##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-KSB




|(Mark One)
|----------
|          
|x         
|          
|o         

Commission file number 0-18808



1st Realty Investments, Inc.


(Name of small business issuer as specified in its charter)




|Nevada
(State or other jurisdictionof incorporation or organization)                        |  | 13-3530765
(IRS Employer Identification No.)
|------------------------------------------------------------------------------------------- |  | --------------------------------------------
|                                                                                           
|5115 N. Scottsdale Road,
 Suite 101, Scottsdale, AZ(Address of principal executive offices) |  | 85250(Zip Code)                             
|                                                                                           
|Registrants telephone number: (480) 949-6007                                              
|                                                                                           
|Securities registered under Section 12(b) of the Act: None                                 
|                                                                                           
|Securities registered under Section 12(g) of the Act:                                      
|                                                                                           
|Common Stock, Par Value $0.001
(Title of Class)                                            

Indicate by check mark whether the registrant: (1) has filed
 all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past
 12 months (or for such shorter period that the registrant was required to file such reports), and
 (2) has been subject to such filing requirements for the past 90 days.    Yes
xNo
o

Indicate by check mark 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.o

The registrants revenues for the fiscal year ended
 August 31, 2002, were $10,716.

There is currently no active trading market for the
 Registrants common stock. There have been no trades of the Registrants common stock within the
 last 60 days. The aggregate value of the voting stock held by non-affiliates of the registrant as
 of October 31, 2002 based on the par value of $0.001 per share was $14,317.

The number of shares of the Registrants Common Stock outstanding
 at October 31, 2002 was 17,518,525.

DOCUMENTS INCORPORATED BY REFERENCENone.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT:
   Yeso
No
x

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TABLE OF CONTENTS



|                                      |                                                                                                                         |  |  |  |  |  |  | 
|------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                               
|                                      | Item 1. Business                                                                                                       
|                                      | Item 2. Description of Property                                                                                        
|                                      | Item 3. Legal Proceedings                                                                                              
|                                      | Item 4. Submission of Matters to a Vote of Security Holders                                                            
|PART II                              
|                                      | Item 5. Market for Common Equity and Related Stockholder Matters                                                       
|                                      | Item 6. Managements Discussion and Analysis or Plan of Operation                                                      
|                                      | Item 7. Financial Statements                                                                                           
|                                      | Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                           
|                                      | Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act
|                                      | Item 10. Executive Compensation                                                                                        
|                                      | Item 11. Security Ownership of Certain Beneficial Owners and Management                                                
|                                      | Item 12. Certain Relationships and Related Transactions                                                                
|                                      | Item 13. Exhibits and Reports on Form 8-K                                                                              
|                                      | Item 14. Controls and Procedures                                                                                       
|SIGNATURES                           
|1ST REALTY INVESTMENTS, INC. CONTENTS
|                                      | REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                                                     
|                                      | CONSOLIDATED BALANCE SHEET                                                                                             
|                                      | CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                  
|                                      | CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)                                                              
|                                      | CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                  
|                                      | 1ST REALTY INVESTMENTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                
|2001 10-KSB EXHIBIT INDEX            
|EX-11                                
|EX-21                                
|EX-99.1                              
|EX-99.2                              
|Ex-99.3                              
|EX-99.4                              
|EX-99.5                              



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##### Table of Contents






PART I




Item 1.      
Business

History

1st Realty
 Investments, Inc. (formerly First National Realty Associates, Inc.) (we
 or the Company) is incorporated in the state of Nevada. We are an Arizona-based
 company that was formed in Georgia in October 1988, and became a publicly-held Nevada
 company through a merger into Emphatic Mergers, Inc. a publicly-held corporation
 on April 11, 1990. We changed our name from First National Realty Associates, Inc.
 to 1st Realty Investments, Inc. on July 13, 2000.

We were founded
 with the intended purpose of becoming primarily a national residential real estate
 brokerage company, focusing on relatively affluent markets in geographically diverse
 market areas. Between 1988 and 1991, we grew primarily through the acquisition of
 other real estate brokerage companies in multiple states. However, principally due
 to the downturn in the real estate industry in the early 1990s, we were unable
 to generate profitable operations. On April 6, 1992, we filed a voluntary petition
 in the United States Bankruptcy Court for the District of Georgia to reorganize
 under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code). On
 January 21, 1993, we voluntarily converted our petition to a case under Chapter
 7 of the Bankruptcy Code. All of our assets were subsequently liquidated and the
 proceeds distributed, and the bankruptcy was dismissed on September 27, 1994. From
 that date through the end of fiscal 2000, we had no operations. We did, however,
 incur approximately $51,000 in administrative and legal expenses during that time.
 We paid for these costs either by issuing common stock or through advances we received
 from Great Western Land and Recreation, Inc. (Great Western), formerly Amortibanc
 Management L.C.

In fiscal
 2001, we began efforts to become an operating company once again. On September
 22, 2000, we purchased a $20,000 note receivable, issued by an unrelated company
 in connection with a sale of real estate, bearing interest at 9%. This note receivable
 was purchased from Great Western in exchange for 500,000 shares of our common stock.
 On December 29, 2000, we purchased ownership interests in nine entities from Great
 Western in exchange for a $951,629 note payable and 1,000,000 shares of our common
 stock. The most significant of these interests were a 25.52% ownership in Laguna
 at Arrowhead Apartments L.L.C., which owns an apartment complex in Phoenix,
 Arizona, and a 51% interest in Firebird Financial L.L.C., (Firebird Financial)
 an entity that was formed to provide second mortgage financing in the Houston, Texas
 area. Our ownership interest in Laguna at Arrowhead Apartments, L.L.C. is held indirectly through
Laguna Investments, L.L.C., a wholly owned subsidiary (collectively
Laguna). Firebird Financial has not funded
any new loans since 1998, and does not have
 any current plans to fund additional loans in the future. The other seven entities
 had no operations and minimal net asset values.

Great Western
 is a related company that owns 14.3% of our common stock as of October 31, 2002.

On July 23,
 2002, we entered into an Agreement and Plan of Merger (the Merger Agreement)
 with Great Western. Under the Merger Agreement, we agreed to undertake a
 series of transactions the result of which would be the transfer of control of the
 Company to the stockholder of Great Western, and the merger of Great Western into
 the Company. We will be the surviving entity. The transaction also involves the
 election of new directors and the amendment of our Articles of Incorporation to
 change our name to Great Western Land and Recreation, Inc. Our Board of Directors
 unanimously approved the Merger Agreement and the other transactions to be undertaken
 and the holders of a majority of our outstanding stock approved the transactions
 in writing on July 25, 2002. On July 23, 2002 the stockholder of Great Western consented
 in writing to the Merger Agreement transactions. Under applicable Nevada law, written
 consent by the holders of a majority of our outstanding stock to the transactions
 outlined in the Agreement is sufficient to approve the transactions, without a meeting
 or vote of all of the stockholders. This transaction will not become effective until
 the later of the time that the Articles of Merger are filed with the Secretary of
 State of the State of Nevada and of the State of Delaware. The Articles of Merger
 will not be filed for at least 20 days after the mailing of an Information Statement
 to all of our stockholders.

We expect
 that the Merger will be treated as a tax-free reorganization under Section 368(a)(1)(B)
 of the Internal Revenue Code of 1986, as amended. If the Merger qualifies as a tax-free
 reorganization, no gain or loss will be recognized for income tax purposes by either
 1st Realty or Great Western as a result of the acquisition. There also should not
 be any material tax effects to the existing stockholders of 1st Realty or Great
 Western as a result of the transaction. However, neither 1st Realty nor Great Western
 has requested a tax ruling from the Internal Revenue Service with respect to the
 transaction. Accordingly, we can give no assurance that the transaction will qualify
 as a tax-free reorganization. We expect to account for our acquisition of Great
 Western as a reverse acquisition, with Great Western the acquirer and 1st Realty
 the acquiree for reporting purposes.

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Prior to September 2000, we
were a dormant non-operating company. Our current operations are solely
the result of the series of transactions we entered into with Great
Western. As a result, the assets and liabilities of both companies will
be combined at their historical cost.

The SEC's staff has informed
us that in their view we are an investment company under the
Investment Company Act of 1940, as amended, due to our ownership
interest in Laguna. While we do not necessarily agree with this
position, it is our intention to eliminate any appearance of being an
investment company by either consummation of the Merger or, if for
any reason the Merger is not consummated, by divesting ourselves of
the assets we acquired in December 2000 from Great Western, which
includes our ownership interest in Laguna, and reverting to our prior
dormant status.

Regulation

The financing
 activities of Firebird Financial are subject to extensive regulation, including
 regulation under the Truth-in-Lending Act, Regulation Z (the Fair Housing Act),
 the Fair Debt Collection Practices Act, the Equal Credit Opportunity Act, Regulation
 B (the Electronic Funds Transfer Act), Regulation E (the Home Mortgage Disclosure
 Act), Regulation C (Unfair or Deceptive Acts or Practices), Regulation AA and the
 Right to Financial Privacy Act. In addition, Laguna must comply with various federal,
 state and local environmental, zoning and other statutes and regulations.

We believe
 that we are in compliance in all material respects with applicable regulations.
 However, these regulations are subject to change and we cannot assess the cost of
 complying with all of the applicable laws and regulations. Our failure to comply
 with applicable laws or regulations could subject us to large fines or other costly
 activities to come into compliance.

Competition

The financing
 activities of Firebird Financial compete with banks, mortgage companies, other financial
 institutions and government agencies offering financing of real estate. However,
 Firebird Financial has not funded any new loans since 1998, and does not have any
 current plans to fund additional loans in the future.

The apartment
 business in Phoenix is highly competitive. Laguna competes against other apartment
 complexes in the area, some of which are owned by national developers.

Facilities

Our office
 is located at the office of Great Western, at 5115 N. Scottsdale Road, Suite 101,
 Scottsdale, Arizona 85250. We are using this space free of charge.

Employees

We have no
 employees. Our business and affairs are handled by directors who provide services
 on an as-needed basis. We may engage consultants, attorneys, and accountants on
 a limited basis, and do not anticipate a need to engage any full-time employees
 until the consummation of the Merger Agreement.




Item 2.      
Description of Property.

We do not
 own any property directly and conduct our limited operations from the office of
 Great Western. (See Item 1. Description of Business: Facilities.)




Item 3.      
Legal Proceedings

We are not
 a party to any pending legal proceedings and, to the best of our knowledge, no litigation
 by or against us has been threatened other than as discussed below.

In October
 2001, quepasa.com loaned Great Western $500,000. This loan was secured by 1st Realtys
 investment in Laguna. In February 2002 quepasa.com filed a counterclaim against
 Great Western seeking to foreclose on the loan and naming 1st Realty as a third-party
 defendant to its counterclaim because 1st Realtys investment in Laguna was
 pledged as collateral for the loan. This lawsuit was settled in October 2002, resulting
 in the loan being deemed paid in full and the pledge of Laguna as collateral being
 released.




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

As of July
 25, 2002, our shareholders representing 9,700,888 shares (or 54%) of our outstanding
 common stock executed a written consent by the majority of the Companys shareholders
 regarding the following matters. Pursuant to SEC rules, these
proposals will not be effective until at least 20 days after we
have sent out an Information Statement to our stockholders.

Our shareholders
 elected our Board of Directors. The Directors elected and the numbers of votes
 each received are as follows:

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| | Jay N. Torok     | 9,700,888
| | ---------------- | ---------
| | William Szilagyi | 9,700,888
| | Roger B. Clark   | 9,700,888
| | Daniel Tracy     | 9,700,888

Our shareholders ratified the appointment
 of Grant Thornton LLP, as the auditors of the Company for the Companys fiscal
 year ended August 31, 2002 with 9,700,888 affirmative votes, 0 against and 0 abstaining.



Our shareholders approved a reverse split
 of our common stock on the basis of one new share for each eight shares of common
 stock held currently by each stockholder with 9,700,888 affirmative votes, 0 against
 and 0 abstaining.



Our shareholders approved amending our Articles
 to increase our authorized common stock from 3,125,000 (after the eight for one
 reverse stock split) to 30,000,000 shares of common stock with 9,700,888 affirmative
 votes, 0 against and 0 abstaining.



Our shareholders approved the Merger of
 Great Western Land and Recreation, Inc. with and into our corporation, with our
 corporation being the surviving entity (the Merger), subject to satisfaction
 of the terms and conditions of the Merger Agreement and Plan of Merger dated July
 23, 2002 with 9,700,888 affirmative votes, 0 against and 0 abstaining.



Our shareholders approved amending our Articles
 to be effective immediately after the effectiveness of the Merger to change our
 name to GREAT WESTERN LAND AND RECREATION, INC. with 9,700,888 affirmative votes,
 0 against and 0 abstaining.



Our shareholders approved our adoption of
 an employee stock option plan, to be effective immediately after the effectiveness
 of the Merger, identical in all material respects to the Stock Option Plan currently
 in place at Great Western with 9,700,888 affirmative votes, 0 against and 0 abstaining.



Our shareholders approved and delegated
 authority to our president to effect a reverse split of our common stock of one
 share for up to each five shares of common stock outstanding (the Second Split)
 at any time prior to or during the 24 month period following the effective
 date of the Merger, but in any event no later than January 31, 2005 with 9,700,888
 affirmative votes, 0 against and 0 abstaining.



Our shareholders approved that when and
 if the Second Split is effected, amending our Articles to return our authorized
 number of shares of common stock to 30,000,000 should our authorized number of shares
 of common stock be reduced by effecting the Second Split with 9,700,888 affirmative
 votes, 0 against and 0 abstaining.




PART II




Item 5.      
 Market for Common Equity and Related Stockholder Matters

There is currently
 no active trading market for our common stock, and there can be no assurance that
 an active or liquid trading market for our common stock will develop in the future.

We act as
 our own transfer agent. According to our records, at October 31, 2002, there were
 7,644 holders of record of our common stock, including broker-dealers and clearing
 firms holding shares on behalf of their clients.

No dividends
 have ever been paid on our common stock, and we do not anticipate paying dividends
 in the foreseeable future.




Item 6.      
 Managements Discussion and Analysis or Plan of Operation

Forward-Looking Statements

This Annual
 Report to Stockholders includes forward-looking statements. Forward-looking
 statements are often characterized by the use of words such as may,
 believes, plans, will, anticipates,
 estimates, expects, or intends or by discussions of
 strategy, plans or intentions. All forward-looking statements in this Annual Report
 to Stockholders are made based on our current expectations and estimates, which
 involve risks, uncertainties and other factors that could cause results to differ
 materially from those expressed in forward-looking statements. You are cautioned
 not to place undue reliance on any such forward-looking statements. We

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have no obligation
 to publicly release the result of any revisions that may be made to any forward-looking
 statements to reflect anticipated or unanticipated events or circumstances occurring
 after the date of such statements. Forward-looking statements involve a number of
 risks and uncertainties including, but not limited to, general economic conditions,
 our ability to find a suitable company to effect a business combination, competitive
 factors and other risk factors as set forth in Exhibit 99.1 of this Annual Report
 to Stockholders and in our other filings with the Securities and Exchange Commission.

Overview

On April 6,
 1992, we filed a voluntary petition in the United States Bankruptcy Court for the
 District of Georgia to reorganize under Chapter 11 of the United States Bankruptcy
 Code. On January 21, 1993, we voluntarily converted our petition to a case under
 Chapter 7 of the Bankruptcy Code. All of our assets were subsequently liquidated
 and the proceeds distributed, and the bankruptcy was dismissed on September 27,
 1994. From that date through the end of fiscal 2000, we had no operations. We did,
 however, incur approximately $51,000 in administrative and legal expenses during
 that time. We paid for these costs either by issuing common stock or through advances
 we received from Great Western.

In fiscal
 2001, we began efforts to become an operating company once again. On September
 29, 2000, we purchased a $20,000 note receivable issued by an unrelated company
 in connection with a sale of real estate, bearing interest at 9%. This note receivable
 was purchased from Great Western in exchange for 500,000 shares of common stock.
 On December 29, 2000, we purchased ownership interests in nine entities from Great
 Western in exchange for a $951,629 note payable and 1,000,000 shares of common stock.
 The most significant of these interest were a 25.52% ownership in Laguna, which
 owns an apartment complex in Phoenix, Arizona, and a 51% interest in Firebird Financial,
 an entity that was formed to provide second mortgage financing in the Houston, Texas
 area. Our ownership interest in Laguna is held indirectly through
Laguna Investments, L.L.C., a wholly owned subsidiary. Firebird Financial has not funded any new loans since 1998, and does not have
 any current plans to fund additional loans in the future. The other seven entities
 had no operations and minimal net asset values.

Great Western
 is a related company. Jay Torok, the Chairman of our board of directors, is also
 the Chairman, President and Chief Executive Officer of Great Western. William Szilagyi,
 our President and a member of our board of directors is also the Senior Vice President
 of Great Western. Great Western owns 14.3% of our common stock as of October 31,
 2002.

On July 23,
 2002, we entered into an Agreement and Plan of Merger (the Merger Agreement
 or the Agreement) with Great Western. Under the Merger Agreement,
 we agreed to undertake a series of transactions the result of which would be the
 transfer of control of the Company to the stockholder of Great Western, and the
 merger of Great Western into the Company. We will be the surviving entity. The
 transaction also involves the election of new directors and the amendment of our
 Articles of Incorporation to change our name to Great Western Land and Recreation,
 Inc. Our Board of Directors unanimously approved the Merger Agreement and the other
 transactions to be undertaken and the holders of a majority of our outstanding stock
 approved the transactions in writing on July 25, 2002. On July 23, 2002 the stockholder
 of Great Western consented in writing to the Merger Agreement transactions. Under
 applicable Nevada law, written consent by the holders of a majority of our outstanding
 stock to the transactions outlined in the Agreement is sufficient to approve the
 transactions, without a meeting or vote of all of the stockholders. This transaction
 will not become effective until the later of the time that the Articles of Merger
 are filed with the Secretary of State of the State of Nevada and of the State of
 Delaware. The Articles of Merger will not be filed for at least 20 days after the
 mailing of an Information Statement to all of our stockholders.

We expect
 that the Merger will be treated as a tax-free reorganization under Section 368(a)(1)(B)
 of the Internal Revenue Code of 1986, as amended. If the Merger qualifies as a tax-free
 reorganization, no gain or loss will be recognized for income tax purposes by either
 1st Realty or Great Western as a result of the acquisition. There also should not
 be any material tax effects to the existing stockholders of 1st Realty or Great
 Western as a result of the transaction. However, neither 1st Realty nor Great Western
 has requested a tax ruling from the Internal Revenue Service with respect to the
 transaction. Accordingly, we can give no assurance that the transaction will qualify
 as a tax-free reorganization. We expect to account for our acquisition of Great
 Western as a reverse acquisition, with Great Western the acquirer and 1st Realty
 the acquiree for reporting purposes. Prior to September 2000, we
were a dormant non-operating company. Our current operations are
solely the result of the series of transactions we entered into with
Great Western. As a result, the assets and liabilities of both companies will
 be combined at their historical cost.

Results of Operations

Year ended August 31, 2002 compared
 to year ended August 31, 2001

Interest
 income. Interest income was $10,716 in 2002, compared $18,898 in 2001. Interest
 income is related to the second mortgage notes receivable carried by Firebird Financial
 and to a $20,000 note receivable we purchased from Great Western. Firebird

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Financial
 was acquired in December 2000 and the note receivable was purchased in September
 2000. The decrease in interest income was primarily because only one mortgage note
 receivable was paid off during 2002 compared to two notes in 2001. The remaining
 unamortized discount on these notes, which totaled $5,146 in 2002
and $11,081 in
 2001 was included in interest income in the periods the notes were paid off.

General
 and administrative expense. General and administrative expense decreased $14,447
 to $112,401 in 2002 from $126,848 in 2001. General and administrative expense in
 2002 consisted of management, legal and accounting fees, including legal and accounting
 fees of $101,472 incurred in connection with the preparation and filing of quarterly
 reports for the quarters ended November 30, 2000 through May 31, 2002, an annual
 report on Form 10-KSB for the fiscal year ended August 31, 2001 and a Schedule 14C
 Information Statement that was filed in connection with the Merger. General and
 administrative expense in 2001 consisted of $110,301 in charge-offs of uncollectible
 notes receivable carried by Firebird Financial and $16,547 of management, legal
 and accounting fees, primarily related to Firebird Financial.

Interest
 Expense. Interest expense was $73,717 in 2002 compared to $51,684 in 2001. The
 interest expense is related to our payable to Great Western. Beginning in January
 2001, interest at 8% per annum began to accrue on $892,570 of this payable.

Equity
 in losses of unconsolidated company. Equity in losses of unconsolidated company
 (Laguna) was $208,384 in 2002 compared to $83,445 in 2001. Laguna was purchased
 in December 2000. During 2001, Laguna was negatively impacted by the opening of
 three new apartment complexes nearby, causing a decrease in the occupancy levels
 at Laguna and an increase in the level of concessions offered to new tenants. The
 losses increased during 2002 due to further increases in competition combined with
 the impact of the economic downturn in the Phoenix area.

Other income. Other income was $51,346 in 2002 compared to zero in 2001. Other income consisted
 of a gain on the sale of land in Houston, Texas for cash. The land was sold to the
 owner of the adjacent property. The land was owned by F Troops, LLC, a wholly owned
 subsidiary that was one of the entities we purchased from Great Western in December
 2000. The land had been carried at zero value due to its location in a flood way,
 which severely limited its ability to be developed. However, recent changes in
 circumstances have increased the development potential of the land when combined
 with the adjacent property.

Liquidity and Capital Resources

Cash used
 in operating activities was $143,541 in 2002 compared to $77,829 in 2001. Cash used
 in operations in 2002 consisted of our net loss of $332,440, an increase in other
 assets of $1,699 and a decrease in accounts payable and other accrued liabilities
 of $14,934 offset by net non-cash expenses of $205,532. Net non-cash expenses consisted
 of $208,384 in undistributed losses related to our equity investment in Laguna
 and $2,294 in depreciation and amortization expense offset by $5,146 of accretion
 of interest income.

Cash provided
 by investing activities was $27,171 in 2002 compared to $96,651 in 2001. Cash provided
 by investing activities in 2002 consisted of collections of notes receivable.
 Cash provided by investing activities in 2001 consisted of a distribution of capital
 from Laguna of $31,900, cash acquired through purchase of investments in businesses
 of $18,632 and collections of notes receivable of $46,119. Our investments in businesses
 were financed by a $951,629 advance from Great Western and by the issuance to Great
 Western of 1,000,000 shares of common stock.

Cash provided
 by financing activities was $114,750 in 2002 compared to cash used of $13,023 in
 2001. Cash provided by financing activities in 2002 consisted of a net increase
 in advances from related parties (primarily Great Western).

At August
 31, 2002, notes receivable, net of unamortized discount, total $156,598. Many of
 these notes are seriously delinquent, with the status ranging from one to 50 months
 delinquent. We evaluate the collectibility of these notes based on the payment
 history, the value of the collateral and the status of the borrower. If we believe
 the collectibility of a note to be in doubt, we establish a specific reserve for
 that note. In addition, we have provided an allowance for estimated losses in the
 remaining portfolio of performing loans based on the same criteria. At August 31,
 2002, our allowance for doubtful accounts totals $110,301.

Our cash balance
 at August 31, 2002 was $4,179. Our limited cash requirements have been funded primarily
 by advances from Great Western. Upon consummation of the Merger, we anticipate that
 our merged operations, combined with borrowings from banks and other financial institutions,
 will generate sufficient cash to fund our operations and the purchase and development
 of new properties. Additional funds can be obtained, if needed, through bulk sales
 of property. We project that our combined capital expenditures for property and
 development will be approximately $3.0 million over the next twelve months, but
 that only a portion of that amount will need to be funded internally. The remainder
 will be borrowed from banks and other financial institutions. As part of

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our business
 strategy, we will continuously review acquisition opportunities and proposals. We
 would expect to finance any future acquisitions with additional equity and debt
 financing, to the extent available on attractive terms.

If the Merger
 is not consummated, we cannot presently foresee the cash requirements of any other
 business opportunities that we may ultimately acquire. However, since it is likely
 that any business we acquire will be involved in active business operations, we
 anticipate that an acquisition would result in increased cash requirements as well
 as increases in the number of employees.

Recent Accounting Pronouncements

In October
 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting
 Standards No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets:
 (SFAS 144). SFAS 144 requires that all long-lived assets (including discontinued
 operations) that are to be disposed of by sale be measured at the lower of book
 value or fair value less cost to sell. Additionally, SFAS 144 expands the scope
 of discontinued operations to include all components of an entity with operations
 that can be distinguished from the rest of the entity and will be eliminated from
 the ongoing operations of the entity in a disposal transaction. SFAS
144 will be effective
 for us as of September 1, 2002. The implementation of SFAS 144
is not expected to have a material
 effect on our financial condition or results of operations.




Item 7.      
Financial Statements

The consolidated
 financial statements of the Company listed in the index appearing under Item 13(a)(1)
 hereof are filed as part of this Annual Report on Form 10-KSB and are hereby incorporated
 by reference in this Item 7. See also Index to Consolidated Financial Statements
 on page F-1 hereof.




Item 8.      
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

PART III






Item 9.      
Directors, Executive Officers, Promoters and Control Persons; Compliance with Section
 16(a) of the Exchange Act


Directors and Executive Officers

The following
 table sets forth information regarding our current executive officers and directors:



| | Name             |  | Age |  | Office                     |  | Officer orDirector Since | 
| | ---------------- |  | --- |  | -------------------------- |  | ------------------------ | 
| |                  |  |     |  |                            |  |                          | 
| | Jay N. Torok     |  | 62  |  | Chairman                   |  | 1994                     | 
| | William Szilagyi |  | 56  |  | President and Board member |  | 1988                     | 
| | Roger B. Clark   |  | 67  |  | Board member               |  | 1989                     | 
| | Daniel Tracy     |  | 61  |  | Board member               |  | 2002                     | 

Our board
 of directors currently consists of four members. All directors hold office until
 the next Annual Stockholders Meeting or until their death, resignation, retirement,
 removal, disqualification, or until their successors have been elected and qualified.
 Vacancies in the existing board are filed by majority vote of the remaining directors.
 A summary of the background and experience of each of these individuals follows

Jay N. Torok
 served as Chairman of our board of directors, President and Chief Executive Officer
 from our inception in 1988 until early 1992. He again agreed to serve as our Chairman
 in 1994, and has held that position since that date. During these periods, Mr. Torok
 served in various positions with our subsidiary companies, including First National
 Realty Associates of Georgia, Inc. and Hamer Holding Group, Inc. In mid-1992, together
 with these subsidiaries, we filed voluntary petitions to reorganize under Chapter
 11 of the Bankruptcy Code. All petitions were voluntarily converted to Chapter 7
 liquidations and the companies assets were liquidated and distributed in 1994.
 Mr. Torok currently serves as the President and Chief Executive Officer of Amortibanc
 Management, L.C. since 1993 and as Chairman of the Board, President and Chief Executive
 Officer of Great Western since its inception. In addition Mr. Torok has served as
 Executive Vice President of Amortibanc, Inc. and President of Amortibanc Land and
 Cattle, L.L.C., Southwest Land and Cattle, L.L.C. and Firebird Financial, L.L.C.,
 as well as other Amortibanc affiliates engaged in real estate development or venture
 capital. Prior to joining the Amortibanc group of companies, from 1986 to 1992,
 Mr. Torok served as President and Chief Executive Officer of Lone Pine Capital,
 a venture capital company specialized in acquisitions management. Prior to joining
 Lone Pine

7



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##### Table of Contents



Capital, from 1981 to 1985, Mr. Torok served as President and Chief Executive
 Officer of Merrill Lynch Realty, Inc. Under Mr. Toroks management, Merrill
 Lynch Realty, Inc. grew from 100 offices to over 380 offices in 38 cities in the
 United States and four foreign cities, becoming the worlds largest real estate
 brokerage firm. Prior to joining Merrill Lynch Realty, Inc., Mr. Torok served in
 various positions, including President of the Container and Core Division of Clevepak
 Corporation, a former NYSE listed company, President of Associated Forest Products,
 Inc., Vice President of Finance of Wausau Paper Mills, a Nasdaq quoted company and
 Controller of the Forest Products Division and the Land Development Division of
 Owens Illinois, Inc., a Fortune 100 company. Mr. Torok received his M.B.A. from
 Dartmouth in 1962 and attended law school at Temple University.

William Szilagyi
 has served as a member of our board of directors since 1988. From our inception
 in 1988 until 1990 he was our Executive Vice President, and in 1991 he became our
 President and Chief Operating Officer. During this period, Mr. Szilagyi served in
 various positions with our subsidiary companies, including First National Realty
 Associates of Georgia, Inc. and Hamer Holding Group, Inc. In 1992, together with
 these subsidiaries, we filed voluntary petitions to reorganize under Chapter 11
 of the Bankruptcy Code. All petitions were voluntarily converted to Chapter 7 liquidations
 and the companies assets were liquidated and distributed in 1994. Mr. Szilagyi
 currently serves as the Vice President of Operations of Amortibanc Management since
 1996 and senior vice president of Great Western since its inception. Since 1998,
 Mr. Szilagyi has also served as the President of UniLoan, a mortgage brokerage company
 specializing in the needs of new homebuilders and since 1998 as Vice President and
 Director of Firebird Financial, L.L.C., a mortgage investment company. Prior to
 joining the Amortibanc group of companies, Mr. Szilagyi served as President of Merrill
 Lynch Realty, Inc. / Beach Cities Company in California. During his tenure with
 Merrill Lynch Realty, Inc., Mr. Szilagyi developed a Real Estate Owned Division
 to address the needs of bank owned properties, turned around multiple unprofitable
 subsidiaries and created a Resorts Division that managed and marketed resort properties
 throughout the West. In addition, while with Merrill Lynch Realty, Inc., Mr. Szilagyi
 created a multilingual international real estate network that targeted properties
 in Central and South America, Mexico, Canada and the Pacific Rim. Mr. Szilagyi,
 also served as Marketing Director with Merrill Lynch Realty Associates, Inc. where
 he wrote the companys Policy and Procedure Manual and New Sales Associate
 Training and Marketing Manual. Prior to that, Mr. Szilagyi was employed by the Forest
 E. Olsen Company, a Coldwell Banker company, where he supervised 18 real estate
 offices in the greater Los Angeles metropolitan area. Mr. Szilagyi received his
 degree in business from California State University in 1967. Mr. Szilagyi has written
 two books and given numerous seminars on the advantages of real property ownership
 and investment.

Roger B. Clark
 has served as a member our board of directors since 1990. Mr. Clark has been president
 and chief executive officer of GlennCon, Inc. a leading supplier of goods and services
 to the worldwide public gaming industry since 1984. From 1970 to 1983, Mr. Clark
 served in several positions with Glendinning Companies, including president of Glendinning
 Companies, North America from 1978-83, during which time he was responsible for
 all U.S. operations, including the consulting, retail promotion, telecom and lottery
 divisions. Prior to that, Mr. Clark was employed by Procter & Gamble. Mr. Clark
 received his degree in economics from Amherst College in 1955.

Daniel Tracy
 has been elected to serve as member of our Board of Directors beginning in 2002.
 Mr. Tracy is a business consultant and director. Mr. Tracy is currently a director
 of Edac Technologies Corporation, a publicly traded manufacturer of aerospace components.
 Mr. Tracy is also a trustee of the YMCA of Metropolitan Hartford, and Renbrook School.
 In 1998, Mr. Tracy concluded a 35-year career with Arthur Andersen, an international
 accounting and consulting firm. From 1994 to 1998, Mr. Tracy was responsible for
 Andersens SEC practice in Asia and lived in Hong Kong. In that role he counseled
 Asian companies involved in private placements and public offerings in the U.S.,
 London and Asian markets. He worked on the first of such public offerings in the
 United States market for companies in China, Taiwan and Korea, as well as offerings
 of companies in Indonesia, Australia, the Philippines, Hong Kong, Singapore and
 Malaysia. From 1975 to 1994, Mr. Tracy was the partner in charge of Andersens
 audit and accounting practice in Hartford, CT (1980-1994) and Rochester, NY (1975-1980).
 Mr. Tracy received his bachelors degree and MBA from Dartmouth College.

After the
 Merger has been consummated, Mr. Torok will continue serving as our Chairman of
 the Board and will also be appointed to serve as our President and Chief Executive
 Officer. Mr. Szilagyi will resign as our President, but will be appointed to serve
 as our Senior Vice President and will remain serving as one of our Directors. Mr.
 Clark and Mr. Tracy will remain serving as Directors.

Section 16(a) Beneficial Ownership Reporting
 Compliance

Section 16(a)
 of the Securities Exchange Act of 1934, as amended, requires our directors and executive
 officers, and persons who own more than 10% of a registered class of our equity
 securities to file with the Securities and Exchange Commission initial reports of
 ownership and reports of changes in ownership of equity securities of the Company.
 Officers, directors, and greater than 10% stockholders are required to furnish us
 with copies of all Section 16(a) forms they file. We have not received any copies
 of such forms

8



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##### Table of Contents



during the year ended August 31, 2002. Based solely on a review of
 our transfer books, we believe that each person who, at any time during such fiscal
 year, was a director, officer or beneficial owner of more than 10% of our common
 stock complies with all Section 16(a) filing requirements during such fiscal year,
 except that Jay N. Torok and William Szilagyi received 140,000 and 100,000 shares,
 respectively, of common stock in November 1999 for services rendered to us and each
 of Jay N. Torok, William Szilagyi and Roger B. Clark received vested
stock options
 in November 1999 to purchase 250,000 shares of common stock. On October 14, 2002,
 Form 5s were filed with the Securities and Exchange Commission to report these
 transactions.




Item 10.     
Executive Compensation

We have not
 paid any compensation to any officer or director during the past three years, however
 we have granted stock options and restricted stock to our officers and directors
 during the past three years. In November 1999, we granted 140,000 shares of restricted
 stock, with an estimated value of $1,400 to our Chairman, Jay N. Torok, and 100,000
 shares of restricted stock, with an estimated value of $1,000 to our president,
 William Szilagyi, for services rendered to the Company. Also in November 1999, we
 granted stock options with an exercise price of $0.10 per share to the following
 officers and directors:



|                 |  | Number ofShares ofCommon StockUnderlyingOptionsGranted |  | Percent ofTotalOptionsGranted toEmployees inFiscal Year |   |            |   |            |  |           |  |           | Potential RealizableValue at AssumedAnnual Rate ofStock Price
Appreciation for theOption Term
|---------------- |  | ------------------------------------------------------ |  | ------------------------------------------------------- | - | ---------- | - | ---------- |  | --------- |  | --------- | ---------------------------------------------------------------------------------------------
|                 |  |                                                        |  | Exercise                                                |   |            |   | Expiration |  |          
|Name             |  |                                                        |  | Price                                                   |   | Grant Date |   | Date       |  | 5%        |  | 10%      
|                 |  |                                                        |  |                                                         |   |            |   |            |  |           |  |           |                                                                                              
|Jay N. Torok     |  | 250,000                                                |  | 33.3                                                    | % |            | $ | 0.10       |  | 11/2/1999 |  | 11/2/2009 |                                                                                              
|William Szilagyi |  | 250,000                                                |  | 33.3                                                    | % |            | $ | 0.10       |  | 11/2/1999 |  | 11/2/2009 |                                                                                              
|Roger B. Clark   |  | 250,000                                                |  | 33.3                                                    | % |            | $ | 0.10       |  | 11/2/1999 |  | 11/2/2009 |                                                                                              

These options
 were granted under our stock option plan and were fully vested and exercisable on
 the date of grant. None of our officers or directors exercised options to purchase
 our common stock during the past three years.

We currently
 have no retirement, pension, profit sharing, or insurance or medical reimbursement
 plans covering our officers or directors. However, Great Western maintains a 401(k)
 profit sharing plan for the benefit of its eligible employees. Great Western makes
 a matching contribution equal to 50% of each participants eligible contributions
 to a maximum of 6% of each participants compensation. Great Western can also
 make a discretionary contribution determined annually by its Board of Directors.
 In addition, Great Western maintains medical and dental insurance plans for its
 officers and employees. We plan to continue these benefits after the consummation
 of the Merger Agreement.

We have not
 made or contemplated making any advances to any of our officers or directors.




Item 11.     
Security Ownership of Certain Beneficial Owners and Management

The following
 table sets forth certain information as of August 31, 2002 concerning ownership
 of our common stock by each director and officer, by all persons who hold of record
 or are known by us to hold beneficially of record 5% or more of our outstanding
 shares and by all directors and officers as a group. On October 31, 2002 there were
 17,518,525 shares of our common stock outstanding and entitled to vote.



|Name and Address of Beneficial Owner          | SharesBeneficiallyOwned (1) |           | Percent ofSharesOutstanding
|--------------------------------------------- | --------------------------- | --------- | ---------------------------
|                                              |                             |           |                            
|Five Percent Shareholders:                    |                             |           |                            
|David Theroux (2)                             |                             | 2,033,424 |                            
|Great Western Land and Recreation, Inc.(3)    |                             | 2,500,000 |                            
|Amortibanc Investments, L.C. (3)(6)           |                             | 2,500,000 |                            
|Willard W. Garvey Revocable Trust(3)(6)       |                             | 2,500,000 |                            
|Willard W. Garvey Trust Number Thirteen(3)(6) |                             | 2,500,000 |                            
|Jean Garvey, Trustee (3)(6)                   |                             | 2,500,000 |                            
|Directors and Executive Officers:             |                             |           |                            
|Jay. N Torok(4)(7)                            |                             | 1,839,336 |                            
|William Szilagyi(4)(8)                        |                             | 1,346,521 |                            
|Roger B. Clark(5)(9)                          |                             | 765,810   |                            

9



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##### Table of Contents





|Daniel Tracy(10)                                            |  |          |  |  |  |     |  
|----------------------------------------------------------- |  | --------- |  |  |  | ---- | -
|All Directors and Executive Officers as a Group (4 persons) |  | 3,951,667 |  |  |  | 21.6 | %



|(1)  | In accordance
 with Rule 13d-3 under the Securities Exchange Act of 1934, a person is deemed to
 be the beneficial owner, for purposes of this table, of any shares of common stock
 if such person has or shares voting power or investment power with respect to such
 security, or has the right to acquire beneficial ownership at any time within 60
 days after October 31, 2002. In calculating the percentage of ownership, such shares
 are deemed to be outstanding for the purpose of computing the percentage of shares
 of common stock owned by such stockholder, but are not deemed outstanding for the
 purpose of computing the percentage of shares of common stock owned by any other
 stockholder. For purposes of this table, voting power is the power to vote or
 direct the voting of shares and investment power is the power to dispose or direct
 the disposition of shares.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(2)  | The address
 for David Theroux is 11990 Skyline Blvd, Oakland, CA 94619.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(3)  | The address
 for Great Western Land and Recreation, Inc. is 5115 N. Scottsdale Road, Suite 101,
 Scottsdale, AZ 85250. The address for Amortibanc Investments L.C., the Willard Garvey
 Revocable Trust, the Willard W. Garvey Trust Number Thirteen and Jean Garvey is
 7309 E. 21st Street, Suite 120, Wichita, KS 67206.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(4)  | The address
 for Messrs. Torok and Szilagyi is 5115 North Scottsdale Road, Suite 101, Scottsdale,
 AZ 85250.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(5)  | The address
 for Mr. Clark is 6 Cardinal Road, Hilton Head, SC 29926.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(6)  | Includes 2,500,000
 shares owned by Great Western Land and Recreation, Inc. Amortibanc Investments,
 L.C. beneficially owns 100% of the outstanding shares of Great Western Land and
 Recreation. Amortibanc Investments disclaims beneficial ownership of these shares.
 The Willard W. Garvey Revocable Trust and the Willard W. Garvey Trust Number Thirteen
 are the only members of Amortibanc Investments and thereby share beneficial ownership
 of these shares. Jean Garvey is the trustee of the Willard W. Garvey Revocable
 Trust and the Willard W. Garvey Trust Number Thirteen.                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(7)  | Includes 1,328,556
 shares of common stock owned by Mr. Torok, 81,320 shares owned by Lone Pine Industries,
 Inc., a company controlled by Mr. Torok, 179,460 shares owned by Western Reserve
 Environmental Services, a company in which Mr. Torok has an interest, primarily
 in a joint trust with Anne V. Hodgkins, Mr. Toroks wife, and 250,000 shares
 of common stock issuable upon the exercise of vested stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(8)  | Includes 1,096,521
 shares of common stock owned by Mr. Szilagyi and 250,000 shares of common stock
 issuable upon the exercise of vested stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(9)  | Includes 500,000
 shares of common stock owned by Mr. Clark, 15,810 shares owned by Clark-Bemis Lumber
 Company, a company controlled by Mr. Clark, and 250,000 shares of common stock issuable
 upon the exercise of vested stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(10) | The address
 for Mr. Tracy is 88 Wood Pond Road, West Hartford, CT 06107-3541.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             




Item 12.     
Certain Relationships and Related Transactions

On September
 22, 2000, we purchased a $20,000 note receivable, issued by an unrelated company
 in connection with a sale of real estate, bearing interest at 9%. This note receivable
 was purchased from Great Western in exchange for 500,000 shares of our common stock.
 On December 29, 2000, we purchased ownership interests in nine entities from Great
 Western in exchange for a $951,629 note payable and 1,000,000 shares of our common
 stock. The most significant of these interests were a 25.52% ownership in Laguna
 which owns an apartment complex in Phoenix, Arizona, and a 51% interest in Firebird
 Financial, an entity that was formed to provide second mortgage financing in the
 Houston, Texas area. Firebird Financial has not funded any new loans since 1998,
 and does not have any current plans to fund additional loans in the future. The
 other seven entities had no operations and minimal net asset values. In addition,
 Great Western charges us $900 per month for management services it provides to Firebird
 Financial. Furthermore, Great Western advances us funds to pay our current expenses.
 At August 31, 2002, advances from Great Western totaled $1,180,284, primarily to
 finance the purchase of the Companys ownership interests in Laguna and Firebird
 Financial from Great Western. We had also pledged our interest in Laguna as collateral
 for of a $500,000 loan Great Western received from a third party. This loan was
 deemed paid in full in October 2002 (see Item 3. Legal Proceedings and Item 13.
 Notes to Consolidated Financial Statements, Note H).

On July 23,
 2002, we entered into an Agreement and Plan of Merger (the Merger Agreement
 or the Agreement) with Great

10



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##### Table of Contents



Western. Under the Merger Agreement,
 we agreed to undertake a series of transactions the result of which would be the
 transfer of control of the Company to the stockholder of Great Western, and the
 merger of Great Western into the Company. We will be the surviving entity. The
 transaction also involves the election of new directors and the amendment of our
 Articles of Incorporation to change our name to Great Western Land and Recreation,
 Inc. Our Board of Directors unanimously approved the Merger Agreement and the other
 transactions to be undertaken and the holders of a majority of our outstanding stock
 approved the transactions in writing on July 25, 2002. On July 23, 2002 the stockholder
 of Great Western consented in writing to the Merger Agreement transactions. Under
 applicable Nevada law, written consent by the holders of a majority of our outstanding
 stock to the transactions outlined in the Agreement is sufficient to approve the
 transactions, without a meeting or vote of all of the stockholders. This transaction
 will not become effective until the later of the time that the Articles of Merger
 are filed with the Secretary of State of the State of Nevada and of the State of
 Delaware. The Articles of Merger will not be filed for at least 20 days after the
 mailing of an Information Statement to all of our stockholders.

Jay Torok,
 the Chairman of our board of directors, is also the Chairman, President and Chief
 Executive Officer of Great Western. William Szilagyi, our president and a member
 of our board of directors is also the senior vice president of Great Western.

We utilize
 office space at the office of Great Western. We are using this space free of charge.




Item 13.     
Exhibits and Reports on Form 8-K.



|(a) | The following
 documents are filed as part of this Annual Report on Form 10-KSB:
|--- | --------------------------------------------------------------------------------
|    |                                                                                 
|    | (1)                                                                             



| |                                                                                                         | Page No.
| | ------------------------------------------------------------------------------------------------------- | --------
| |                                                                                                         |         
| | Report of Independent Certified Public Accountants                                                      |         
| | Consolidated Balance Sheet as of August 31, 2002                                                        |         
| | Consolidated Statements
 of Operations for the years ended August 31, 2002 and 2001                     |         
| | Consolidated Statements
 of Stockholders Equity (Deficit) for the years ended August 31, 2002 and 2001 |         
| | Consolidated Statements of Cash
 Flows for the years ended August 31, 2002 and 2001                     |         
| | Notes to Consolidated Financial
 Statements                                                             |         



|    | (2)                                                                                                                                | Exhibits                                                                                                                                                                                                                           | 
|--- | ---------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|    |                                                                                                                                    |                                                                                                                                                                                                                                    | 
|    |                                                                                                                                    | The Exhibits
 which are filed with this Annual Report or which are incorporated herein by reference
 are set forth in the Exhibit Index which appears on page E-1 hereof, which Exhibit
 Index is incorporated herein by reference | 
|    |                                                                                                                                    |                                                                                                                                                                                                                                    | 
|(b) | Reports on
 Form 8-K                                                                                                               |                                                                                                                                                                                                                                   
|    |                                                                                                                                    |                                                                                                                                                                                                                                    | 
|    | On July 25,
 2002, we filed a report on Form 8-K to report the Agreement and Plan of Merger between
 1st Realty and Great Western. |                                                                                                                                                                                                                                   




Item 14.     
Controls and Procedures

(a)     We
maintain disclosure controls and procedures (as defined in Securities
Exchange Act 1934 Rules 13a-14(c) and 15d-14(c)) that are designed to
ensure that information required to be disclosed in our Exchange Act
reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange
Commissions rules and forms, and that such information is
accumulated and communicated to our management, including our Chief
Executive Officer and Principal
Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognized that any
controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving the desired
control objectives, and management necessarily was required to apply
its judgment in evaluating the cost-benefit relationship of possible
controls and procedures.

Within
90 days prior to the date of this annual report, we
carried out an evaluation, under the supervision and with the
participation of management, including our Chief Executive Officer
and Principal Financial Officer, of the effectiveness of the design
and operation of our disclosure controls and procedures. Based on the
foregoing, our Chief Executive Officer and Principal Financial
Officer concluded that our disclosure controls and procedures were
effective.

(b)     There
have not been any significant changes in our internal
controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation. There were no
significant deficiencies or material weaknesses, and therefore no
corrective actions were taken.

11



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##### Table of Contents






SIGNATURES

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



|                        | 1ST REALTY
 INVESTMENTS, INC.
|----------------------- | -----------------------------
|                        | (Registrant)                 
|Date: November
21, 2002 | By /s/
 Jay N. Torok         
|                        |                              
|                        | Jay N. Torok                 
|                        | Chairman of
 the Board       

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



|Signatures           |  | Title                                                                               |  | Date             
|-------------------- |  | ----------------------------------------------------------------------------------- |  | -----------------
|                     |  |                                                                                     |  |                  
|/s/ Jay N. Torok     |  | Chairman of the Board (Principal Executive Officer)                                 |  | November
21, 2002
|                     |  |                                                                                     |  |                  
|Jay N. Torok         |  |                                                                                     |  |                  
|                     |  |                                                                                     |  |                  
|/s/ William Szilagyi |  | President and Director
 (Principal Financial Officer; Principal Accounting Officer) |  | November
21, 2002
|                     |  |                                                                                     |  |                  
|William Szilagyi     |  |                                                                                     |  |                  
|                     |  |                                                                                     |  |                  
|/s/ Roger B. Clark   |  | Director                                                                            |  | November
21, 2002
|                     |  |                                                                                     |  |                  
|Roger B. Clark       |  |                                                                                     |  |                  
|                     |  |                                                                                     |  |                  
|/s/ Daniel Tracy     |  | Director                                                                            |  | November
21, 2002
|                     |  |                                                                                     |  |                  
|Daniel Tracy         |  |                                                                                     |  |                  

12



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##### Table of Contents






1ST REALTY INVESTMENTS,
 INC.

CONTENTS



|                                                                                                               | PAGE
|-------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                               |     
|Report of Independent Certified Public Accountants                                                             |     
|Consolidated Balance Sheet, August 31, 2002                                                                    |     
|Consolidated Statements of Operations, for the
 fiscal years ended August 31, 2002 and 2001                    |     
|Consolidated Statements of Stockholders Equity (Deficit)
 for the fiscal years ended August 31, 2002 and 2001 |     
|Consolidated Statements of Cash Flows, for the fiscal
 years ended August 31, 2002 and 2001                    |     
|Notes to Consolidated Financial Statements                                                                     |     

F-1



---



##### Table of Contents






REPORT OF INDEPENDENT
 CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors

1st Realty Investments

We have audited the accompanying consolidated
 balance sheet of 1st Realty Investments, Inc. as of August 31, 2002, and the related
 consolidated statements of operations, stockholders equity (deficit) and cash
 flows for each of the two years in the period ended August 31, 2002. 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 1st Realty Investments as of August 31, 2002 and the consolidated results
 of its operations and its consolidated cash flows for each of the two years in the
 period ended August 31, 2002, in conformity with accounting principles generally
 accepted in the United States of America.

GRANT THORNTON LLP

Fountain Hills, Arizona
November 12, 2002

F-2



---



##### Table of Contents






1ST REALTY INVESTMENTS, INC.
CONSOLIDATED BALANCE SHEETAugust 31, 2002



|ASSETS                                                                                  |   |           |  
|--------------------------------------------------------------------------------------- | - | --------- | -
|Cash and cash equivalents                                                               | $ | 4,179     |  
|Notes receivable, net                                                                   |   | 46,297    |  
|Investment in unconsolidated company                                                    |   | 552,603   |  
|Other assets                                                                            |   | 14,539    |  
|                                                                                        |   |           |  
|                                                                                        | $ | 617,618   |  
|                                                                                        |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                          |   |           |  
|Liabilities                                                                             |   |           |  
|Payable to related entities                                                             | $ | 1,180,284 |  
|Accounts payable and other accrued liabilities                                          |   | 694       |  
|                                                                                        |   |           |  
|Total liabilities                                                                       |   | 1,180,978 |  
|Stockholders equity (deficit)                                                          |   |           |  
|Common stock, $0.001 par value; 25,000,000
 shares authorized; 17,518,525 shares issued |   | 17,519    |  
|Additional paid-in capital                                                              |   | 45,401    |  
|Accumulated deficit                                                                     |   | (626,280  | )
|Treasury stock, at cost, 651,972 shares                                                 |   |          |  
|                                                                                        |   |           |  
|Total stockholders equity (deficit)                                                    |   | (563,360  | )
|                                                                                        |   |           |  
|                                                                                        | $ | 617,618   |  
|                                                                                        |   |           |  

The accompanying
 notes are an integral part of this consolidated financial statement.

F-3



---



##### Table of Contents






1ST REALTY INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                 |  | Fiscal year ended
 August 31,
|---------------------------------------------------------------- |  | -----------------------------
|                                                                 |  |                              
|                                                                 |  | 2002                         
|                                                                 |  |                              
|Interest income                                                  |  | $                            
|General and administrative expense                               |  |                              
|                                                                 |  |                              
|Operating loss                                                   |  |                              
|Other income (expense)                                           |  |                              
|Interest expense                                                 |  |                              
|Equity in losses of unconsolidated company                       |  |                              
|Other income                                                     |  |                              
|                                                                 |  |                              
|                                                                 |  |                              
|                                                                 |  |                              
|Net loss                                                         |  | $                            
|                                                                 |  |                              
|Net loss per common and common equivalent share                  |  |                              
|Basic                                                            |  | $                            
|                                                                 |  |                              
|Diluted                                                          |  | $                            
|                                                                 |  |                              
|Weighted average common and common equivalent shares outstanding |  |                              
|Basic                                                            |  |                              
|Diluted                                                          |  |                              

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

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1ST REALTY INVESTMENTS, INC.
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) Fiscal years ended August
 31, 2002 and 2001



|                                              |  | Common stock |            | Additional |  |             |        |          |  |       |        |       |  |   |          |  
|--------------------------------------------- |  | ------------ | ---------- | ---------- |  | ----------- | ------ | -------- |  | ----- | ------ | ----- |  | - | -------- | -
|                                              |  |              |            | paid-in    |  | Accumulated |        | Treasury |  |       |        |      
|                                              |  | Shares       |            | Amount     |  | capital     |        | deficit  |  | stock |        | Total
|                                              |  |              |            |            |  |             |        |          |  |       |        |      
|Balance, September 1, 2000                    |  |              | 16,018,525 |            |  | $           | 16,019 |          |  | $     | 16,901 |       |  | $ | (50,761  | )
|Issuance of shares to acquire note receivable |  |              | 500,000    |            |  |             | 500    |          |  |       | 19,500 |       |  |   |         |  
|Issuance of shares to acquire businesses      |  |              | 1,000,000  |            |  |             | 1,000  |          |  |       | 9,000  |       |  |   |         |  
|Net loss                                      |  |              |           |            |  |             |       |          |  |       |       |       |  |   | (243,079 | )
|                                              |  |              |            |            |  |             |        |          |  |       |        |       |  |   |          |  
|Balance, August 31, 2001                      |  |              | 17,518,525 |            |  |             | 17,519 |          |  |       | 45,401 |       |  |   | (293,840 | )
|Net loss                                      |  |              |           |            |  |             |       |          |  |       |       |       |  |   | (332,440 | )
|                                              |  |              |            |            |  |             |        |          |  |       |        |       |  |   |          |  
|Balance, August 31, 2002                      |  |              | 17,518,525 |            |  | $           | 17,519 |          |  | $     | 45,401 |       |  | $ | (626,280 | )
|                                              |  |              |            |            |  |             |        |          |  |       |        |       |  |   |          |  

The accompanying
 notes are an integral part of these consolidated financial statement.

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1ST REALTY INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                                     |  | Fiscal year ended August 31,
|---------------------------------------------------------------------------------------------------- |  | ----------------------------
|                                                                                                     |  |                             
|                                                                                                     |  | 2002                        
|                                                                                                     |  |                             
|Cash flows from operating activities                                                                 |  |                             
|Net loss                                                                                             |  | $                           
|Adjustments to reconcile net loss to net cash used in
 operating activities                          |  |                             
|Bad debt expense                                                                                     |  |                             
|Depreciation and amortization                                                                        |  |                             
|Equity in losses of unconsolidated company                                                           |  |                             
|Accretion of interest income                                                                         |  |                             
|Change in assets and liabilities (net of businesses acquired):                                       |  |                             
|Other assets                                                                                         |  |                             
|Accounts payable and other accrued liabilities                                                       |  |                             
|                                                                                                     |  |                             
|Net cash used in operating activities                                                                |  |                             
|Cash flows from investing activities                                                                 |  |                             
|Collection of notes receivable                                                                       |  |                             
|Distribution of capital from unconsolidated company                                                  |  |                             
|Cash acquired through purchase of investments in businesses                                          |  |                             
|                                                                                                     |  |                             
|Net cash provided by investing activities                                                            |  |                             
|                                                                                                     |  |                             
|Cash flows from financing activities                                                                 |  |                             
|Increase (decrease) in advances from related parties                                                 |  |                             
|                                                                                                     |  |                             
|Net increase (decrease) in cash and cash equivalents                                                 |  |                             
|Cash and cash equivalents at
beginning of year                                                       |  |                             
|                                                                                                     |  |                             
|Cash and cash equivalents at
end of year                                                             |  | $                           
|                                                                                                     |  |                             
|Supplemental disclosure of cash flow information:                                                    |  |                             
|Cash paid during the year for interest                                                               |  | $                           
|Noncash investing and financing activities                                                           |  |                             
|Issuance of common stock to acquire a note receivable                                                |  | $                           
|Issuance of common stock and a note payable to a
 related party to acquire investments in businesses |  | $                           

The accompanying
 notes are an integral part of these consolidated financial statement.

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##### Table of Contents






1ST REALTY INVESTMENTS,
 INC.NOTES TO CONSOLIDATED
 FINANCIAL STATEMENTS

NOTE A  SUMMARY OF ACCOUNTING POLICIES

A summary of the significant accounting
 policies consistently applied in the preparation of the accompanying consolidated
 financial statements follows.



1.  Basis
 of presentation and business




1st Realty Investments (formerly First National
 Realty Associates Nevada, Inc.) (the Company) is an Arizona-based company that
 was formed in Georgia in October 1988, and became a publicly-held company through
 a merger into Emphatic Mergers, Inc. a publicly-held corporation on April 11, 1990.
 The name of the corporation was changed from First National Realty Associates, Inc.
 to 1st Realty Investments on July 13, 2000.




The Company was founded with the intended
 purpose of becoming primarily a national residential real estate brokerage company,
 focusing on relatively affluent markets in geographically diverse market areas.
 Between 1988 and 1991, the Company grew primarily through the acquisition of other
 real estate brokerage companies in multiple states. However, principally due to
 the downturn in the real estate industry in the early 1990s, the Company was
 unable to generate profitable operations. On April 6, 1992, the Company filed a
 voluntary petition in the United States Bankruptcy Court for the District of Georgia
 to reorganize under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy
 Code). On January 21, 1993, the Companys Chapter 11 case was voluntarily
 converted to a case under Chapter 7 of the Bankruptcy Code. All of the Companys
 assets were subsequently liquidated and the proceeds distributed, and the bankruptcy
 was dismissed on September 27, 1994. From that date through the end of fiscal 2000,
 the Company had no operations. It did, however, incur approximately $51,000 in administrative
 and legal expenses during that time. The Company paid for these costs either by
 issuing common stock or through advances it received from Great Western Land and
 Recreation, Inc. (Great Western), formerly Amortibanc Management L.C.




In fiscal 2001, the Company began efforts
 to become an operating company once again. On September 22, 2000, the Company purchased
 a $20,000 note receivable issued by an unrelated company in connection with a sale
 of real estate, bearing interest at 9%. This note receivable was purchased from
 Great Western in exchange for 500,000 shares of the Companys common stock.
 On December 29, 2000, the Company purchased ownership interests in nine entities
 from Great Western in exchange for a $951,629 note payable and 1,000,000 shares
 of the Companys common stock. The most significant of these interests were
 a 25.52% ownership in Laguna at Arrowhead Apartments L.L.C., which owns
 an apartment complex in Phoenix, Arizona, and a 51% interest in Firebird Financial
 L.L.C, (Firebird Financial) an entity that was formed to provide second mortgage
 financing in the Houston, Texas area. The ownership interest in
Laguna at Arrowhead Ranch Apartments, L.L.C. is held indirectly through Laguna Investments, L.L.C., a
wholly owned subsidiary (collectively Laguna). Firebird Financial has not funded any new
 loans since 1998, and does not have any current plans to fund additional loans in
 the future. The other seven entities had no operations and minimal net asset values.




The acquisitions of the ownership interests
 in the nine entities from Great Western are accounted for by the purchase method
 of accounting. The purchase price was allocated as follows: $876,332 to Laguna,
 $74,579 to Firebird Financial and $10,718 to the remaining seven entities. The
 purchase price was based on the estimated fair value of the entities acquired based
 on an independent appraisal of Laguna and managements estimates of the values
 of the other entities. The 25.52% interest in Laguna is being accounted for on the
 equity method since acquisition and the accounts of Firebird Financial are consolidated
 in these financial statements. Firebird Financial has a deficit equity balance therefore
 no minority interest is reflected in these financial statements. The excess cost
 over the Companys interest in the net equity of Laguna is included in the
 investments in unconsolidated company on the balance sheet and is being amortized
 over the life of the Laguna apartment complex. The amortization is
included in equity in losses of unconsolidated company on
the statement of operations. A partnership controlled by the
 Chairman of the Companys board of directors owns 1.82% of Laguna. Ownership
 of the remaining 72.66% of Laguna is by 28 other unaffiliated investors.


F-7



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Pro forma information for the fiscal year
 ended August 31, 2001 follows (unaudited):




|                                                        |  | For the year ended August 31, 2001
|------------------------------------------------------- |  | ----------------------------------
|                                                        |  |                                   
|                                                        |  | 1st Realty                        
|                                                        |  |                                   
|Interest income                                         |  | $                                 
|Operating expenses                                      |  |                                   
|                                                        |  |                                   
|Income from operations                                  |  |                                   
|Other income (expense)                                  |  |                                   
|                                                        |  |                                   
|Net loss                                                |  | $                                 
|                                                        |  |                                   
|Diluted net loss per common and common equivalent share |  | $                                 
|                                                        |  |                                   
|Shares outstanding                                      |  |                                   
|                                                        |  |                                   



(1)  A proforma adjustment was made to reflect
 additional interest expense on the payable to Great Western.




Great Western is a related company. Jay
 Torok, the Chairman of the board of directors, is also the Chairman, President and
 Chief Executive Officer of Great Western. William Szilagyi, the President and a
 member of the board of directors is also the Senior Vice President of Great Western.
 Prior to September 2000, Great Western owned 6.2% of the Companys common
 stock. As a result of the issuance of common stock to Great Western in September
 2000 and December 2000 discussed above, Great Western owns 14.3% of the Companys
 common stock as of October 31, 2002.




On July 23, 2002, the Company entered into
 an Agreement and Plan of Merger (the Merger Agreement or the
 Agreement) with Great Western. Under the Merger Agreement, the Company
 agreed to undertake a series of transactions the result of which would be the transfer
 of control of the Company to the stockholder of Great Western, and the merger of Great
 Western into the Company. The Company will be the surviving entity. The transaction also
 involves the election of new directors of the Company and the amendment of the Companys
 Articles of Incorporation to change its name to Great Western Land and Recreation, Inc. The
 Board of Directors of the Company unanimously approved the Merger Agreement and the other
 transactions to be undertaken and the holders of a majority of the outstanding stock of the
 Company approved the transactions in writing on July 25, 2002. On July 23, 2002 the stockholder
 of Great Western consented in writing to the Merger Agreement transactions. Under applicable
 Nevada law, written consent by the holders of a majority of the outstanding stock of the
 Company to the transactions outlined in the Agreement is sufficient to approve the transactions,
 without a meeting or vote of all of the stockholders. This transaction will not become effective
 until the later of the time that the Articles of Merger are filed with the Secretary of State of
 the State of Nevada and of the State of Delaware. The Articles of Merger will not be filed for at
 least 20 days after the mailing of an Information Statement to all of the stockholders of 1st
 Realty.









The Company expects that the Merger will
 be treated as a tax-free reorganization under Section 368(a)(1)(B) of the Internal
 Revenue Code of 1986, as amended. If the Merger qualifies as a tax-free reorganization,
 no gain or loss will be recognized for income tax purposes by either the Company
 or Great Western as a result of the acquisition. There also should not be any material
 tax effects to the existing stockholders of the Company or Great Western as a result
 of the transaction. However, neither the Company nor Great Western has requested
 a tax ruling from the Internal Revenue Service with respect to the transaction.
 Accordingly, the Company can give no assurance that the transaction will qualify
 as a tax-free reorganization. The Company expects to account for its acquisition
 of Great Western as a reverse acquisition, with Great Western the acquirer and the
 Company the acquiree for reporting purposes. Prior to September
2000, the Company was a dormant non-operating company. Its current
operations are solely the result of the series of transactions it
entered into with Great Western. As a result, the assets and liabilities of both companies will
 be combined at their historical cost.




The accompanying consolidated financial statements
 include the accounts of the Company and its wholly- and majority-owned subsidiaries.
 Investments in companies that represent 20% to 50% of the ownership interest are
 accounted for on the equity method. Investments in companies that represent less
 than a 20% ownership interest are accounted for on the cost basis. All material
 intercompany accounts and transactions have been eliminated.




2.  Income taxes




Income taxes are accounted for using the
 asset and liability method. Under this method, deferred income tax assets and liabilities
 are recognized for the future tax consequences attributable to temporary differences
 between the financial statement carrying amounts of existing assets and liabilities
 and their respective tax bases. Deferred income tax assets and liabilities are measured
 using enacted tax rates expected to apply to taxable income in the years in which
 these temporary differences are expected to be


F-8



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##### Table of Contents





recovered or settled. The effect
 on deferred tax assets and liabilities of a change in tax rates is recognized in
 income in the period that includes the enactment date. A valuation allowance is
 provided for deferred tax assets that are not expected to be recovered from future
 operations.




At August 31, 2002, the Company has approximately $14,238,000 of tax
 loss carryforwards, which expire on various dates through 2021, to offset future
 federal taxable income. A full valuation allowance has been
provided, as the ultimate realization of the carryforwards is not
assured.




3.  Use of estimates




In preparing financial statements in conformity
 with accounting principles generally accepted in the United States of America, management
 is responsible for making estimates and assumptions that affect the reported amounts
 of assets and liabilities, the disclosure of contingent assets and liabilities at
 the date of the financial statements, and reported amounts of revenues and expenses
 during the reported period. Actual results could differ from those estimates.




4.  Cash equivalents




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




5.  Property and equipment




Property and equipment, consisting of office
 furniture and equipment, is recorded at cost and is depreciated over useful lives
 of three to five years using the straight-line method. At August 31, 2002, all property
 and equipment, which had an aggregate original cost of $4,365, has been fully depreciated.
 Expenditures for maintenance and repairs are charged to operations in the year
 in which the expense is incurred.




6.  Loss per share




Basic loss per share is computed by dividing
 net loss by the weighted average number of common shares outstanding during the
 period. Diluted loss per share incorporates the incremental shares issuable upon
 the assumed exercise of stock options. The number of incremental shares from the
 assumed exercise of stock options is calculated by applying the treasury stock method.
 For the fiscal years ending August 31, 2002 and 2001, 750,000 shares issuable upon the
 exercise of the stock options were not included in the calculation because
 they were antidilutive.




7.  Stock-based compensation




The Company measures compensation expense
 relating to employee stock awards in accordance with Accounting Principles Board
 Opinion No. 25 Accounting for Stock Issued to Employees (APB 25). The
 Company measures compensation expense relating to non-employee stock awards in accordance
 with Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
 Compensation (SFAS 123).




8.  Recent accounting pronouncements




In October 2001, the Financial Accounting
 Standards Board issued Statement of Financial Accounting Standards No. 144 Accounting
 for the Impairment or Disposal of Long-Lived Assets: (SFAS 144). SFAS 144 requires
 that all long-lived assets (including discontinued operations) that are to be disposed
 of by sale be measured at the lower of book value or fair value less cost to sell.
 Additionally, SFAS 144 expands the scope of discontinued operations to include all
 components of an entity with operations that can be distinguished from the rest
 of the entity and will be eliminated from the ongoing operations of the entity in
 a disposal transaction. SFAS 144 will be effective for the Company
as of September 1,
 2002. The implementation of SFAS 144 is not expected to have a material effect on its financial
 condition or results of operations.


NOTE B  NOTES RECEIVABLE

Notes receivable consist primarily of second
 mortgage loans made to individuals, which are reported net of unamortized discount
 of $37,165 and an allowance for doubtful accounts of $110,301 at August 31, 2002.
 The notes have original maturities of 3 to 5 years and bear interest at effective
 rates of 19.0% to 33.6%. Principal and interest are payable monthly based on 15-year
 amortization schedules with the remaining balances due at maturity.

Notes receivable also includes a $20,000
 note issued by an unrelated company in connection with a sale of real estate, bearing
 interest

F-9



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##### Table of Contents



at 9%, principal and interest payable as lots
 are sold and released, with any outstanding balance due in September 2003. This note
 receivable was purchased from Great Western in September 2000 in exchange for 500,000
 shares of the Companys common stock.

Maturities for notes receivable as of August
 31, 2002 follow:



|Year ending August 31, |  |   |         | 
|---------------------- |  | - | ------- | 
|2003                   |  | $ | 173,763 | 
|2004                   |  |   | 20,000  | 
|                       |  |   |        
|                       |  | $ | 193,763 | 
|                       |  |   |        

NOTE C  INVESTMENT IN UNCONSOLIDATED
 COMPANY

On December 29, 2000, the Company acquired
 a 25.52% ownership in Laguna at Arrowhead Apartments L.L.C., which owns
 an apartment complex in Phoenix, Arizona. This investment is accounted for using
 the equity method. Under the equity method, the Companys investment balance
 approximates the Companys original cost adjusted for its equity interest in
 the earnings and losses of Laguna since December 29, 2000, the date of acquisition.
 At August 31, 2002 and 2001, the Companys investment in Laguna totaled
$552,603 and $760,987, respectively.
 Lagunas fiscal year ends on December 31. Summarized financial information for Laguna
 as of August 31, 2002 and 2001 follows:

|                       |              |            |           |           |  |   |           |           | 
|---------------------- | ------------ | ---------- | --------- | --------- |  | - | --------- | --------- | 
|                       |              |           
|                       |              | August 31,
|                       |              |           
|                       |              | 2002       |           | 2001     
|                       |              |            |           |          
|Current assets         |              | $          | 61,596    |           |  | $ | 245,920   |          
|Noncurrent assets      |              |            | 8,921,661 |           |  |   | 9,507,671 |          
|                       |              |            |           |           |  |   |           |          
|                       | Total assets |            | $         | 8,983,257 |  |   | $         | 9,753,591 | 
|                       |              |            |           |           |  |   |           |          
|Current liabilities    |              | $          | 197,448   |           |  | $ | 204,141   |          
|Noncurrent liabilities |              |            | 9,349,843 |           |  |   | 9,441,948 |          
|Members capital       |              |            | (564,034  | )         |  |   | 107,502   |          
|                       |              |            |           |           |  |   |           |          
|                       |              | $          | 8,983,257 |           |  | $ | 9,753,591 |          
|                       |              |            |           |           |  |   |           |          

|                                                 |  |                             |           |      |  |   |           |  
|------------------------------------------------ |  | --------------------------- | --------- | ---- |  | - | --------- | -
|                                                 |  |                            
|                                                 |  | For the twelve months ended
|                                                 |  | August 31,                 
|                                                 |  |                            
|                                                 |  | 2002                        |           | 2001
|                                                 |  |                             |           |     
|Revenues                                         |  | $                           | 1,431,308 |      |  | $ | 1,003,359 |  
|Net loss from continuing operations and net loss |  |                             | (714,125  | )    |  |   | (384,592  | )

NOTE D  PAYABLES TO RELATED ENTITIES

Related entity payables at August 31, 2002
 consist of amounts payable to Great Western, primarily to finance the purchase of
 the Companys ownership interests in Laguna and Firebird Financial from Great
 Western on December 29, 2000. The amounts owed to Great Western are payable on demand,
 and $892,570 of the payable bears interest at 8% per annum.

NOTE E  FINANCIAL INSTRUMENTS

The carrying amounts reflected in the consolidated
 balance sheet for notes receivable approximate fair value considering the quality
 of the credit, payment terms and short remaining maturities. A reasonable estimate
 of the fair value for payables to related entities cannot be made due to the common
 control between the entities.

NOTE F  STOCK OPTIONS

The Company has adopted the 1999 Stock Option
 Plan (the Plan), an incentive plan for key employees and directors. A total of
 1,000,000 shares of the Companys common stock have been reserved for issuance
 under the Plan. The plan is administered by the Board of Directors or a committee
 thereof, which is authorized to, among other things, select the key employees and
 directors who will receive grants and determine the exercise prices and vesting
 scheduled of the options. Options expire no more than ten years after the date of
 grant. Upon termination of an option holders employment, all unvested options
 will immediately terminate and vested options will generally remain exercisable
 for a period of three months after date of termination (one year in case of disability,
 three years in case of death).

As of August 31, 2002, there were 750,000
 options outstanding under the Plan. The options were granted in 1999 and are fully
 exercisable. These options have a remaining contractual life of 7.2 years as of
 August 31, 2002, expire in 2009 and have an exercise price per share of $0.10. The
 pro forma information required under SFAS 123 is not included as it has no impact
 on loss per share.

F-10



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##### Table of Contents



NOTE G  TREASURY STOCK

Treasury stock consists of previously issued
 shares that were returned to the Company during and shortly after the Companys
 bankruptcy proceedings. These shares were returned as part of litigation settlements
 at the time of bankruptcy.

NOTE H  COMMITMENTS AND CONTINGENCIES

From time-to-time the Company is involved
 in litigation arising in the normal course of business. The Company is not a party
 to any outstanding litigation as of August 31, 2002 or as of the filing date of
 this report, other than as discussed below.

Great Western entered into a merger agreement
 with quepasa.com as of August 6, 2001. In October 2001, in order to induce Great
 Western to amend and extend the original merger agreement, quepasa.com loaned Great
 Western $500,000 (the loan). This loan was secured by 1st Realtys
 investment in Laguna. In February 2002, the merger agreement was terminated. The merger
 agreement provided for a termination fee of $500,000 as liquidated damages under certain
 circumstances. Great Western believed that it was entitled to this termination fee, which
 would result in the loan being deemed paid in full, and filed a declaratory judgment action
 against quepasa.com on that issue. quepasa.com filed a counterclaim, alleging that
 it was entitled to the termination fee and seeking to foreclose on the loan. quepasa.com
 named 1st Realty as a third-party defendant to its counterclaim because 1st Realtys
 investment in Laguna was pledged as collateral for the loan. This lawsuit
 was settled in October 2002. Under the terms of the settlement, Great Western retained
 the termination fee, which resulted in the loan being deemed paid in full and the
 pledge of Laguna as collateral being released, in exchange for a payment by Great
 Western to quepasa of $50,000 and the transfer to quepasa of 642,000 shares of quepasa
 common stock with a market value of approximately $39,000.

NOTE I  SELECTED QUARTERLY FINANCIAL
 DATA (UNAUDITED)

Consolidated quarterly financial information
 for fiscal 2002 and 2001 is as follows:



|                                                |  | Fiscal 2002
|----------------------------------------------- |  | -----------
|                                                |  |            
|Quarter ended                                   |  | November 30
|                                                |  |            
|Revenue                                         |  | $          
|                                                |  |            
|Operating loss                                  |  | $          
|                                                |  |            
|Net loss                                        |  | $          
|                                                |  |            
|Net loss per common and common equivalent share |  | $          
|                                                |  |            



|                                                 |  | Fiscal 2001
|------------------------------------------------ |  | -----------
|                                                 |  |            
|Quarter ended                                    |  | November 30
|                                                 |  |            
|Revenue                                          |  | $          
|                                                 |  |            
|Operating loss                                   |  | $          
|                                                 |  |            
|Net loss                                         |  | $          
|                                                 |  |            
|Net loss
 per common and common equivalent share |  | $          
|                                                 |  |            

NOTE J  OTHER INCOME

Other income for 2002 consisted of a gain
 on the sale of land in Houston, Texas for cash. The land was sold to the owner
 of the adjacent property. The land was owned by F Troops, LLC, a wholly owned subsidiary
 of the Company that was one of the entities the Company purchased from Great Western
 in December 2000. The land had been carried at zero value due to its location in
 a flood way, which severely limited its ability to be developed. However, recent
 changes in circumstances have increased the development potential of the land when
 combined with the adjacent property.

NOTE K  RELATED PARTY TRANSACTIONS

On September 29, 2000, the Company purchased
 a $20,000 note receivable, issued by an unrelated company in connection with a sale
 of real estate, bearing interest at 9%. This note receivable was purchased from
 Great Western in exchange for 500,000 shares of the Companys common stock.
 On December 29, 2000, the Company purchased ownership interests in nine entities
 from Great Western in exchange for a $951,629 note payable and 1,000,000 shares
 of the Companys common stock. These interests included a 25.52% ownership
 in Laguna at Arrowhead Apartments L.L.C., which owns an apartment
 complex in Phoenix, Arizona, and a 51% interest in Firebird Financial L.L.C.
 (Firebird Financial), an entity that was formed to provide second mortgage
 financing in the

F-11



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##### Table of Contents



Houston, Texas area. Firebird Financial
 has not funded any new loans since 1998, and does not have any current plans to
 fund additional loans in the future. The other seven entities had no operations
 and minimal net asset values. In addition, Great Western charges the Company $900
 per month for management services provided to Firebird Financial. At
August 31, 2002,
 advances from Great Western totaled $1,180,284, primarily to finance the purchase of
 the Companys ownership interests in Laguna and Firebird Financial from Great
 Western. The Company had pledged its interest in Laguna as collateral for a $500,000
 loan Great Western received from a third party. This loan was deemed paid in full in
 October 2002 (see Note H).

On July 23, 2002, the Company entered into
 an Agreement and Plan of Merger (the Merger Agreement or the
 Agreement) with Great Western. Under the Merger Agreement, the Company
 agreed to undertake a series of transactions the result of which would be the transfer
 of control of the Company to the stockholder of Great Western, and the merger of Great
 Western into the Company. The Company will be the surviving entity. The transaction also
 involves the election of new directors of the Company and the amendment of the
 Companys Articles of Incorporation to change its name to Great Western Land and
 Recreation, Inc. The Board of Directors of the Company unanimously approved the Merger
 Agreement and the other transactions to be undertaken and the holders of a majority of
 the outstanding stock of the Company approved the transactions in writing on July 25,
 2002. On July 23, 2002 the stockholder of Great Western consented in writing to
 the Merger Agreement transactions. Under applicable Nevada law, written consent
 by the holders of a majority of the outstanding stock of the Company to the transactions
 outlined in the Agreement is sufficient to approve the transactions, without a meeting
 or vote of all of the stockholders. This transaction will not become effective until
 the later of the time that the Articles of Merger are filed with the Secretary of
 State of the State of Nevada and of the State of Delaware. The Articles of Merger
 will not be filed for at least 20 days after the mailing of an Information Statement
 to all of the stockholders of 1st Realty.

Jay Torok, the Chairman of the board of
 directors, is also the Chairman, President and Chief Executive Officer of Great
 Western. William Szilagyi, a member of the board of directors is also the Senior
 Vice President of Great Western.

The Company utilizes office space at the
 office of Great Western. The Company is using this space free of charge.

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2001 10-KSB EXHIBIT INDEX



|Exhibit No. |  |                                                                                                                                                                                                                                                                                
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                                                                
|3.1         |  | Articles of
 Incorporation of First National Realty Associates, Inc. (Incorporated by reference
 to Exhibit 8 of Registration Statement on Form S-18 (No. 33-30679-NY))                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                
|3.2         |  | Agreement of Merger
 of First National Realty Associates, Inc. into Emphatic Mergers (Incorporated by
 reference to Exhibit 14 of Registration Statement on Form S-18 (No. 33-30679- NY))                                                                                      
|            |  |                                                                                                                                                                                                                                                                                
|3.3         |  | By-Laws of First
 National Realty Associates, Inc. (Incorporated by reference to Exhibit 9 of Registration
 Statement on Form S-18 (No. 33-30679-NY))                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                
|10.1        |  | Promissory Note,
 dated September 22, 2000 from First Commerce Marketing L.L.C. to 1st Realty Investments,
 Inc. (Incorporated by reference to Exhibit 10.1 of Form 10KSB for the fiscal year ended
 August 31, 2001)                                                          
|            |  |                                                                                                                                                                                                                                                                                
|10.2        |  | Promissory Note,
 dated December 31, 2000, from 1st Realty Investments, Inc to Amortibanc Management
 L.C. (Incorporated by reference to Exhibit 10.2 of Form 10KSB for the fiscal year
 ended August 31, 2001)                                                                
|            |  |                                                                                                                                                                                                                                                                                
|10.3        |  | Assignment of Membership
 Interest of Laguna Investments L.L.C., dated December 29, 2000, from Amortibanc Management
 L.C. to 1st Realty Investments, Inc. (Incorporated by reference to Exhibit
 10.3 of Form 10KSB for the fiscal year ended August 31, 2001)                
|            |  |                                                                                                                                                                                                                                                                                
|10.4        |  | Assignment of
 Membership Interest of Firebird Financial L.L.C., dated December 29, 2000, from
 Amortibanc Management L.C. to 1st Realty Investments, Inc.
 (Incorporated by reference to Exhibit 10.4 of Form 10KSB for the fiscal year
 ended August 31, 2001)               
|            |  |                                                                                                                                                                                                                                                                                
|10.5        |  | Assignment of Membership
 Interest of Arizona Legacy Ranches L.L.C., dated December 29, 2000, from Amortibanc Management
 L.C. to 1st Realty Investments, Inc. (Incorporated by reference to Exhibit 10.5 of Form 10KSB
 for the fiscal year ended August 31, 2001)            
|            |  |                                                                                                                                                                                                                                                                                
|10.6        |  | Assignment of Membership
 Interest of F Troops L.L.C., dated December 29, 2000, from Amortibanc Management L.C. to 1st
 Realty Investments, Inc. (Incorporated by reference to Exhibit 10.6 of Form 10KSB
 for the fiscal year ended August 31, 2001)                          
|            |  |                                                                                                                                                                                                                                                                                
|10.7        |  | Assignment of Membership
 Interest of Bosque del San Antonio L.L.C., dated December 29, 2000, from Amortibanc Management
 L.C. to 1st Realty Investments, Inc. (Incorporated by reference to Exhibit 10.7 of Form 10KSB
 for the fiscal year ended August 31, 2001)            
|            |  |                                                                                                                                                                                                                                                                                
|10.8        |  | Assignment of
 Membership Interest of Aquarius Mountain Water & Mineral L.L.C., dated December 29,
 2000, from Amortibanc Management L.C. to 1st Realty Investments, Inc. (Incorporated by
 reference to Exhibit 10.8 of Form 10KSB for the fiscal year ended August 31,
 2001)
|            |  |                                                                                                                                                                                                                                                                                
|10.9        |  | Assignment of
 Membership Interest of Prom Partners L.P., dated December 29, 2000, from Amortibanc
 Management L.C. to 1st Realty Investments, Inc. (Incorporated by reference to Exhibit
 10.9 of Form 10KSB for the fiscal year ended August 31, 2001)                       
|            |  |                                                                                                                                                                                                                                                                                
|10.10       |  | Assignment of
 Membership Interest of Willow Springs Water L.L.C., dated December 29, 2000, from
 Amortibanc Management L.C. to 1st Realty Investments, Inc. (Incorporated
 by reference to Exhibit 10.10 of Form 10KSB for the fiscal year ended August 31, 2001)             
|            |  |                                                                                                                                                                                                                                                                                
|10.11       |  | Assignment of
 Membership Interest of Houston Damage Control L.L.C., dated December 29, 2000, from
 Amortibanc Management L.C. to 1st Realty Investments, Inc. (Incorporated by reference to
 Exhibit 10.11 of Form 10KSB for the fiscal year ended August 31, 2001)           
|            |  |                                                                                                                                                                                                                                                                                
|10.12       |  | Agreement and Plan
 of Merger between 1st Realty Investments, Inc. and Great Western Land
 and Recreation, Inc. dated as of July 23, 2002 (Incorporated by reference to Exhibit 1 of                                                                                           

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##### Table of Contents





|     |  | Form 8-K filed
 with the Commission on July 29, 2002)                                                                                      
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                            
|11   |  | Statement RE:
 Computation of per Share Earnings (Loss)                                                                                    
|     |  |                                                                                                                                            
|21   |  | List
 of Subsidiaries                                                                                                                      
|     |  |                                                                                                                                            
|99.1 |  | Risk Factors                                                                                                                               
|     |  |                                                                                                                                            
|99.2 |  | Certification of
 Jay N. Torok pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of
 the Sarbanes-Oxley Act of 2002    
|     |  |                                                                                                                                            
|99.3 |  | Certification of
 William Szilagyi pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302
 of the Sarbanes-Oxley Act of 2002
|     |  |                                                                                                                                            
|99.4 |  | Certification of
 Jay N. Torok pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
 the Sarbanes-Oxley Act of 2002    
|     |  |                                                                                                                                            
|99.5 |  | Certification of
 William Szilagyi pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906
 of the Sarbanes-Oxley Act of 2002
|     |  |                                                                                                                                            

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