house.

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 the Hunterdon County,
New Jersey 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 30, 2002, the Company had 6 employees, of whom 3 were
executives, 3 were employed in the processing of mortgage loans and other
clerical positions.  None of the Company's employees are covered by collective
bargaining agreements and the Company believes that its relations with its
employees are satisfactory.

ITEM 2.  DESCRIPTION OF PROPERTIES

     The Company's executive offices formerly occupied approximately 700
square feet of a total area of approximately 2,800 square feet of
office space it shared with Capital and Development that was located in
Bernardsville, New Jersey until April 5, 2002.  The 2,800 sq. ft. office was
leased from an unaffiliated third party pursuant to a lease which expired on
March 31, 2002.  The lease provided for a monthly rental of $5,017, $5,250 and
$5,484 through March 2000, 2001 and 2002 respectively.  On April 1, 2002 the
Company entered into a new 30 month lease with a non-affiliate of the Company
of an approximate 700 square foot office located in Parsippany, NJ.  The terms
of the new lease provide for monthly rent payments of $952 until October 1,
2002, and then $999.60 per month until October 1, 2003 when the rent increases
to $1,049.58 per month.  In addition, the Company is negotiating with a
non-affiliated wholesale mortgage banking customer of the Company to occupy
approximately 500 additional square feet of the non-affiliate's space which is
located within the same building in Parsippany, New Jersey.

     As described in ITEM 1, "Business - American Asset Development
Corporation", as of March 30, 2002, the Company owns 1 unimproved building
lot within a subdivision consisting of approximately 3 acres of land in
Franklin Township, Hunterdon County, New Jersey.

ITEM 3.  LEGAL PROCEEDINGS

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

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

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

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

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

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

     Counter defendants, including the 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.

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, 2001.

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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


MARKET INFORMATION

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

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

                     2001 PRICES FOR THE QUARTER ENDED

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

                     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


HOLDERS

     The number of record holders of the Company's Common Stock was
approximately 125 as of March 30, 2002.  The Company believes that, in
addition, there are in excess of 300 beneficial owners of its Common Stock
whose shares are held in "street name".

DIVIDENDS

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

RECENT SALES OF SECURITIES

     During December 2001, the Company commenced an offering of up to
$600,000 of its 10% Series A, Cumulative Participating Preferred Stock.  As of
December 31, 2001, the Company had received and accepted one subscription in
the amount of $150,000 from one of its directors.

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


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

YEAR ENDED DECEMBER 31, 2001 COMPARED TO THE YEAR ENDED DECEMBER 31, 2000

     Total revenues for the year ended December 31, 2001 were $1,963,740
compared to $1,552,814 for the year ended December 31, 2000, an increase of
$410,926 or 26.4%.  The increase is primarily attributable to an increase in
revenues generated from Capital, the Company's wholly owned mortgage banking
subsidiary.  Capital had an increase of $18,923 or 26.7% in application and
commitment fee income in 2001 from $70,668 to $89,591, and an increase of
$326,543 or approximately 56.2% in mortgage origination fees from $580,653
during 2000 to $907,196 during 2001.  These increases were partially offset by
a decrease in land sales made by Development of $88,076 or approximately 15.2%
from $578,153 during 2000 to $490,077 during  the year ended December 31,2001
The increase in mortgage related originations and revenues was the result of an
increase in the number and amount of mortgage closings during 2001 as a result
of lower interest rates throughout most of the year and by the Company's focus
on building its wholesale business and mortgage programs offered to the
Company's correspondents.  The increase in mortgage interest income was also 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, 2001, Capital closed 284 residential
mortgage loans in the principal amount of approximately $50,724,763 compared
to 189 loans in the principal amount of approximately $35,728,544 in the prior
year, an increase in number of 95 or approximately 50.2% and an increase in
amount of $14,996,219 or approximately 41.9%.  At December 31, 2001, the
Company had approximately 91 mortgage loan applications in process in the
amount of approximately $17,608,219 compared to approximately 65 mortgage loan
applications in process in the approximate amount of $15,594,832 at December
31, 2000, an increase in number of 26 or approximately 40% and an increase in
dollar amount of approximately $2,013,387 or 12.9%.  Of the 91 loans in process
as of December 31, 2001, 79 loans in the approximate amount of $15,685,477, or
89% were from wholesale originations and 12 loans in the approximately amount
of $1,922,742 or 11% 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, 2001 were
$2,485,724, an increase of $509,440 or 25.7% from the $1,976,284 incurred in
the prior year.  The $509,440 increase in operating expenses was the result of
an increase in interest expense of $117,856 or approximately 71.2% to $283,167
from $165,311 in the prior year due to a larger amount of loans closed, an
increase of $241,301 or approximately 54.5% in commissions to $683,978 from
$442,677 in the prior year, an increase in employee compensation and benefits
of $34,632 or approximately 8.5% to $443,056 from $408,424 from the prior year
and an increase in other expenses of $195,343 or 49.2% to $592,036 from
$396,693 in the prior year.  Other expenses are primarily attributable to legal
and accounting fees, associated warehouse and loan processing fees, and rent.
These increased costs were partially offset by a decrease in land development
costs of $79,689 or approximately 14.2% to 483,487 from $563,179 in the prior
year. Expressed as a percentage of revenues, operating expenses decreased to
approximately 126.6% in 2001 from 127.3% in 2000, reflecting expenses
increasing at a lesser rate than the 26.5% increase in revenues.

     Due to the foregoing, the Company incurred a loss from operations of
$521,984, or a $0.40 loss per share basic and diluted, for the year ended
December 31, 2001 compared to a loss from operations of $423,470, or $.32 per
share for the year ended December 31, 2000.

     The Company had a deferred tax asset at December 31, 2001, arising from
federal and state net operating loss ("NOL") carry forwards of approximately
$3,500,000 and $3,300,000 respectively.  The NOL carryforwards expire between
2001 and 2021.  A valuation allowance has been recorded in the amount of
$1,489,051 at December 31, 2001, due to the uncertainty of future utilization
of the Company's NOL carry forwards.

     No provision for income taxes was made in 2001 and 2000 due to net
operating losses.

LIQUIDITY AND CAPITAL RESOURCES
     Throughout 2001 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 an additional 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
March 2001 the Company's warehouse line was increased from $4,000,000 to
$6,000,000 as the Company's mortgage closings had increased to require a
greater credit line available to fund its monthly mortgage closing
obligations.  The warehouse credit line currently expires on March 31, 2003.

     The Company's capital resources during the year ended December 31, 2001,
have primarily been derived from revenues generated by its mortgage banking
operations, by land sales and through the sale of Preferred Stock.  The
Company's cash position decreased in 2001 primarily as a result of a loss from
operations. On December 31, 2001 the Company had working capital of $254,285
compared to working capital of $397,163 on December 31, 2000.

    As of December 31, 2001, the Company had cash and cash equivalents of
$298,319 compared to $371,012 at December 31, 2000, a decrease of $72,693 or
approximately 19.6%.  The decrease was primarily attributable to net cash
used  in operating activities of $217,256, a net cash decrease of $145,000
used in financing activities, and by net cash used in investing activities
of $437.

    Net cash used in operating activities was the result of a net loss of
$521,984, increases in prepaid expenses and other current assets of $26,982,
and decreases in warehouse finance facility of $354,100.  These amounts were
partially offset by decreases in mortgage loans receivable of $24,000,
mortgage loans held for sale of $350,341, and land development costs of
$250,483, depreciation and amortization of $9,578, a write down of
commission advances and notes receivable of $28,946, and a decrease in
deferred income of $17,991.

     Cash used in financing activities during the period ended December 31,
2001 was a $5,000 payment on a note payable. This was partially offset by
net cash of $150,000 provided by investing activities due to the sale of
Series A Preferred Stock.

     During the third quarter of 2001, the Company had completed and sold for
approximately $480,000 a single family home on one of the two unimproved
building lots owned by the Company contained in it's Hunterdon County
subdivision, which the Company built under contract.  As of March 31, 2002,
the Company owns one building lot and has no contract of sale pending.

     In July 2000, the Board of Directors voted on and authorized a
moderate increase in salary for the President and implemented an incentive
bonus plan for the President based on profitability which will be reviewed
and paid quarterly when earned.

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

     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 engaged WithumSmith+Brown, as its
principal independent accountant who reported on the financial statements of
the Company for the years ended December 31, 1999, 2000 and 2001.


                                 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      55          Chairman of the Board,
                                      President and Chief
                                      Executive Officer

Lynn K. Gagliardi         44          Executive Vice President,
                                      Secretary and Director

Bernard Gitlow            75          Director

Spence Killam             33          Director

Debra Lourie              46          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, 2001 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, 2001.

                        SUMMARY COMPENSATION TABLE
               ANNUAL COMPENSATION  LONG-TERM COMPENSATION

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

 Richard G. Gagliardi   2001   $110,000   $11,225(1)   25,000(2)
 Chairman of the Board, 2000    100,000    11,225(1)        0
 President and Chief    1999    100,000    11,107(1)        0
 Executive Officer


(1)  Represents the approximate reimbursement cost of an automobile leased and
insured by Mr. Gagliardi for business purposes. Also includes a 2% contribution
aggregating $2,000 during 2001 and 2000 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.

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


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

     No options were exercised by the  named executive during fiscal 2001.  The
following table sets forth certain information regarding options owned by the
named executive at December 31, 2001.

OPTIONS/SAR GRANTS IN YEAR ENDING DECEMBER 31, 2001

                      No. of Shares  % of Total
                      Underlying     Options/SAR's
                      Options/SAR's  Granted       Exer. Price  Expiration
                      Granted        In Year       ($/share)     Date

Richard G. Gagliardi  25,000          31.25%        $0.40        9/03

All of the options granted were exercisable at December 31, 2001.

     The following table sets forth information concerning the number of
options owned by the named executive and the value of any in-the-money
unexercised options owned by the named executive as of December 31, 2001.  No
options were exercised by the named executive during the year ended
December 31, 2001:

            AGGREGATED OPTION EXERCISES AND YEAR-END OPTION/SAR VALUES

                          Number of Securities    Value of Unexercised
                         Underlying Unexercised      In-The-Money
                       Options/SARs at 12/31/2001  Options/SARs at 12/31/2001

                       Exercisable  Unexercisable  Exercisable  Unexercisable

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

     The year-end values for unexercised in-the-money options represent the
positive difference between the exercise price of the options and the year-end
market value of our common stock. An option is "in-the-money" if the year-end
fair market value of our common stock exceeds the option exercise price. The
closing sale price of our Common Stock on December 31, 2001 was $.0.40.



CHANGES IN SECURITIES AND USE OF PROCEEDS

     During the quarter ended September 30, 2001, the Board authorized the
issuance of an aggregate of 80,000 common stock purchase options at $0.40 per
share to three (3) directors of the Company in equal 25,000 share amounts and
5,000 to an employee of the Company.  The issuance's were made pursuant to the
exemption from registration in Section 2(a)3 and 4(2) of the Securities Act
of 1933.  During the quarter ended December 31, 2001 the Company sold 150,000
shares of its 10% Series A Cumulative Participating Preferred Stock in a
private transaction to a director of the Company in a transaction that was
exempt from Section 4(2) and/or Regulation D of the Securities Act of 1933.

COMPENSATION OF DIRECTORS

     During 2001 the Company paid director fees of $1,600 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.  During 2001, options to purchase 25,000 shares
of its Common Stock at $0.40 were granted to each of three employee directors
under the Plan as compensation for their serving as directors.

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, 2001, options to purchase 80,000 shares of the
Company's Common Stock have been granted pursuant to the Plan and options to
purchase 20,000 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, 2002
based on information obtained from the persons named below, with respect to
the beneficial ownership of shares of Common Stock by (i) each person known
by the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock, (ii) the named executive, (iii) each of
the Company's directors and (iv) all directors and executive officers as a
group:


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

Richard G. Gagliardi(1)       528,490 (3)(8)           39.4%
Lynn K. Gagliardi              12,911 (4)                *
Bernard Gitlow                155,751 (8)              10.8%
Nathan Low                    149,000 (1)(5)           13.6%
Sunrise Foundation Trust       68,000 (1)(6)            5.1%
Brian Gonnelli                 68,000 (1)               5.1%
Spence Killam                  25,000 (7)               1.9%
Debra Lourie                   25,000 (7)               1.9%

All directors and executive
officers as a group (five persons) 815,332 (8),(9)     53.0%

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

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

(6)  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 6 (iii) above.

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

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

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

ITEM 12   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.

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, 2001 and 2000   F-2
Consolidated Statements of Operations -
 for the years ended December 31, 2001 and 2000            F-3
Consolidated Statement of Changes In Stockholders'
 Equity - for the years ended December 31, 2001 and 2000   F-4
Consolidated Statements of Cash Flows - for the years
 ended December 31, 2001 and 2000                          F-5
Notes to Consolidated Financial Statements             F-6 - F-17


(b)  CURRENT REPORTS ON FORM 8-K

     No reports on Form 8-K were filed by the Company during the
fiscal quarter ended December 31, 2001.

(c)     EXHIBITS

      *3.1(a) Certificate of Incorporation as Amended
    ***3.1(b) Amendment to Certificate of Incorporation filed
                February 1995
       3.1(c) Amendment to Certificate of Incorporation filed
                January 1998
       3.1(d) Amendment to Certificate of Incorporation filed
                December 2001
      *3.2    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.


















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, 2001 and 2000, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years then ended.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these financial statements based on our audits.

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

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



/s/WithumSmith+Brown
WithumSmith+Brown
New Brunswick, New Jersey
February 13, 2002, except as to Note 13(2),
for which the date is March 29, 2002.







                                     F-1









               AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                             Consolidated Balance Sheets
                             December 31, 2001 and 2000

ASSETS:                                                 2001        2000

Current Assets:
 Cash                                               $  298,319     $371,012
 Mortgage loans held for sale                        3,411,888    3,762,229
 Mortgage loans receivable                                  --       24,000
 Commission advances and notes receivable, net              --       28,946
 Prepaid expenses and other current assets              79,703       52,721
  Total Current Assets                               3,789,910    4,238,908

Land and Development Costs                             158,502      408,985

Property and Equipment, Net                              4,894       14,035

TOTAL ASSETS                                        $3,953,306   $4,661,928


LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
 Warehouse finance facility                          3,336,358   $3,690,458
 Deferred income                                        17,991       17,622
 Accounts payable, accrued expenses and
 other current liabilities                             155,758      133,665
 Current maturities of note payable                     25,518           --
  Total Current Liabilities                           3,535,625   3,841,745

Note Payable, Net of Current Maturities                 40,627           --

Commitments and Contingencies

Stockholders' Equity:
 Series A Preferred stock, no par value (liquidation
  preference $150,000); 600,000 shares authorized,
  150,000 and -0- issued and outstanding at
  December 31, 2001 and 2000, respectively             150,000          --

 Common stock, no par value; 10,000,000 shares
  authorized; 1,316,989 issued; at December 31, 2001
  and 2000; 1,295,970 and 1,316,989 outstanding
  at December 31, 2001 and 2000, respectively        3,852,825   3,852,825
Additional paid-in capital                             231,207     231,207
Accumulated deficit                                 (3,785,833) (3,263,849)
                                                       448,199     820,183

Treasury stock, at cost; 21,019 and -0- shares at
 December 31, 2001 and 2000, respectively              (71,145)         --
  Total Stockholders' Equity                           377,054     820,183

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $3,953,306  $4,661,928

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, 2001 AND 2000



                                                           2001       2000
Revenues:
 Mortgage origination fees                           $   907,196  $  580,653
 Land sales                                              490,077     578,153
 Application and commitment fees                          89,591      70,668
 Mortgage interest income                                476,876     323,340
      Total Revenues                                   1,963,740   1,552,814


Expenses:
 Employee compensation and benefits                      443,056     408,424
 Commissions                                             683,978     442,677
 Other expenses                                          592,036     396,693
 Land development costs                                  483,487     563,179
 Interest expense                                        283,167     165,311
 Total Expenses                                        2,485,724   1,976,284

Loss Before Provision for Income Taxes                  (521,984)   (423,470)

Provision for Income Taxes                                    --          --

Net Loss                                                (521,984)   (423,470)

Dividends on Preferred Stock                                  --          --

Loss Attributable to Common Stockholders               $(521,984)  $(423,470)

Net Loss Per Common Share:
 Basic                                                     $(.40)      $(.32)
 Diluted                                                   $(.40)      $(.32)

Weighted Average Number of Shares of Common
 Stock Outstanding:
  Basic                                                1,309,944   1,316,989
  Diluted                                              1,309,944   1,316,989






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, 2001 AND 2000



   Series A                        Additional
 Pref'd Stock      Common Stock     Paid-In  Accumulated  Treasury Stock
Shares  Amount   Shares    Amount   Capital    Deficit   Shares  Amount  Total



Balance, January 1, 2000

  --  $ --   1,316,989 $3,852,825  $231,207  $(2,840,379) $ -- $  -- $1,243,653


Net Loss
  --   --         --        --        --        (423,470)   --    --  (423,470)


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


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


Series A Pref'd Stock Issued for Cash
150,000 150,000   --        --       --          --      --       --   150,000


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


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






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, 2001 AND 2000



                                                           2001           2000
Cash Flows From Operating Activities:
Net loss                                               $(521,984)    $(423,470)
 Adjustments to reconcile net loss to net cash (used in)
  provided by operating activities:
 Depreciation and amortization                             9,578        10,527
 Write off of commission advances and
   notes receivable                                       28,946            --
 Changes in:
 Mortgage loans held for sale                            350,341    (3,522,229)
 Mortgage loans receivable                                24,000       218,273
 Prepaid expenses and other current assets               (26,982)      (30,735)
 Land and development costs                              250,483       352,278
 Warehouse finance facility                             (354,100)    3,456,434
 Deferred income                                             369        13,522
 Accounts payable, accrued expenses and
  other current liabilities                               22,093       (47,113)
   Net Cash (Used In) Provided By Operating Activities  (217,265)       27,487

Cash Flows From Investing Activities:
 Purchases of property and equipment                        (437)       (3,327)
 Proceeds from commission advances and
   notes receivable                                           --         5,946
  Net Cash (Used In) Provided By Investing Activities       (437)        2,619

Cash Flows From Financing Activities:
 Payments on note payable                                  (5,000)           --
 Proceeds from issuance of Series A Preferred Stock       150,000            --
 Net Cash Provided By Financing Activities                145,000            --

Net (Decrease) Increase in Cash                           (72,693)       30,106

Cash, Beginning of Year                                   371,012       340,906

Cash, End of Year                                        $298,319      $371,012


Supplemental Disclosure of Cash Flow Information:
 Cash paid during the year for:
  Interest                                               $273,414      $165,311
  Income taxes                                           $     --      $     --

 Supplemental Schedule of Non-Cash Investing and Financing
  Activities:
   Purchase of treasury stock through the incurrence of
    a note payable                                       $ 71,145      $     --

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:

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

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

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

The Company's origination revenues are derived from loan sales to various
investors and interest revenue from the use of Company funds to fund loans.
During 2001, the Company sold loans to 17 different investors, three of which
accounted for 80 percent of total revenues.  During 2000, the Company sold
loans to 24 different investors, five of which accounted for 78 percent of
total revenues.  The remaining investors purchased less than 10 percent each
of the loans.

The Company receives all of its funds for mortgage banking activities from one
mortgage warehouse lender (see Note 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 $5,869 and
$4,532 for the years ended December 31, 2001 and 2000, respectively.

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

                                      F-6

               AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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, 2001 and
2000, because all loans were sold within 45 days of origination.

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.

LAND SALES
Revenues on land sales are recognized when the property is sold.  The costs to
improve the land are recorded as Land Development Costs and matched with the
revenues when the property is sold.

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.  There were
no cash equivalents at either December 31, 2001 or 2000.


                                      F-7

               AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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.

EARNINGS PER COMMON SHARE
Earnings per common share are based on the weighted average number of common
shares outstanding.  Generally accepted accounting principles require 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 loss attributable to common stockholders by the weighted
number of common shares outstanding. Basic and diluted loss per share for 2001
and 2000 are the same because the effect of outstanding stock options and
preferred stock conversions 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 $96,141 and
$67,195 at December 31, 2001 and 2000.

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

EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, 1999, and 2000, the FASB issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, SFAS No. 137, Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133, and SFAS No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities, respectively.  These statements
require companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value.  Gains or losses resulting from changes
in the values of those derivatives would be accounted for depending on the use
of the derivative and whether it qualifies for hedge accounting.  The adoption
of these statements on July 1, 2001 did not have a significant impact on the
Company's financial position or results of operations.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101 (SAB 101),
Revenue Recognition in Financial Statements.  SAB 101 provides guidance on
the recognition, presentation, and disclosure of revenues in financial
statements of all public registrants.  In October 2000, the SEC issued a
Frequently Asked Questions document related to SAB 101, which provides
interpretive guidance.  The Company adopted SAB 101 in fiscal year 2001, and
the adoption of SAB 101 did not have a significant impact on the Company's
financial position or results of operations.

                                      F-8

             AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In June 2001, the FASB issued SFAS No. 141, Business Combinations. SFAS No. 141
addresses the initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination.  SFAS No. 141 is
applicable to business combinations commencing after July 1, 2001. The adoption
of this statement did not have a significant impact on the Company's financial
position or results of operations.

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets.  SFAS No. 142 addresses the recognition and measurement of goodwill
and other intangible assets subsequent to their acquisition.  SFAS No. 142 also
addresses the initial recognition and measurement of intangible assets acquired
outside of a business combination whether acquired individually or with a group
of other assets.  Goodwill and intangible assets previously recorded in the
Company's financial statements, will be affected by the provisions of SFAS No.
142.  This statement provides that intangible assets with finite useful lives
be amortized and that intangible assets with indefinite lives and goodwill will
not be amortized, but will rather be tested at least annually for impairment.
SFAS No. 142 will be effective for the Company's fiscal year 2002.  Management
does not believe that it will have a significant impact on the Company's
financial position and results of operations.


NOTE 2 - FAIR VALUE OF FINANCIAL INSTRUMENTS:

The following disclosure of the estimated fair value of financial instruments
as of December 31, 2001 and 2000 is made by the Company using available market
information and appropriate valuation methodologies.  However, considerable
judgment is required to interpret market data to develop the estimated fair
value.  Accordingly, the estimates presented herein are not necessarily
indicative of the amounts the Company could realize in a current market
exchange.  The use of different market assumptions and/or methodologies may
have a material effect on the estimated fair value amounts.

                                         2001                      2000
                                  Carrying   Estimated      Carrying  Estimated
                                   Amount    Fair Value     Amount   Fair Value
Assets
  Mortgage loans held for sale  $3,411,888  $3,411,888   $3,762,229  $3,762,229
  Mortgage loan receivable      $       --  $       --   $   24,000  $   24,000

Liabilities
  Warehouse finance facility    $3,336,358  $3,336,358   $3,690,458  $3,690,458

The fair value estimates as of December 31, 2001 and 2000 are based on
pertinent information available to management as of December 31, 2001 and 2000.
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:

                                       F-9

           AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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.

It was not practicable to estimate the fair value of the Company's note
payable as of December 31, 2001.

NOTE 3 - PROPERTY AND EQUIPMENT:
Property and equipment at December 31 consist of:
                                                              2001       2000

     Computer equipment                                    $ 71,903    $ 71,466
     Furniture and fixtures                                  19,291      19,291
     Office equipment                                        44,075      44,075
     Leasehold improvements                                   2,240       2,240
                                                            137,509     137,072
     Less:  Accumulated depreciation and amortization       132,615     123,037

     Property and Equipment, Net                            $  4,894   $ 14,035

Depreciation and amortization expense was $9,578 and $10,527 for the years
ended December 31, 2001 and 2000, respectively.

NOTE 4 - ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:
    Accounts payable, accrued expenses and other current liabilities consist of
    the following at December 31:
                                                               2001      2000

       Accounts payable                                     $97,097     $21,125
       Accrued development costs                                 --      45,200
       Accrued expenses and other current liabilities        58,661      67,340
            Total                                          $155,758    $133,665

NOTE 5 - NOTE PAYABLE:
       Note payable consists of the following at December 31:
                                                               2001      2000

Note payable (face amount $75,000) - imputed interest
at 7.5 percent per annum, quarterly payments of $6,250,
personally guaranteed by the Company's President,
final payment due September 2004                           $ 66,145    $     --

       Less: Current Maturities                              25,518          --

       Note Payable, Net of Current Maturities             $ 40,627    $     --


                                     F-10


           AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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


                     Year                                  Amount
                     2002                                 $ 20,937
                     2003                                   22,563
                     2004                                   18,064
                        Total                             $ 61,564

NOTE 6 - WAREHOUSE LINES OF CREDIT:
The Company has a warehouse line of credit of $6,000,000 with a financial
institution, which originally expired on December 15, 2001, and was extended
until March 31, 2002.  This line bears interest at prime plus 1.75 percent.
The prime lending rate at December 31, 2001 was 4.75 percent.  Funds from this
line of credit are used for short-term financing of mortgage loans held for
sale, and are secured by residential mortgage loans and a personal guarantee
of the Company's President.  The investor pays the line of credit at the time
of the closing.  As of December 31, 2001, eighteen loans amounting to
$3,411,888 had yet to be delivered to investors, resulting in a warehouse loan
payable of $3,336,358.  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.

The Company had another warehouse line of credit of $5,000,000 with a financial
institution.  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.  This line expired December 31, 2000.  All amounts outstanding on
this line were repaid in January 2001.

NOTE 7 - INCOME TAXES:
The provision for income taxes consists of the following for the years ended
December 31:

                                                          2001         2000

        Current                                        $    --       $    --
        Deferred                                            --            --
           Total                                       $    --       $    --

Deferred income taxes are summarized as follows at December 31:

                                                          2001         2000

       Deferred Income Tax Asset                     $1,489,051   $1,169,983
       Valuation Allowance                           (1,489,051)  (1,169,983)
       Net Deferred Income Tax Asset                         --           --
       Deferred Income Tax Liability                         --           --
       Net Deferred Income Tax Liability            $        --   $       --


                                        F-11


         AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company has federal net operating loss carryforwards available to offset
future taxable income of approximately $3,500,000 at December 31, 2001, which
expire in 2002 through 2021, and state net operating loss carryforwards of
approximately $3,300,000, which expire in 2002 through 2007.

For the years ended December 31, 2001 and 2000, 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:
On December 3, 2001, the Company authorized the issuance of 600,000 shares of
Series A Cumulative Convertible Participating Preferred Stock with no par
value, and on December 13, 2001, the Company sold 150,000 shares of this
preferred stock for $150,000.  The holder is entitled to annual dividends of
$.10 per preferred share, accruing from the date of original issue and payable
in cash on a quarterly basis at a rate of $.025 per preferred share.  Preferred
shares rank senior to the common stock with respect to dividends and
liquidating distributions or any future capital stock that ranks junior to
the preferred shares.  Each preferred share may be converted by the holders
thereof, at any time, into one share of common stock of the Company at a
conversion price equal to $1.00, subject to certain adjustments, which include:
payment of stock dividends on common stock, common stock splits, or
combinations affecting the common stock and recapitalizations, mergers or
reorganizations.  Preferred stock holders have no voting rights, except where
required by law or upon conversion to common stock.  Cumulative unpaid
dividends were $740 as of December 31, 2001.

In August 2001, the Company issued a note payable (See Note 5) for 21,019
shares of its outstanding common stock as part of a litigation settlement
(See Note 10).

The Company had outstanding a Class B Warrant 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, 2002.  The Company also had
outstanding a Class C Warrant 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, 2002.

NOTE 9 - RELATED PARTY:
The preferred stock issued in Note 8 was to a director of the Company.

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 non-cancelable operating leases are
as follows:
                     Year                                  Amount

                     2002                                 $16,450

Rental costs under operating leases included in other operating  expenses
Amounted to $61,900 and $60,240 for the years ended  December 31, 2001 and
2000, respectively.

                                      F-12

           AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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

On March 25, 1999, the Company, its President, and the Company's wholly owned
subsidiary (CFC) (the Company Defendants) and one of the Company's former
directors together with other individuals were named in an action filed in the
Superior Court of New Jersey, Chancery Division by two New Jersey limited
liability companies (the LLCs).  The plaintiffs allege the Company's former
director and other defendants other than the Company Defendants (Other
Defendants) misappropriated assets and opportunities of the LLCs for their own
use, engaged in self-dealing with respect to the LLCs, breached the operating
agreements of the LLCs and converted and embezzled assets and funds of the
LLCs.  The Company Defendants are alleged to have aided and abetted the
Company's former director in converting the assets of the LLCs by accepting
loans and payments from the LLCs and the Company's former director and repaying
loans to the Company's former director in the form of cash and Company stock.

The LLCs seek declaratory and injunctive relief against the Company Defendants;
an accounting of (1) all shares of Company stock purchased by the Company's
former director and Other Defendants and (2) all payments to or from the
Company and the Company's former director and Other Defendants; imposition of
a lien or equitable trust in favor of the LLCs on shares of the Company's stock
issued to the Company's former director and Other Defendants; and certain
unspecified compensatory and punitive damages, attorney's fees and costs.

                                      F-13

        AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

With respect to all litigation, as additional information concerning the
estimates used by the Company become known, the Company reassesses its position
both with respect to accrued liabilities and other potential exposures.
Estimates that are particularly sensitive to future change relate to legal
matters, which are subject to change as events evolve and as additional
information becomes available during the administration and litigation process.

NOTE 11 - STOCK BASED COMPENSATION:

STOCK OPTIONS
The Company adopted a 1992 Stock Option Plan, whereby the Company may grant
incentive and new qualified options to eligible participants that vest upon
grant date.  The plan 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.

                                        F-14



        AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


During 2001, the Company granted 80,000 options with an exercise price of $.40
per share. These options vest immediately and were all exercisable.  There was
no compensation expense recognized as a result of this grant.  There were no
options granted during 2000.  A summary of the stock option plan activity for
the years ended December 31, 2001 and 2000 is presented below:

                                                        Options
                                          Options     to Purchase     Options
                                       to Purchase     Shares at    to Purchase
                                          Shares       Price Range      Shares
                                         at $.40      $1.25 - $1.50    at $2.00

       Outstanding and exercisable
         at January 1, 2000:                    --       20,000         10,000

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

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

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

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

Had compensation cost for the Company's options granted to employees been
determined consistent with SFAS 123, the Company's net loss and loss per share
would be affected as follows:

                                                          2001          2000

Net Loss:
            As Reported                               $(521,984)     $(423,470)

            Pro Forma                                 $(543,743)     $(423,470)

            Net Loss Per Common Share:
            As Reported                                   $(.40)         $(.32)

            Pro Forma                                     $(.42)         $(.32)


                                       F-15



              AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The fair value of the 2001 stock option grant was $21,759 and was estimated
on the date of the grant using the Black-Scholes option pricing model with
the following assumptions for the grant: dividend yield of 0 percent,
risk-free interest rate 5.46 percent to 5.53 percent, expected life of two
to three years, and volatility of 1.27 to 1.29.

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

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

                 $.40            80,000            2.45          $.40

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

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:

   2001                             CFC         AADC      PARENT         TOTAL

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

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


   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)     14,77  4  (144,616)    (423,470)

   Identifiable assets          $5,875,797    $832,151  $2,462,612   $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

NOTE 13 - SUBSEQUENT EVENTS:

     1.  The Company raised additional capital in the amount of $60,000
         through the issuance of 60,000 shares of Series A Preferred stock
         (Note 8) subsequent to year-end.
     2.  The Company received notice on March 29, 2002, that their warehouse
         line of credit has been approved for extension until March 31, 2003.

                                   F-16